Virtus Investment Partners Inc (VRTS) 2013 Q1 法說會逐字稿

Good morning. My name is Karen, and I'll be your conference operator for today. I would like to welcome everyone to the Virtus Investment Partners quarterly conference call. The slide presentation for this call is available in the Investor Relations section of the Virtus website, www.virtus.com. This call is also being recorded and will be available for replay on the Virtus website. (Operator Instructions). I will now turn the conference to your host, Joe Fazzino.

Thank you, Karen. And good morning, everyone. On behalf of Virtus Investment Partners, Inc. I would like to welcome you to the discussion of our operating and financial results for the first quarter of 2013. Before we begin, I direct your attention to the important disclosures on page 2 of the Slide presentation that accompany this webcast.

Certain matters discussed on this call may contain forward-looking statements within the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not statements of facts or guarantees of future performance, and are subjects to risks, uncertainties and other factors that may cause the actual results to differ materially from those discussed understand the statements. These may statements maybe identified by expect, anticipate, believe, outlook, may and similar terms.

For a discussion of these risks and uncertainties, please see the risk factors and management discussion in an analysis section of our periodic reports that are filed with the SEC, as well as our other recent filings, which are available in the Investor Relations section of our website, www.virtus.com. In addition to results presented on a GAAP basis, Virtus uses certain non-GAAP measures to evaluate its financial results.

Our non-GAAP financial measures are not substitutes for GAAP financial results, and should be read in conjunction with GAAP results. Reconciliations of these non-GAAP financial measures to the applicable GAAP measures are included in our earnings press release, which is available on our website. For this call, we have a presentation, including an appendix, that is accessible with the webcast through the Investor Relations Section of Virtus.com.

This morning we will begin with remarks from the President and Chief Executive Officer, George Aylward, who will review our accomplishments and operating results for the quarter. Mike Angerthal, Executive Vice President and Chief Financial Officer, will then discuss our financial results in further detail, and will also review the balance sheet and capital items. We will conclude by opening up the call to your questions. Now, I would like to turn the call over to George Aylward. George?

Good morning, everyone, andthank you for joining our call today. Let me start by reviewing the financial results for the quarter, which were exceptionally strong and represent a very good start to the year.

We continued to deliver a significant topline and bottom line growth including record sales, net flows and profitability. As such, we continue the trend of the past few years of sustaining a very high level of sales and consistently above average growth, which has translated into increased profitability and operating margin. We had record total sales and net flows for the quarter on the strength of significantly higher mutual fund sales and net flows. We also had contributions from [higher] institutional except for the managed account sales and flows.

Total sales of $6.2 billion represented a 78% increase from the first quarter of last year, and a sequential increase of 62% for the fourth quarter. We also had record $3.7 billion ofpositive net flows, or nearly double from net flows from the year earlier, and $2 billion more than our net flows last quarter.

As a result of these substantial net flows and market appreciation from a very constructive market in the quarter, assets under management grew toto $51.2 billion. The biggest driver for our growth continues to be mutual fund salesWe had the best quarter ever for fund sales. Sales were $5.7 billion in the quarter, or 98% higher than in the first quarter of last year and 68% higher on a sequential basis.

The mutual fund sales rate for the quarter was 90%, so wecontinue to be at the top end of the industry for sales through intermediaries. This continued high level of sales is the result of our product breadth, strong investment performance and effective distribution. And all of those elements contributed to our exceptional growth in the quarter.

For example, we maintained strong levels of sales and net flows and equity products. In the quarter, 69% of our sales were in equity funds consistent with the levels of the past few quarters, and much higherthan what the industry, in general, has been experiencing.

On the distribution side, we had substantial growth in the independent [RIA] channel, while we maintained a high level of growth through the [Wirehouse] channel. As we like to say, wehave multiple engines for growth, and the results this quarter are certainly reflective of our many opportunities. We mentioned in our release that a key contributor to the significant increase in sales and flows in the orders was our emerging market opportunities fund.

After we informed fund shareholders that it was limited new investments to the fund to existing investors and designated broker/dealer platforms as of February 1 st, we saw theexpected increase in sales from investors who wanted continued access to the fund. End of quarter emerging markets sales were $2.3 billion compared with $1.2 billion in the fourth quarter of 2012.

In addition to these exceptional sales in the emerging market, we were also able to significantly grow sales in other strategies, which reflects the effectiveness of our distribution and the breadth our products. If you were to exclude emerging markets, we have $3.4 billion of fund sales in the first quarter, which was higher than the fourth quarter sales including emerging markets. We effectively replaced the sales of emerging markets in the quarter, even while we still had the benefit of emerging markets sales.

As a result of these strong sales, mutual fund net flows were $3.6 billion, or more than double the net flows in both first and fourth quarters of 2012. Our analyzed organic growth rate was 56% in the quarter. Once more, among the best in the industry.

We are pleased to see the trend of very strong net flows continue in the second quarter, and we had more than $1 billion of fund net flows in the month of April. Operating income as adjusted reached a record level and a quarter as a result of higher revenue from our cumulative top line growth and generally stable fixed costs.

Operating income as adjusted was $25 million for the quarter. An increase of 57% from the $16 million in the first quarter of last year. This increase reflects a 38% increase in revenue over the past year as a result of our growing AUM, particularly in open-end funds were assets were up 53% over the past year.

The sequential increase in operating income as adjusted occurred despite increase in payroll taxes related to annual incentive compensation and the impact of the higher sales costs from the significantly higher fund sales in the quarter. The profitability of the business is reflected in the margin, which was 39%, in the fourth quarter, an increase from 34% a year ago. As with operating earnings, the margin expansion reflects the benefit of higher revenue on our growing asset base.

In looking at the margin compared with the fourth quarter of last year, it was total impact of 580 basis points related to the higher payroll taxes we had in the first quarter, as well as the increased sales costs. Earnings per diluted shales were a $1.73 on net income of $14 millioncompared with $0.68 per share in the first quarter of 2012.

I want to mention a few other recent accomplishments. The strong relative investment performance of our funds is an important contributor to our sales success, and this quarterseveral of our strategies were recognized by Morningstar and Lippert for delivering very strong and consistent results. Two of our international equity funds were given top awards by Lippert for their consistently strong risk-adjusted performance over the past three years.

Foreign Opportunities was named the best international large-cap growth fund, and Global Opportunities was named the best global large-cap growth fund. Both funds are managed by Rajiv Jain of Vontobel, and he washonored earlier this year as the Morningstar 2012 International Stock Fund Manager of the year.

In addition, our new fleet team allowed us to take the top spot in taxable fixed income category in Barron's Lipper ranking of leading mutual fund companies. That ranking is based on one-year performance of the funds they manage, includingthe multi-sector short-term bond fund, multi-sector intermediate bond and senior floating rate funds. This is the second time in three years that Dave Albrycht and his team have been honored by Barron, and the third consecutive year we have been the best company in one of the Lipper categories.

We are proud of each of these honors , because they are indicative of the emphasis we place on providing attractive, well-performing products. Finally, in April, we completed our previously announced minority investment in Kleinwort Benson Investors International, or KBII, which is a U.S. registered management subsidiary of Kleinwort Benson Investors of Ireland.

KBII offers institutional quality equity and resource strategies with an attractive income component, and is a sub advisor of the emerging market [FE] income fund that we launched last year. We are very pleased with these results and accomplishments, and we believe they represent a very strong start to the year. Let me ask Mike to review our financial results in more detail.

Thank you, George. Good morning, everyone. In the first quarter we continued to deliver strong financial results across all our key metrics andthis morning I am going to review our quarterly results starting with assets under management, sales and flows. Starting on Slide 7, assets under management.

We ended quarter with total AUM of $51.2 billion up 35% from prior year, and 12% over the prior quarter. The sequential and year-over-year increases in AUM are primarily related to the impact of strong net flows, which contributed approximately two-thirds of the growth, and asset appreciation from the strong performance of the financial markets.

The year-over-year increase also included a higher separately managed account assets from the addition of Rampart. As a result of our consistent strong mutual fund flows, mutual fund AUM are up 53% from the prior year, and 18% from the prior quarter. In addition, separately managed account assets are up 50% from the prior year and 10% on a sequential basis.

Long-term assets increased 14%, sequentially, to $49.4 billion, and also grewby $13.2 billion, representing 37% growth over the prior year. With our consistently strong equity sales and market appreciation, the percent of equity assets increased 150 basis points to 60.6%, whichis the highest percentage over the past four years, and money market assets declined to less than 4% of our total AUM.

These are key factors contributing to the increasing average fee rates and higher investment management fees. In the first quarter, we achieved record levels of total sales and net flows, as well as record results from mutual fund sales and flows. Total sales for the quarter $6.2 billion, an increase of 62% from the prior quarter of $3.9 billion, and increase of 78% from the prior year quarter of $3.5 billion.

Total sales were driven primarily by open-end fund sales, which were $5.7 billion in the first quarter, or 68% sequential increase and 98% increase from the prior year. We also had a 19% increase in separately managed accounts sales, compared with the prior year, primarily driven by sales in our small cap strategies at Kayne Anderson Rudnick.

The increase in institutional sales reflects sales in new fleet, fixed income strategies and options and overlay strategies from Rampart. Net flows for the quarter were $3.7 million, which reflected in organic growth rate of 33% compared with 16% in the prior quarter and 22% in the prior year.

We've now had positive net flows for 16 consecutive quarters, as well as double digit overall organic growth for 8 of the past 9 quarters. Our primary driver of net flows has consistently been long-term, open-end funds. In the quarter, open-end fund net flows were $3.6 billion, an increase of 104% from the prior quarter, and 111% from the prior year quarter.

Funds net flows for the quarter resulted in an organic growth rate of 56% compared with 29% in the fourth quarter of 2012 and 40% in the prior year quarter. Also contributing to net flows in the first quarter were $133 million from separately managed accounts and $89 million from institutional.

Our consistently high organic growth rates are reflective of diversified, strong-performing product offerings and effective retail distribution. As George mentioned, a contributor to sales was the impact of notifying investors that we were limiting new investors into our emerging market opportunities fund. The current shareholders had designated distribution platforms. The emerging market fund contributed $2.3 billion in sales, and $1.6 billion of our mutual fund that flows of $3.6 billion.

The $2 billion of flows from all other funds was an increase of 14% compared to fund net flows of $1.7 billion in the fourth quarter of 2012, which included emerging market net flows, and an increase of $1 billion excluding emerging markets. Looking at these results in another way our analyzed organic growth without $1.6 billion of net flows from emerging markets would have been about 30%, an increase from 29% in the fourth quarter including emerging markets, and still among the best in the industry.

We are pleased that our organic growth rates, excluding emerging market flows, was at the same level in April. Our growth was based on our diversified product offerings and strong performance of our 45 long-term open-end funds. We experienced continued success from our top-performing, multi-sector, short-term bond fund, and our defensive domestic equity premium Alpha sector offering.

In addition, we were pleased to see significant growth in other attractive offerings, including foreign opportunities, dynamic alpha sector and senior floating rate funds. We believe the ongoing strength of our mutual fund flows is a testament to our diverse and well performing product line, that comprises differentiated strategies designed to meet investor needs across a variety of asset classes and investment styles.

Slide 9 presents the continued growth in operating income, as adjusted in the associated margin. In the first quarter, operating income, as adjusted was $25.1 million, which is up 57% compared to a year ago, and 2% on a sequential basis.

The point $0.6 million sequential increase reflects higher continued growth in revenues driven by buyer assets under management, partially offset by $2 million of higher payroll taxes, as well as $1.8 million of higher sales based compensation. Substantial increase in operating income, as adjusted over the prior year, primarily reflects the cumulative impact of $8.3 billion of positive open-end fund net flows over the past four quarters combined with 10% higher close-end fund assets.

The operating margin, as adjusted for the first quarter was 39%, an increase of 520 basis points from first quarter of 2012, and a decrease of 250 basis points on sequential order basis. Two items at a combined 580 basis point impacton the margin compared with the prior quarter, all else being equal. As noted earlier , this quarter included $2 million of higher payroll taxes that had a 310 basis point impact on the margin, and $1.8 million of higher sales based compensation that impacted the margin by 270 basis points.

Our capture ratio for the quarter, which we define as incremental operating earnings divided by revenues, was 11%. Excluding the higher payroll taxes, our capture ratio would have been closer to 50%, which is at the low end of our historical range. Concerning GAAP reported results.

Net income attributable to common stock holders $14 million or $1.73 per diluted common share representing a sequential increase of 15% at year-over-year increase of 154%. I would like to point out our mark-to-market gains for the quarter were $1.2 million or $0.09 per fully diluted common share on our marketable securities and consolidated investment products.

This mark-to-market equates to an approximate return of 2.2%, which reflects that approximately 50% of our C-capital portfolio is invested in an merging market debt strategy that is benchmarked to the EMDI global diversified index. In addition, we incurred approximately $200,000 of severance expenses and a quarter that reflected current period adjustments to actions taken late in 2012.

Finally our effective tax rate was 37.3%. As we stated during prior calls, the Company's cash tax rate remains in the low single digits, allowing us to retain a large portion of the cash we generate from operations. Turning to revenues on Slide 10.

Investment management fees increased to $57.8 million, up 9% on sequential quarter basis and 38% from the first quarter of last year. The two key drivers of investment management fee growth are average long-term assets and fee rates. Average long-term assets of $46.4 billionincreased 10% from the prior quarter due to strong mutual fund net flows and market appreciation.

The average fee rate increased to 48.5 basis points, up half a basis point from the sequential quarter at an increase of 2.1 basis points for the prior year. The increases over the sequential quarter and prior year are primarily driven by net flows into higher mutual fundings. Over the past four quarters over 65% of our net flows have been into equity products.

Lower expense reimbursements on our variable insurance funds, and for the year-over-year increase, the addition of the VGI closed-end fund which has a 95 basis point management fee. Total employment expenses for the quarter were $32.4 million, an increase of $4.6 million or 16% from the prior quarter.

The sequential increases attributable to payroll taxes related to annual incentive payments that occur in the first quarter of each year resulting in a higher expense of $2 million compared to the fourth quarter, an increased variable sales compensation due to the $2.3 billion increase in mutual fund sales from the prior quarter, which resulted in $1.8 million of higher employment expenses compared with the fourth quarter of 2012.

That key metric to consider is the ratio of employment expenses to revenues, which increased 330 basis points on a sequential quarter basis to 50.3%. Excluding the impact of the higher payroll taxes, the ratio would have been 47%, or a significant improvement from the prior year. This improvement demonstrates the continued leverage ability of our cost structure.

We believe this ratio is within industry averages at a very strong result given our multi manager business model. Moving to Slide 12, other operating expenses. The trend in other operating expenses demonstrates the scale of our business as these expenses continue to remain in a stable range.

Specifically notable is the improvement of other operating expenses compared to revenues as adjusted. Other operating expenses in the first quarter increased by $1.1 million from the prior year quarter, and were essentially flat on a sequential basis.

The ratio of other operating expenses to revenues as adjusted declined 90 basis points to 13.9% in the quarter compared with 14.8% the fourth quarter reflecting the increased scale of the business. The year-over-year improvement in the ratio was 270 basis point including the impact of the additional expenses related to Ramparts.

This declining ratio demonstrates our ability to leverage our cost structure and expand profit margins. Touching on our balance sheet and capital position. As we've mentioned on previous calls, our first quarter cash position is typically the low point of the year as annual incentive compensation is paid during the quarter. In addition, we continue to return capital to shareholders in the form of common stock repurchases.

As a result, cash balances declined $17 million on a sequential basis, and cash-to-annual-spend ratio declined sequentially from 27% to 18%. With regard to share repurchase in the quarter, we repurchased 60,000 shares at a total cost of $10.4 million. After the first quarter's activity there were 45,000 shares remaining under the share repurchase program that was authorized in the fourth quarter of 2010.

In addition, in the first quarter we utilized $5.2 million to net settle vesting of 27,747 restricted stock units. I would like to point out one minor accounting item this quarter related to the $58 million of marketable securities. As noted in our press release, marketable securities include $35.1 million of consolidated investments we have made to seed new funds where we have a majority interest in the investment.

This balance decreased $5.3 million from the prior quarter, as a result of the deconsolidating three seed capital investments that had previously been consolidated as sponsored investment products. Is no economic impact from this action. It is merely a reclassification in line items, and it reflects the fact that we no longer hold a majority interest ownership level as a result of new sales into each fund.

Looking at working capital the metric we focus on is working capital, excluding marketable securities, divided by our annual spend, which is defined as our GAAP operating expenses. We ended at 19% on this metric unchanged from the prior quarter. By comparison the industry average is 50% to 75% range.

As we discussed previously, we manage our capital to provide operating flexibility and to maximize shareholder value. We continue to increase our financial flexibility to be in position to capitalize on the opportunities and maintain our growth. With that let me turn the call back over to George.

Thanks, Mike. Before we take your questions I just want to provide final thoughts. The strong results of the quarter follow a trend of continued and progressive growth in sales and profitability. By successfully leveraging our business model and executing on our strategy, we've distinguished Virtus as a fast growing company. We believe that we are very well positioned to continue that growth as we have the critical elements in place including our model, our breadth of product, our strong distribution capabilities and the effective execution of our strategy.

With that we will take some questions. We may ask you to limit your questions as a courtesy to your user fellow listeners (inaudible) I one of those questions. If you have more, please feel free to get back in the queue. Karen, can you open up the lines, please?.

(Operator Instructions)First question we have comes from Michael Kim of Sandler O'Neill. Please, go ahead.

Hey, guys. Good afternoon. Just a couple of questions from me. First, George, can you talk a little bit more about sort of the outlook for asset allocation trends or themes coming out of the first quarter across both retail and institutional investor? Would you expect investors to maybe continue to gradually move up the risk curve, assuming the markets are constructive, or do you think there is some risk you that we kind of returned it to somewhat of a holding pattern?

Great question. Earlier, I think in the first quarter, we did see more of an interest in more of the riskier assets. And the big question had been whether that would come at the expense of the fixed income products, or whether it would come more from cash on the sidelines.

I think, from our experience in what we have seen, a lot of that in the first quarter came more so from cash that had not put to use as opposed to fixed income. For us we continue to see strength in the fixed income , as well as increase on riskier, per se, equity types of assets. I think as we see going forward -- as we look through what we've seen in April and were thinking going forward. I do think there will be a continued interest in the non fixed income assets.

I think people will making investment decisions not only just, per se, saying I am willing to take more risk, but I am willing to put my money to work in other types of strategies as opposed to traditional credit. And we think on the fixed income side that really the change that you will see is people trying to take opportunities in strategies that they may feel more comfortable with being in the environment going forward will perform better than maybe some of the categories where they were generally putting money.

We feel good on the fixed income side with our senior floating rate, as well as our traditional multi sector short-term bond fund. That those will continue to bea great place to put your fixed income allocation going forward. But I think a lot of what we see in the latter part of the year is really going to be driven by what happens in the macro environment as we move through the next few quarters as people are trying to determine, you know, what is the economic outlook here in the U.S.

as compared to outside of the U.S. We continue to see people needing to put their money to work. Maybe thinking a little differently about how they do their allocation, but they are still touching upon many of traditional categories where there is assets.

Okay that is helpful. Can you may be give us some color on how the mutual fund flows trended through the first quarter, and then maybe how that matches up against the $1 billion of inflows that you mentioned for April? Just curious if you have seen any sort of volatility or meaningful shifts in kind of flow trends for recently.

Obviously, you know, the whole industry in we experienced a very positive early part in the first quarter. Again, and it's really just following up on your point, which was people beginning to have more of a risk appetite. I think, for us, we generally saw that sustained and the pretty constant. For us, we have seen more increase in some of our products that we think should be attractive, like the senior floating rate for us, like the dynamic alpha sector, which is a long/short variation of our very successful premium alpha sector fund.

We still have that to be continued strong trend throughout the first quarter, and again as Mike and I both alluded to, webasically saw the similar type of results in the month of April. That is again, it's just four months of the year, and it think there are a lot of things that could influence the behavior in of the year and we will serve probably see that as we emerge. We are pleased with what we saw in the first four months.

Okay. And just one less quick work. I appreciate you taking all my questions here. Maybe for Mike, just to follow up on the capital management front. Is the priority to still further strengthen the balance sheet, and then in that context how you thinking about share repurchases going forward? Maybe being a bit more opportunistic just given the rally in the stock, or sticking with a consistent buyback. Thanks.

Consistently on share repurchases we have generally used the program to offset dilution based on the fact we are using equity in connection with our annual incentive programs. That is a trend that we would expect to continue, and it's what we have been focused on over the past several years.

With respect to the strength of the balance sheet, we've talked about our ability to retain the capital that we generate and start to move our averages of the metrics that we look at, which is both cash as a percentage of spend and working capital as a percentage of spend where we exclude some of the seed capitol investments closer to industry averages.

We will continue to look at that. We will be selective and opportunistic to deploy capital, as well. I think the trend and how we have demonstrated our capital management is really to provide ultimate flexibility to operate the business, which we will continue to do.

Okay. Thank you for taking my questions.

Thank you for your question. The next question comes in the line of Steven Schwartz of Raymond James & Associates.

Hey. Good morning, everybody.

Good morning.

If I may, I just -- I thought I had it then I got confused so I'm not quite sure. George, the $1 billion of flows, the flows that you sited in April, that is the total complex? That is not excluding what I would assume outflows out of emerging markets?

The number I referred to, it is the open-end mutual funds. That is the number that I was really sort of addressing. That does include the -- any impact from emerging markets.

Okay. Great. I wanted to make sure of that last point.

And then we separately, Mike -- just so you know, Mike separately gave you the growth rate for April that was consistently at the 30% level excluding EM, not including but excluding EM. So, I can sort of give you a flavor for how much of those flows are EM versus non-EM..

Okay. So the one -- that is why I was confused. The $1 billion that you cited includes including EM. The growth rate Mike sited excludes EM. Got it. And then --

Yes.

Okay. And then just thinking about the effective EM. I guess the first thing is that, obviously, you know flows remained good in the first month of this quarter. That is good. Your sales guys, your wholesalers, they have basically begun concentrating more on the floating rate product, more on the short-term duration product? Is that fair to say or is there may be something else that's coming up?

Good question. We generally focus on multiple products at any point in time. Looking at the fourth quarter, where our best selling product was the emerging market fund, but to behonest you don't need to spend a lot of time talking about one of the best performing emerging market funds. You know, in that quarter we did $1.7 billion of net flows in that quarter.

In the first quarter, you know, upon the first day of January announcing that there is going to be a closure on the EM fund, you see a rush of people getting into the fund so that they can continue to have access. Even in the first quarter, if you exclude benefit from EM, which was huge, the sales of all of the non-EM products were actually greater -- and the net flows, were greater than the fourth quarter.

That is the illustration that the wholesalers, who always focus on multiple products, in some ways had a great opportunity to now start talking about other things as they continue to focus away from the attention they were paying on the EM side. Our issue, I think, as we've tried to illustrate before is we have too many things to sell as opposed to few things to sell.

But we do think the environment, as well as our efforts, are making things like the senior floating rate, the dynamic alpha sector continuing to make multi sector short-term bond fund all still very attractive in this environment. For us we really sort of have to look for where is the demand in the market, and given the cycle and flows and our broad enough menu, we'll just sort of make sure we have something that matches up to that.

It's a combination of what we do from a sales execution, but it's really just mirroring up to where is the demand emerging and to Michael's earlier question, sort of, where are people on their risk appetite continuum in terms of what they are looking to access. We have a large number of very attractive high performing products on both the defensive side, as well as on the higher end of the risk spectrum.

I think that is one of the reasons why, again, we were effectively able to replace the sales of our best-selling fund in the fourth quarter with other flows in the first quarter.

Okay. Just to be this horse one more time, the effect of this, though, you got the sales which is great, the [end] of flows. The effect of this, though, I would presume without going to your website and looking it up, would be that there would be some headwind on the effective C rate? As you transfer from emerging markets to these other funds?

Oh, I'm sorry. The emerging market rate fund has a higher fee, but a lot of the other funds -- the blended average rate of those funds, particularly dynamic Alpha sector, is not going to be that different. I don't think you would see material difference in the shift of sales between equity products and fixed income products. I think it is generally consistent, as well.

Okay. Then one for -- a quick numbers question for Mike. The $2 billion and $1.8 million increase in expenses due to the high sales, that was about 63% of sales, is that a good number two kind of -- if we thought sales were going to go down $1 billion to use the point 63% of that?

Yes, I think -- we've typically talked about that as basis points. The challenge in the total $2.3 billion increase is there are different channels where that $2.3 billion comes from, where someare commissionable sales and some are noncommissionable sales. I think basis point average in that instance is about 7 basis points if you just do the math, which is probably lower than some of the impact we've talked about and experienced previously. I would think about it on a basis point impact, and this quarter's impact is, again, about 7 basis points, which is below. I would probably think of-- we've have had experiences in the 12 to 15 basis point range, which might be a better number.

Okay. Thanks, guys.

Thank you for your questions. (Operator Instructions). There is no further questions coming through, so this concludes our question-and-answer session. I would like now to turn the conference back over to Mr. Aylward for any closing remarks.

I just want to thank everyone for joining us this morning . Obviously, we encourage you to give us a call if you have any further questions. Thank you.

That concludes today's teleconference. Thank you for participating. You may now disconnect.