Franklin Resources (BEN) Earnings Report: Q Conference Call Transcript

Transcription

1 Franklin Resources (BEN) Earnings Report: Q Conference Transcript The following Franklin Resources conference call took place on January 30, 2015, 11:00 AM ET. This is a transcript of that earnings call: Company Participants Gregory Johnson; Franklin Resources; CEO and President Kenneth Lewis; Franklin Resources; CFO Other Participants Michael Carrier; BofA Merrill Lynch; Analyst Lucas Montgomery; Sanford C. Bernstein; Analyst Michael Kim; Sandler O'Neill + Partners; Analyst Kenneth Worthington; JP Morgan Chase; Analyst William Katz; Citigroup; Analyst Brian Bedell; Deutsche Bank; Analyst Robert Lee; Keefe, Bruyette, & Woods; Analyst Brennan Hawken; UBS Investment Bank; Analyst Greggory Warren; Morningstar; Analyst Eric Berg; RBC Capital Markets; Analyst MANAGEMENT DISCUSSION SECTION Good afternoon and welcome to Franklin Resources Earnings Conference for the quarter ended December 31, My name is [Lorraine] and I will be your conference operator today. Statements made in this conference call regarding Franklin Resources. which are not historical facts are forward-looking statements within the meaning of Private Securities Litigation Reform Act of These forward-looking statements involve a number of known and unknown risks, uncertainties, and other important factors that could cause actual results to differ materially from any future results expressed or implied by such forward-looking statements. These and other risks, uncertainties, and other important factors are described in more detail in Franklin's recent filing with the Securities and Exchange Commission, including in the Risk Factors and MD&A sections of Franklin's most recent Form 10-K and 10-Q filings. (Operator Instructions) Now, I would like to turn the call over to Franklin Resources CEO, Mr. Greg Johnson. Mr. Johnson, you may begin. Well, hello, and thank you for joining Ken Lewis, our CFO, and myself for this quarter's conference call. Financial results and relative investment performance remain solid. The institutional business had one of its best flow quarters, and fiduciaries secured one of its largest new wealth management relationship in the firm's history. Although net flows were weaker, retail clients showed increased interest in key products within 2014 TheStreet,. All Rights Reserved Page 1 of 11

2 our U.S. Equity, tax REIT, fixed income and global bond franchises. And now at this time, I'd like to open it up for your questions. QUESTIONS & ANSWERS (Operator Instructions) And our first question comes from Michael Carrier from Bank of America. Michael Carrier (Analyst - BofA Merrill Lynch): First question, just on the flows in the quarter and then in the outlook, I think on the recorded call, you just mentioned that institutional is really strong, and then in December you had a spike for a couple reasons on the retail side. I didn't know if you could give any color on how significant that spike was in December, just to kind of get a better run rate x some of the volatility that we saw around whether the Global Bond Fund or just the market environment. Right, you know, I think we felt like it's certainly worth discussing. We didn't try to go back and quantify because of the difficulty with omnibus but what happened with the Templeton Global Bond Fund is we had a $0.60 special dividend right at year-end and there's not a lot of warning for that kind of a currency dividend, and it kind of caught the market a little bit off guard, and we saw a real spike in redemptions. And also it's hard to quantify because many of the omnibus accounts track that as a redemption and then reinvest it and we know -- we think it's somewhere in the $1 billion range of potential overstatement of redemptions but we didn't want to adjust any numbers. We just kind of went with the number that we had but we know that, that December number is higher and as we'd said, January is a more normalized redemption rate. Michael Carrier (Analyst - BofA Merrill Lynch): Okay, that's helpful. And then Ken, maybe a couple things to clarify on some of the expense guidance that you gave. So first, just on the comp, I think you mentioned 2% higher in the next quarter. Just wanted to find out if that excludes or includes the $8 million Darby comp-related number, and then just two other items that seemed a little bit lower were the shareholder service revenues and the other revenues. I think other revenues, you said this could be at the higher end, so wanted to get some color on what's driving that. Sure, the 2% is our estimate off the absolute reported number which includes the Darby. Now other revenue, we are forecasting that to be lower because basically, because of the bank no longer had that banking business but the other item that's unpredictable that goes through that line relates to the consolidated SIPs, so excluding that we do think the run rate for other revenue is going to be lower going forward. On shareholder servicing, we think that this is probably about a good run rate for shareholder servicing going forward. Michael Carrier (Analyst - BofA Merrill Lynch): Okay. Thanks a lot. The shareholder accounts have been stable and increasing TheStreet,. All Rights Reserved Page 2 of 11

3 Michael Carrier (Analyst - BofA Merrill Lynch): Okay. And our next question comes from Luke Montgomery from Bernstein Research. Lucas Montgomery (Analyst - Sanford C. Bernstein): Just first on the special dividend, obviously that's appreciated by some investors but it was about half what you did a couple years ago. I know the tax and legislative environments were different then but if you could give us a little insight as to the discussion with the Board around the size of the special, and really, how that intersects with where you are on the cash flexibility on the US cash balance. Sure, so very robust discussion at the Board meeting in December, and the dividends very much a Board decision. One of the factors that they looked at is they felt like it was appropriate to target returning 50% of current year's earnings to shareholders through dividends and share repurchases. They look back at They saw that it was short of that goal, and so that was a key influencer on doing a special dividend and the size of the special dividend, so essentially, as I mentioned in the pre-recorded remarks, targeting 100% of US cash flow seemed like a reasonable objective at the time and that was factored into their decision. Lucas Montgomery (Analyst - Sanford C. Bernstein): Okay, helpful, thanks, and then I was just hoping that you could update us on your latest thoughts around liquidity and the emerging market portfolios. I think that Templeton Global Bond Fund keeps about 15% of total AUM in cash, and I realize also that managing liquidity is a quarter of what your PMs do but does Michael continue to believe that cash level is sufficient? And if you could comment on the potential for selling because there have been some new less-than-favorable articles in the press that cite the large percentage of certain countries' sovereign debt that you guys own and how you'll be positioned if those drop in value and the fund experiences more redemptions or redemptions. Yes, I mean, I think obviously that's something that all of our portfolio managers monitor and take very seriously looking at liquidity and cash and I think we've just felt like some of the coverage, looking at a fixed income fund like an equity fund, and trying to look at turnover and extrapolate that for liquidity doesn't really give you the whole picture. So I think the combination of the high cash positions along with the very low duration and maturities of securities happen within a very short period in the fund. Those two factors alone, and then sometimes the flexibility of working directly with central banks and selling positions creates liquidity that's not always measured, so there's many sources of liquidity that I feel like that area is probably one of the best as far as liquidity. But it continues, I think, because of the nature of some of the holdings and a 2.2% position in Ukraine gets a lot of focus with the headlines right now, but I think they feel comfortable, the team, and I think we feel pretty comfortable with liquidity there. Lucas Montgomery (Analyst - Sanford C. Bernstein): Great, thanks a lot I appreciate it. And our next question comes from Michael Kim from Sandler O'Neill TheStreet,. All Rights Reserved Page 3 of 11

4 Michael Kim (Analyst - Sandler O'Neill + Partners): So first, as you highlighted earlier, just looking at the relative returns across some of your bigger flagship funds, the three year numbers generally remain strong but some of the funds have been underperforming a bit over a shorter time frame, so just wondering how you're thinking about where you see the biggest organic growth opportunities, particularly assuming the markets remain choppy and risk appetites remain lackluster. I think there are pockets of strong performance, even on a shorter term basis, in some of the Franklin funds, the Franklin Growth Fund, another fund that we started a few years back, a focused equity fund, is doing very well so that's kind of gaining traction. I think looking at the short-term relative underperformance, there's no question that the strong US dollar has taken its toll, certainly, on Templeton that has a longer term approach and doesn't hedge against the dollar so this kind of unprecedented move does create headwinds for, certainly, that area. The other big one that moved just slightly into the bottom or the third quartile would be the Franklin ome Fund and again, very consistent with how that fund's run, with high-yield bonds some of the volatility during the quarter in that area, and then also because high-yield bonds tend to have a larger percentage in energy and oil, that had an impact as well. So that's just slightly in the third and does have a big short-term effect on our numbers and it's nothing unusual there. I think the good stories, some of the good stories in areas of continued growth, the Franklin, the India Fund, which is in our CCAB, had a very strong quarter in flows, and that is up, I think, about 45% for the year, so that continues to do well. And then the institutional opportunities, I think we feel like the pipeline is as strong as ever in categories like still, global equities, emerging markets, debt, and we continue to see opportunity for growth there. And tax free, just to mention tax free has come back to just slightly positive flows for the quarter and it's taken awhile to get there, but again, we think that's well-positioned and has good relative performance to hopefully get some organic growth. Michael Kim (Analyst - Sandler O'Neill + Partners): Got it, that's helpful, and then maybe just a follow-up for Ken. Beyond some of the more specific line item guidance that you referenced, any just sort of broader thoughts on expense growth looking out to the new year, particularly given sort of the step-up in market volatility? At some point, do you maybe start to pull back on some discretionary spending and just curious where you might have some of that flexibility? Well, I think history can show you that we do have a fair amount of flexibility in controlling the expenses and certainly, with revenue levels where they are, it's something that's top of mind, so we are talking about that I think you'll see the expense levels start -- you'll see the expense growth start to level out going out a few quarters as we kind of tap the brakes on expenses. But that does take a little bit of time to work through the system too, so but certainly, we are thinking about dialing back on the expenses. Michael Kim (Analyst - Sandler O'Neill + Partners): Great, thanks for taking my questions. And our next question comes from Ken Worthington from JPMorgan. Kenneth Worthington (Analyst - JP Morgan Chase): 2014 TheStreet,. All Rights Reserved Page 4 of 11

5 Greg, just one kind of big picture question. So as you look out over the next three years, what drives Franklin to the next level of growth? So I'd say Templeton brought in that big level, kind of pre-tech bubble, and I think it was income series post-tech bubble and the global bond franchise post-credit crisis. You've got different initiatives, different regions, different products that all seem like maybe they have potential. So kind of let us know what you're most excited about and what at least has the opportunity to be the focus for Franklin over the next couple of years? You know, I think it's hard just to look at one area and say that, that is going to drive organic growth like global bonds or like Templeton had. I think they are all -- hopefully, what we like to see is very diversified organic growth with all those areas and I still think the strength around the hybrid area, the balanced area, still continues to be a good grower and good potential for organic growth. The tax-frees have had a tough run but there's no reason why in a stable rate environment we can't get growth back there. If you look at the global bond, I would still argue that the performance continues to be very consistent, it's an alternative category and while it's the 800-pound gorilla in its category it still has very low penetration for the average retail owner and I think in a sideways volatile market, that stands out as a very good alternative. And you look at one area for us just this year, which shows, I think, the strength of our distribution and product line and where opportunities that we didn't talk about a year ago but with the yen devaluation in Japan, we've seen our Global Bond Funds really take off in that market and that's at the very early stages, where just this quarter we had over $1.3 billion in flows into global bond and that's a new channel for us. So I have I think it's hard just to call out any one area. The K2 fund continues to grow, we think that's a nice one, and the alternatives, we just kicked it off in the cross-border area and we are getting a lot of interest there. And as we talked about the institutional initiative, again, it gets somewhat lost in the numbers but $4 billion in flows coming into international -- or coming outside of the US into institutional net, is again, a very significant growth number that we think is getting better and better. So that would be a few. Kenneth Worthington (Analyst - JP Morgan Chase): Okay, great. Thank you very much. And our next question comes from Bill Katz from Citigroup. William Kat z (Analyst - Citigroup): Just following up on growth, maybe a little bit more tactical in nature. As I run my eye across some of your gross sales dynamics, yes there's a little improvement sequentially but when you look on a longer-term basis now over the last couple years, you seem to be sort of on a relatively down to flattish type of backdrop. What specifically might you be targeting in terms of growth initiatives to try and catalyze the net flow dynamics sort of adjusting for the spike in redemptions toward the end of the year? I'm just trying to see what gets the nets going at this point. Well we do target organic growth rates but I mean, at the end of the day, you look at where the opportunities are with the specific products in different markets and position and $50 billion in gross sales a quarter is a pretty strong accomplishment for a distribution, but when redemptions, the pressures of volatility and movement, even in this last quarter there were a lot of -- our European growth fund, which tends to track a little bit faster money and that at $1.2 billion in net redemptions, which put a lot of pressure on the equity flows. And then you look at our Asia growth fund, another one that reversed from a positive quarter to a negative 2014 TheStreet,. All Rights Reserved Page 5 of 11

6 which was about a $1 billion difference quarter-over-quarter. So you know, you hope you can reduce those and get back to steady but I think it's volatility in specific pockets and a lot of headwinds certainly with currencies and emerging markets, and those create pressure and make it just harder to get that organic growth. So I think it's difficult to sit here and say, well this is where it's going to happen or not. I think it's, again, the focus is going to be on delivering performance, consistent returns, and then hopefully the rest takes care of itself. I know, Bill, that's not exactly answering the question but as I said before, a more diversified mix and strong performance is really what we can control and hopefully that organic growth takes care of itself. William Kat z (Analyst - Citigroup): Okay, that's helpful, and then just want to follow-up, second question is just as you mentioned, the Global Bond Fund is sort of low and early stages of retail opportunity. When you step back and you think about, sort of, franchise risk, and I don't mean to use that term too lightly. One of the lessons I think we've learned with concentration, it cuts both ways, when it looks good it looks good and when it hurts it goes bad pretty quickly. How are you thinking about that just given the size of the aggregate portfolio, you used the word 800-pound gorilla in your response to a prior question. How are you thinking about that, letting that business continue to grow versus thinking about what might be some franchise risk if there was a problem that would build in that portfolio more deeply? Well, I think it's like any business, you want to make sure you watch carefully the risks in the larger portfolios and where assets are concentrated. I think we do a pretty good job, and also whether you'd consider closing something, that's more related to investment performance and liquidity than it would be to the risk to Franklin Templeton. But I think we do have, still, a very well-diversified asset base and if you look at every category where we have investment management, I'd still put it up there against anybody in the industry. So I think like any business, you make sure you watch carefully those larger concentrations of assets and I think we do a pretty good job of that. I think from a growth standpoint it still has potential to grow because sovereign debt is large and getting larger. William Kat z (Analyst - Citigroup): Okay, thanks for taking my questions. And our next question comes from Brian Bedell from Deutsche Bank. Brian Bedell (Analyst - Deutsche Bank): Greg, if you could talk a little bit more about some of the differences between what you're seeing in sales demand in Europe versus the US for, really, the global and international equity product set. Just trying to get a sense of the tempo as we come into the first quarter. Again, more on the sales side versus the redemption side. Yes, I think the pressure, it's a little bit different, our mix in certainly Europe and Asia versus the US, and the big drivers for us tend to be that Asia growth fund which is sold in -- all over Europe as well as Asia. And that you do tend to see more volatility in both gross and redemptions and that's more of a sector-oriented, more of a platform-driven model. That's really what has put a lot of pressure on the global equity outflows for the quarter, where you had volatility in the currencies as well as emerging markets having a relatively weak 2014 TheStreet,. All Rights Reserved Page 6 of 11

7 quarter against the rest. So Europe, obviously it was a lot of money moving into it a quarter or two ago, and now it seems to be the reverse. Probably the same in Asia but the good news, again, is that when those markets rebound you'll see the sentiment change. I think for the US, it's more of a steady state for us and I think the challenge has been, more recently we had a strong rebound in Templeton performance but again, the value approach, the overweighting in Europe, and the exposure to the US dollar is going to create some retail headwinds for us in the near term. But you just have never seen this kind of markets where the S&P has had such strength against the MSCI, and I think for the year, what is about 13%, 14% return for the S&P versus 3% for the rest of the world, minus 5% for emerging markets. So that, I think, tells a little bit of the story right there. Brian Bedell (Analyst - Deutsche Bank): Right, and then, maybe just adding to that, on the fee mix shift, obviously you had the adverse fee mix shift coming into the December quarter. As we move into 1Q, I guess, first of all was there anything unusual that changed that and then second of all, I guess would you see that trend continuing into the quarter given some of the dynamics of what's happened most recently coming into quarter end? Right, the only, maybe, unusual thing would be that we had less performance fees. I think that was the delta quarter to quarter, was maybe like $10 million less of performance fees, so you factor that in. But excluding that, as the Assets Under Management mix shifts away from, relatively away from global equity and to US in percentage terms or relative terms, then you're going to see that decline. So it's really a factor of Assets Under Management shift and then maybe also, but to a lesser degree, the mix between retail and institutional. Brian Bedell (Analyst - Deutsche Bank): Right, and you're seeing greater strength in institutional right now, is that correct? Well, we've seen that, yes, we've seen that in the last couple quarters so that's reflected in the decrease in the effective fee rate. Brian Bedell (Analyst - Deutsche Bank): Right okay, great. Thanks very much for taking my questions. And our next question comes from Robert Lee from KBW. Ro bert Lee (Analyst - Keefe, Bruyette, & Woods): Maybe just want to go back to the balance sheet a little bit. I understand clearly the desire to return 50% of cash flow, I guess the US earnings and that drove the special dividend. But can you maybe talk a little bit about how they thought of the bad versus a step up in share repurchase, particularly since, as you guys rightly point out, over the years you've actually done a good job of driving down the share count over time so I'm just trying to get a sense of that dynamic. And then maybe the second part of that would be, I know you have some debt that comes due in a couple of quarters. In the past, I think the only reason you really put leverage on the balance sheet was to fund some specials and share repurchases and so given the capacity you have for additional borrowings and kind of what may be the appetite to even put a little bit more leverage on to step up some share repurchase going 2014 TheStreet,. All Rights Reserved Page 7 of 11

8 forward? Sure, so Greg just talked about the S&P up last year and the Board had the benefit of hindsight looking back and seeing that share repurchases weren't, maybe, at levels they were previously and since we were opportunistic that was clearly understood and justified in their mind. So they said, this would be a good way to top that up and meet our objectives, and going forward, it doesn't change really our strategy going forward in any material way, so we will continue to be opportunistic in share repurchases. If there's a significant pullback in the market we'll step it up and vice versa, so that will continue. Regarding the debt -- well, the other thing that is kind of in the back of people's minds is the whole discussion about tax reform and there's recent news and talk about a potential bill being introduced regarding repatriation for infrastructure. So we're keeping an eye on that and that may change the view of the Board and the view of Management in terms of share repurchases or dividends so we'll wait and see on that. And in terms of the debt, you're right, I don't think there will be any significant change in our overall debt position which, I guess, implies that we're leaning towards refinancing it but that decision hasn't been made yet. I'll probably talk more about that next quarter. Ro bert Lee (Analyst - Keefe, Bruyette, & Woods): All right, great. Then I have a question maybe as you look at the DCIO business. It's, I think, been a good business for you guys over time but certainly the DC business has been changing a lot the last several years with the growth target date, more pressure on planned sponsors in terms of fee disclosures and all kinds of things. So can you maybe talk a little bit about how kind of the changes or reshuffling in that space and what the current strategy is or any thoughts on, are you going after open architecture target date, do you think -- just trying to get a sense of how you're viewing that market segment. Well, I think you've kind of hit on the big changes and for us, going after open architecture target date is kind of a difficult road because there's really limited access to do that. I think what has happened, part of the reason why US domestic equity and large cap and traditional core funds continue to struggle, as a standalone fund, it's just hard to get access and you're going to have to get access through a target date fund and in the past you could get on the platform as a standalone independent fund; today that's very difficult. So target date, especially where you have proprietary defined contribution plans, continue to be, I think, a very appropriate way for individuals to get a better diversified portfolio that changes over time. For us, I think the net effect is that you have more specialty, more specialized funds, which are still accessible -- or still in demand on those platforms, but it's just going to be harder and harder to get, say, the Franklin Growth Fund, get distribution at a DCIO plan versus other types of products that could be a small cap or could be a global bond, ones that are viewed as separate from the core holdings. So I think that, that the net effect, DCIO is still a very attractive channel of growth for us, certainly, versus defined benefit, we put a lot of resources into it and we've seen incremental growth there. But I think the target date area is just hard for an independent asset manager to do well versus people that have the proprietary plans. Ro bert Lee (Analyst - Keefe, Bruyette, & Woods): Great, thank you for taking my question. And our next question comes from Brennan Hawken from UBS TheStreet,. All Rights Reserved Page 8 of 11

9 Brennan Hawken (Analyst - UBS Investment Bank): So quick question on the global equity sales. It seems like on a gross basis the trend has been pretty steadily downward for those products. Can you help us understand what's driving that and what efforts are being made in order reverse that trend? Yes, I mean, I think it, as I've mentioned, it's just this kind of strength of the dollar has created headwinds for Templeton and then Europe more recently. So I think we're always looking at ways to strengthen the process and diversify and look at risks and those are things that we're doing, but as I said earlier what do you focus on? You focus on investment performance and delivering long-term results and that's really what we are trying to do there, but I think we're more sensitive now to the difficulties in just one factor, which has been the strong dollar and looking at whether or not you would hedge, those are the kind of things you can do going forward. So those are the kind of things we're going to look at, but as you've seen in the past these short-term numbers can turn pretty quickly and everybody -- the general consensus is the dollar continues to run but who knows? That can turn too and then all of a sudden that short-term relative performance looks fine, but I would agree with your assessment. That's an area where we have lost share and one that we're very focused on right now. Brennan Hawken (Analyst - UBS Investment Bank): Okay, if we think about it on a constant dollar basis, what would those numbers look like on the gross sales side? I don't, again, I just don't really look at -- we study the market share numbers and I just don't have that in front of me, what the gross sale for the global equity looks like over time, constant. Brennan Hawken (Analyst - UBS Investment Bank): Okay, thanks. Try to get it. And our next question comes from Greggory Warren from MorningStar. Greggo ry Warren (Analyst - Morningstar): I know we touched on this a little bit, sort of the near-term performance issue, so I'm not going to go down that path. I was just kind of curious, when you think about the global international bond portfolio, I know you've talked about the fact that it's negatively correlated to US interest rates and we should see better performance out of that platform as rates start to rise, but do you think you face a stiffer headwind, sort of that investor mindset that they shouldn't be buying fixed income funds when rates are rising? Yes, I think there's some truth to that and I think, certainly, that's why we debate even how advisors place it in their portfolios to say this is part of their fixed income. It's almost -- we would argue it should be an alternative 2014 TheStreet,. All Rights Reserved Page 9 of 11

10 or global macro or something other, because the duration exposure is so low. But, I also think that -- and it's part of the redemptions that we saw when rates rose earlier was exactly that, that people just say we're going to lower our exposure to fixed income so you do have a risk there. But I also think that the market will differentiate fixed income once you have a real rising rate environment and they look at returns and this will stand out as something that holds up very well in a rising rate environment. So I think that, that will be the bigger driver over time, and if you do well in a rising rate environment there's not going to be many places to go, and hopefully that's where you'll get some attention and growth. Greggo ry Warren (Analyst - Morningstar): Good on that front. I guess my other question relates sort of to where we're looking at expenses and margins for the year. I think you noted in the prerecorded call and also a little bit here that compensation expense might be a little bit higher this year than it was last year, and you'll try to make up for it in other areas in the P&L but is the assumption that margins won't be significantly better than they were last year, that we're not going to see an expansion of margins? Is that sort of the takeaway we should have from that? I think it's a revenue story as much as it's an expense story, we've seen Assets Under Management level decline the last two quarters, that's eventually going to reflect itself in the growth rate of revenue year-overyear. So we will -- and when we have some flexibility on the expense side and we will react to that, so it's really challenging to say whether margins will be the same or different year-over-year. I think the best guidance I could give you is to look back to see what happened in 2008, 2009, 2010, and some of the actions we took back then to see what flexibility we have. Greggo ry Warren (Analyst - Morningstar): Well I hope it doesn't get that bad. Oh, but that's like worse case scenario, which, I think we reacted pretty well there. Greggo ry Warren (Analyst - Morningstar): It was fantastic through that period. Well, thanks for taking my questions overall. I'll get back to you if I have anymore. And our next question comes from Eric Berg from RBC Capital Markets. Eric Berg (Analyst - RBC Capital Markets): Good morning, it's Eric Berg from RBC. Greg, it seems like a number of your competitors, your direct competitors, are recording strong flows in fixed income despite the prospects for rising interest rates. Whether it's in passive strategies or in active strategies that are less than traditional, unconstrained, total return, there are a number of competitors that I could cite that are reporting solidly positive fixed income flows. I have sort of a two part related question, one question with two related parts. How are you feeling about your overall around-the-world fixed income flows and what are the prospects near-term? Well, I think the fixed income picture, while there's certainly a consensus that rates are going up, the other consensus is not within the next year or so, so fixed income has performed extremely well, and those with a 2014 TheStreet,. All Rights Reserved Page 10 of 11

11 longer duration have done even better. And then you've had a little bit of dislocation in the marketplace, as we know, and that created some movement where I'm sure there's one firm that's not enjoying large fixed income flows right now. So that's resulted in some other ones having very strong inflows. I think we have very strong funds in those areas. We have seen growth not to the level that the other more institutional-oriented players that match up, I think a little bit better as far as what the consultants are going to drive and we're getting some of that opportunity but probably not to the level of a couple of others. So we -- I still think that's a good opportunity for us and one that we, again, we've seen incremental growth and positive flows but I think not to the level that a couple of other names have. And that's really what you're speaking to and I still think that, that is a good -- I'd put that on a list of still growth opportunities for us, where we have funds, we have strong records in that area, and sometimes it's just, get pushing up between the two or three more obvious names there in the institutional market. Eric Berg (Analyst - RBC Capital Markets): Thank you. Thank you, and I'm showing no further questions at this time. Okay, well thank you everybody for participating on the call and we look forward to speaking next quarter, thanks. Thank you. And thank you, ladies and gentlemen. This concludes today's conference. All rights reserved (c) 2014 TheStreet,. Please feel free to quote up to 200 words per transcript. Any quote should be accompanied by "Provided by TheStreet" and a link to the complete transcript and Any other use or method of distribution is strictly prohibited. THE INFORMATION CONTAINED IN EACH WRITTEN OR AUDIO TRANSCRIPT (the "TRANSCRIPT") IS A REPRODUCTION OF A PARTICULAR COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION. THE TRANSCRIPTS ARE PROVIDED "AS IS" AND "AS AVAILABLE" AND THESTREET IS NOT RESPONSIBLE IN ANY WAY NOR DOES IT MAKE ANY REPRESENTATION OR WARRANTY REGARDING THE ACCURACY OR COMPLETENESS OF THE TRANSCRIPTS AS PRODUCED, NOR THE SUBSTANCE OF A PARTICULAR COMPANY'S INFORMATION. THE TRANSCRIPTS ARE PROVIDED FOR INFORMATIONAL PURPOSES ONLY. THESTREET IS NOT PROVIDING ANY INVESTMENT ADVICE OR ENDORSING ANY PARTICULAR COMPANY TheStreet,. All Rights Reserved Page 11 of 11