Ladies and gentlemen, thank you for standing by. Welcome to the OMAM Earnings Conference Call and Webcast for the Third Quarter 2017. During the call, all participants will be in a listen-only mode. After the presentation, we will conduct a question-and-answer session. [Operator Instructions] Please note that this call is being recorded, today, November 2nd at 10:00 A.M. Eastern Time. I would now like to turn the meeting over to Brett Perryman, Head of Investor Relations. Please go ahead, Brett.

Thank you. Good morning, and welcome to OMAM's conference call to discuss our results for the third quarter of 2017. Before we get started, I would like to note that certain comments made on this call may constitute forward-looking statements for the purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as expect, anticipate, may, intend, believes, estimate, project, and other similar expressions. Such statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from these forward-looking statements. These factors include, but are not limited to, the factors described in OMAM's filings made with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K filed with the SEC on February 22nd, 2017, under the heading Risk Factors and our current report on Form 8-K filed with the SEC on May 15th, 2017, and our quarter report on Form 10-Q filed with the SEC on August 10th, 2017. Any forward-looking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information or future events. We urge you not to place undue reliance on any forward-looking statements. During this call, we will discuss non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, which is available in the Investor Relations section of our website, where you will also find the slides that we will use as part of our discussion this morning. Today's call will be led by Jim Ritchie, our Chairman and Interim Chief Executive Officer; Aidan Riordan, Head of Affiliate Management; and Steve Belgrad, our Chief Financial Officer. I will now turn the call over to Jim.

Thank you, Brett. Good morning, everyone, and thanks for joining us today. I will begin the call with some opening observations, then turn it over to Aidan and Steve to walk through our results in greater detail. Of course, we'll be pleased to answer any questions you may have. The strength of our affiliates combined with a consistent execution of our growth strategy over time has positioned us for a strong operational and financial results during the third quarter and the year-to-date. OMAM reported record earnings this quarter, ENI per share of $0.43, an increase of 34.4% over the same quarter of 2016. Growth from market performance and net client flows, and higher fee, in-demand products, and the resulting increase in management fee revenue combined with accretion from our Landmark investment and a full quarter impact of share repurchases in the second quarter, drive our strong results. Net client cash flows of $500 million included $7.3 billion of inflows at an average fee rate a 54 basis points. These inflows were primarily into global, international, and emerging markets equities and alternative strategies, which combined currently comprised about 60% of our AUM. Inflows into these higher margin assets outweighed lower fee outflows up $6.8 billion, primarily in U.S. equities at an average fee rate of 40 basis points. And that result is an additional $12.2 million of positive annualized revenue. I would note that for simplicity as we move toward completion of the Heitman separation, we have removed Heitman's flows and AUM as of July 1. The equity market environment favored active asset management again during the third quarter and our affiliates produced excellent results across a range of investment styles and asset classes. Strategies representing 69%, 67%, and 81% of our revenue outperformed their benchmarks on a one, three, and…

Thanks Jim, and good morning, everyone. On slide five, we provide greater detail on our three and 12-month AUM progression and AUM breakdown by affiliate. Taking into account the removal of Heitman, our assets under management have increased by about 14.5% over the prior year and about 3.7% over the prior quarter. Our affiliates in our asset base are well diversified both among and within asset classes. Again reflecting the removal of Heitman, just over half of our AUM is in global international and emerging markets equities. Markets that favor these strategies in recent periods and they're very much in demand among investors in the U.S. and around the world. We have strong participation in international equities which account for 23% of AUM as well as global equities currently 16% of AUM and we continue to see growth in our emerging markets equity products currently about 12% of AUM. Looking ahead, as Jim mentioned, we remain focused on diversifying our existing affiliates' products offerings for collaborative organic growth initiatives and also broadening our asset base through additional affiliate acquisitions, particularly in the alternative investments area where we see opportunities across a range of liquid and illiquid investment strategies. Slide six shows a quarterly breakdown of our cash flows on an AUM and revenue basis. These charts illustrate our success in expanding our product offerings in fast-growing, higher-fee segments of the industry. As you can see from the left hand chart, the institutional nature of our business can produce large fluctuations in NCCF on an AUM basis. However, as you see on the right, the revenue impact of our NCCF has been significantly positive. We've seen a sizable increase in the average fee rate on inflows in 2017, up from 43 basis points in Q1 to 53 and 54 basis points in Q2 and Q3, respectively, which has helped generate $26.1 million in annualized revenue for the year-to-date. On slide seven, we provide a further breakdown of flows by asset class. And as you can see, the drivers behind the increase in our average fee rate and revenues will flow into alternative strategies at 93 basis points in global non-U.S. equities at 41 basis points far outweigh outflows and low lower fee U.S. equities at 24 basis point. Slide eight provides a look at our investment performance. The market environment has been favorable for active asset management and our affiliates have been well-positioned for good performance. On a one and three-year -- our one and three-year returns were down slightly from the prior quarter, but remain very strong led by outperformance in international small cap, global value, and domestic mid-cap value products. Our five-year performance increase was attributable to increased returns in domestic mid-cap and dividend-focused value products. As I mentioned last quarter, in a stable market environment, we view these performance levels as consistent with our expectations for the portfolio over time. Now, Steve will provide additional commentary on our financial results.

Thanks Aiden, and good morning. Turning to slide nine, the third quarter continued the positive trends from the first half of 2017 and resulted in record ENI financial results. This quarter benefited from the same factors that drove growth earlier in the year as average AUM consolidated affiliates increased, e-rates expanded, NCCF revenue was positive, and accretion from Landmark continued as expected. We also saw the positive impact of our combined 11 million share buyback in December 2016 and May of 2017, which decreased our share count by approximately 9%. The first nine months of 2017 sets us up for a strong year overall as we saw market inflow-driven growth in our higher-fee global non-U.S. asset classes and alternatives. The EAFE [ph] and emerging markets indices increased 20% and 27.8% respectively in the first nine months, while lower fee large-cap value products in the U.S., those indices went up 7.9%. In addition a number of our larger strategies generated output during this period, which further enhanced AUM growth beyond market levels. Finally, Landmark continues to generate cash flow, fee rate and earnings accretion. As Jim indicated we're close to finalizing a definitive agreement to sell Heitman back to its management on the terms we described last quarter. Expected proceeds are $110 million in cash which represents approximately $73 million on an after-tax basis a current tax rates. The transaction is expected to close around year-end, but the latest quarter and first nine months of the year Heitman represented 6% and 4% of our after-tax ENI respectively. Following the sale while there may be modest short-term dilution until that cash is put to work. We would expect the medium-term financial impact of this transaction to be immaterial. Under U.S. GAAP equity accounting, our share of Heitman earnings are included in our…

[Operator Instructions] And your first question comes from Craig Siegenthaler with Credit Suisse. Please go ahead. Your line is open.

Thanks. Good morning. I want to start on the base fees; the fee rate on the outflows was actually the highest in 3Q since you've been public. And I just wanted to know what is driving this? And also if there's any longer-term trend here?

Yes, I think part of that is probably a reflection of you know Heitman coming out because if when we look at the number with Heitman in you know it would be slightly lower than with Heitman out. But I don't think that there is any you know any real particular trend that we see when we look at the key products that are in inflow and the key products that are an outflow you know they're generally the same products in this quarter as what we saw in previous quarters. So you know obviously when you have the higher fee rates it just means that there's probably some you know non-U.S. global outflows coming through. I guess the other thing as well is even though you can't really see a lot of it, Landmark would have a normal amount of distributions coming out you know from their prior funds that are you know shown as hard asset disposals because effectively you know that's what we're doing is we're distributing assets back to clients. And those obviously are a much higher fee rate as well. So as you know have even though it's a relatively small amount in terms of dollars, the basis points that are earned on those fees are much higher as well. So I suspect that's part of the difference also.

And then just as my fault you know it's nice to see that the global distribution team has a number of large wins year-to-date. But can you just remind us how many senior sales people are included in your non-U.S. sales effort now? And also maybe could you size for us the net flow contribution either this quarter or year-to-date over the last few quarters just so we can see how much it's been contributing?

Yes, its Jim we're and we would rather not get into quarterly disclosures of sales performance but we certainly will do it at the end of the year. When we capture the full year-to-date. We have people positioned around Hong Kong, Korea through most of what we think of as Western Europe as well as the U.K., Steven are kind of counting on our fingers here…

Really frocking of the band ish, I think is a good guestimate. The non-U.S. salesforce.

Thanks guys.

Your next question comes from Bill Katz with Citi. Please go ahead. Your line is open.

Okay. Thank you very much for taking my question this morning. Give us a sense within Landmark of where you think you are in terms of the capital raising cycle there in terms of the secondary private equity or other areas as well? Thank you.

Sure, Bill, it's Aidan. With regard to I think your question as a capital raising cycle on their current funds as opposed to the general market cycles all and is like that way. You know with regard to the timing of their fund, the expectation is that the two funds that are in the market will end there one at the end of Q1 2018. So, from a timing standpoint that gives you a sense as to how far along they are and from you know a directional standpoint they're very much in line with the expectations that we had given the targets for both of those funds.

Even after you have the fundraising process over you know the way we count assets in our AUM is fee paying asset. And so as funds are raised you include all those assets in your fee paying assets. There also to the extent that there are co investments by clients or side pockets by clients that don't pay fees when initially committed and don't pay fees until they're actually put to work. We would actually include those assets over time as capital is drawn on those products.

Okay. That's helpful. And just a follow-up, I guess in your opening comments you mentioned that you're hoping to introduce a new CEO in concert with next quarter earnings I presume. Could give us a sense of the type of profile of the people you're speaking to in terms of what incremental skill set is standing out to you as you sort of look to transition to a promised yield?

Yes, sure. We've been really pleased with the number of candidates that have been raised thus far. And we're really heavily in an interview phase with you know quite a number of them. We're seeing deep experience in the asset management industry kind of across the full breadth of experience. We see candidates. I've probably mentioned before with a strong understanding of the asset management space new toward the emerging trends. And as you might expect you know strong executive talent. We feel we have a very strong team here in Boston. We're certainly looking for someone who can come in hit the ground running to complement that.

Okay. If I can take one more question, Steve perhaps for yourself, so you mentioned the proceeds of Heitman. I was wondering if you could sort of talk us through sort of the walk through of where you expect the debt to EBITDA ratio sort of trend as you sort of think about the impact of that? And as you're thinking into next year sort of balance in the commentary of CEO and the way -- in the near-term early stage discussions with acquiring or as new affiliates and versus buyback how are you thinking about capital deployments next year?

Yes, I mean that if you think about the EBITDA that they contributed relative which I think is -- think was the nine months -- roughly nine and a half million. So you know annualize -- annualized that about $12 million even. And you consider that relative to the $73 million of after-tax proceeds. No, I think it's a deleveraging of that EBITDA. At the same time, I think as we look at capital management overall even though the stock is at levels that we're not happy with right now. Our view is what can we best do to get that PE multiple up to be more in line with certainly first the multi between peers and then hopefully over time the peer group. And you know we've bought back 9% of our shares so far that hasn't really made you know may -- you know it's improved our EPS certainly but it hasn't really improved the PE. And so I think where we believe the best use of proceeds from Heitman and the best use of our capital that we don't need for dividends and seed capital and that sort of thing would be to be able to use that for an acquisition. So, that's what we're thinking about. I mean now that in particular, I mean Heitman was sort of our real estate platform but now the Heitman is going away, you know we're beginning to look at other real estate opportunities. You know we're excited about it. And look we'll hopefully end up with real estate which is a core asset class we think you know of the size of contribution to our earnings that was greater than what we were getting from Heitman given that 50/50 ownership split. So, you know I think that's the sort of way that we're thinking about it. We'd like to be able to you know have a higher proportion as Aidan said coming from the liquid odds of which real estate is certainly one of the key ones that's out there.

Okay. Thank you very much.

Sure.

Your next question comes from Rob Lee with Keefe, Bruyette & Woods. Please go ahead. Your line is open.

Thank you. Good morning. Thanks for taking my questions. This may be a couple of questions. First is of the affiliate -- of the 100 odd million of affiliate cash, I mean how much of that is actually available to be if any to be upstream to the holding company. And you know as we may be falling on Bill's question, we think about kind of capital usage. I mean you have some contingent payments out there for Landmark coming up which I'm sure you want to make because it means good capital raising you've got, caught in another payment for DTA coming up in the short-term. So, just trying to kind of put all the pieces together understanding where your debt to EBITDA is now, but you also have some capital demands kind of coming up, so--

Yes. Why don't I get right to that question because that's what we really look at. As we look at the period between now and, call it, the end of 2018 and even though Landmark payment is due technically in 2019, let's just count that in. If you know the maximum amount that could be is about $225 million. We sort of scaled that back a little bit for our own estimates. And then we also have another $100 for the DTA, which is actually generating cash flow each year as well because obviously, we're the beneficiary of those DTAs which reduce our cash taxes. But if you think about those two payments as well as our dividend and co-investments and all that, the way we think about it is when you include the $73 million that we're getting from Heitman on an after-tax basis and our leverage capacity to get to 2.25 to debt to EBITDA, that would give us approximately $225 million of acquisition capacity between now and the end of 2018. So, taking all those cash flows that you're talking about, our expected earnings in the business, cash is coming to us from the affiliates, we basically have a have a pool of $225 million. The specific question you asked on how much of the $126 million we have access to. On a short-term basis, we have basically intercompany credit lines between us and the affiliates. So, in theory, if we wanted to, we could borrow that money short-term. That's really made up partly of just accruing for bonuses, particularly this time of year. So, they need to get that back. But a lot of it is money that's going to be coming to us anyway because as you pay out your distributions every quarter, you don't pay 100% of your distributions out in case you have a bad quarter at the end and that money is going to both employees and to us. And so part of the $126 million is just money that's sitting at the affiliates waiting to get paid out to us for our distributions for the earlier part of the year and that will get paid probably in the first quarter of 2018 as a catch-up.

Okay. So, that money of the affiliate is not, for example, cash that they accumulate themselves on their own balance sheet for Seed Capital, it's really kind of just the timing between spare cash output?

Yes, it's just a timing issue. And we try to balance that out and sort of manage it in an efficient way. I mean obviously as you can see we don't have any drawls on our credit facility right now. But, yes, we had access to it if we need it, but not all that walking belong to us.

Right. Okay. And then maybe just one follow-up. I guess this quarter it's been the inevitable MiFID II questions, so since you do share profits with affiliates, I guess its relative to some of the other multi-boutiques and may or may not be little bit more impactful for you guys. So, can you maybe just update us on, I don't know if it's affiliate-by-affiliate decision or you do it at the corporate level, how you guys are thinking about dealing with MiFID II costs and related research costs?

I mean look, we've had discussions obviously with each of the affiliates. It certainly starts at the affiliate level and it's their primary decision. A little bit depends I think on changes that may happen in the U.S. as a result of MiFID II. In terms of the first impact of it, we have just very, very little with respect to sort of European asset management and so it's not going to have any kind of material perspective. As we think about where we are within the U.S., we don't really see it having a big impact either, but to the extent it did, it something that we would expect to probably flow through the economic waterfall and be just part of operating expenses if they went up.

Okay, great. Thanks for taking my questions.

Sure.

Your next question comes from Chris Harris from Wells Fargo. Please go ahead. Your line is open.

Thank you. On the taxes I know you guys are looking at various options, but if we get corporate tax reform in the U.S. and a much lower rate in the U.S., might you guys consider dropping the U.K. domicile and just moving the whole structure to the U.S. or is that not an option under consideration?

No, I mean look it certainly when you think in terms of the theoretical, we certainly absolutely look at that and there are pluses and minuses of a U.S. domicile that probably go beyond just pure taxes. So, even if you were to pay a slightly higher overall tax by being U.S. domicile, there may be advantages in terms of simplicity of structure, which is always I think a good thing in simplicity of tax rate and that kind of thing that would probably benefit us. So, look the first thing is to see how this tax plan comes out what's actually proposed and then we'll certainly have everything on the table in terms of trying to figure out whether we stay where we are and keep the benefits that we have or think about domicile in the U.S.

Okay. And on the multi-asset strategy that you guys are rolling out, sounds like you're pretty excited about that or the opportunity for that. How long does it take for new strategies to kind of have like a pretty decent impact? Or how long is it going to take for you guys to bode performance track record there? Is it that kind of like the one to three year horizon we should be thinking about or is it something different than that?

Sure, it's a good question. I think the way to think of it is when we put Seed Capital and work with an affiliate, the expectation is you're building an investment track record that could take three years to season. Certainly from time-to-time investors will come in earlier to those strategies and I would say it's not inconceivable to think that that this sector and track record of Acadian could support that. But I think when we sit here, we're thinking about kind of that one to three year seasoning. I think with regard to the market size, there's certainly momentum with regard to the asset class and so we think that there is a strong potential for flows there in the medium term.

Thank you.

Your next question comes from Michael carrier from Bank of America Merrill Lynch. Please go ahead. Your line is open.

Thanks. Within the alternative bucket, just wanted to get a sense. Once the fund raising on the two funds is complete in maybe post 1Q 2018, are there any other products that would be in that category that would be generating sort of ongoing flows? Just wanted to get a sense of like what's the -- post this fundraising cycle, what's the potential there?

Sure. This is Aidan again. I think when you look at Landmark and our thesis in making the investment, the thought was those asset classes grow, there's going to be secondary activity in a broader set of classes beyond just real estate and private equity. The company does have a track record of making secondary investments in both real assets and credit either in SMAs or carve-outs from existing funds. But I think it would be reasonable to think that over time, we might look to help them build some products in those segments. And then I would say also there's some intersection between what Landmark does as well with making investments in GP pieces of private equity funds and we're looking at all those segments.

Fund raising that would take place at Campbell goes into the alternative. There's also some hedge funds at various affiliates that go into that bucket as well. And then obviously as the -- some of these side pockets that are set up with co-investments that are set up by clients as that capital is drawn down, that would go into the bucket as well.

But clearly I mean to your point is that it is a neckline cash flows in that category will probably tend to be cyclical where you have go through a fund raising cycle, you go through the investment, and you're back out of the fundraising cycle again.

Right. Okay, that makes sense. And Steve maybe just one on the margin. It sounds like there's still some upside with scale as we get into 2018. Just wanted to look at kind of that opportunity versus your commentary on Heitman and doing how that's going to maybe be a little bit less growth or lower the growth rate, just want to make sure we get that right.

I mean Heitman because -- the great thing about equity accounted affiliates, obviously, it's a 100% margin. So, pulling Heitman out even though they are in just that other income line, pulling Heitman out basically has about a 1% impact on the operating margin. But then beyond that, I think as you look at continued growth of the affiliates that have scale -- that spreads the scale across the center, global distribution, and those initiatives, I think that's where you probably have a little bit more upside to come on margin. Likewise, I think if you look at the affiliates that are in fundraising mode now as they finish the fund raised, margin will increase there as well, which will have a positive impact on the weighted average margin across the company. And then I -- maybe it's wishful thinking, but I continue to look at performance fees as another area where we've been weak over the last couple of years relative to where we were in previous years and we're carrying that negative performance fee. And I would hope over time as performance fees pick-up, that's probably gives us another opportunity for some margin increase. But look -- I mean the way we sort of think about the business is almost all of our affiliates are operating with very, very good profitability and we want to make sure there's not a huge opportunity to increase the margins at most of the affiliates because in each of them, we're having conversations and we're focused on making sure that we reinvest in the business whether it's in technology or people to make sure that our growth is sustainable. And so we're balancing out margin with sustainable growth and we're more focused on that sustainable growth than in the short-term certainly. That requires some investment and so that's what you've seen this year. I think you'll continue to see it you know next year. So, I don't -- as I think about our margin, unless there's a substantial rally in the markets like we've had, you've seen over the last year. If you go back to more normal type, 5% to 7% equity markets, I don't really see our margin getting much into the 40s. I mean if we could get into the 40s, that be great, but it's sort of -- I'm quite happy it's sort of a 40%, 41% type of margin if we could get there, but various things have to happen.

Got it. Makes sense. Thanks.

Your next question comes from Kenneth Lee from RBC. Please go ahead. Your line is open.

Just want to ask one on the potential acquisitions. What factors would drive the decision towards either an outright ownership of an affiliate versus sort of like a minority ownership stake?

Sure. I think that depends in part on what the folks who are looking for a partner are looking for. I would say with regard to the strategic value proposition that we bring and the fact that folks are looking for distribution in capital, a number of those things are going to lend more carefully towards a more sizable investment. I would say there are certainly trends in the alternative space where the needs of sellers or what they're looking for from partners and maybe some of the other precedent transactions that are occurring might gravitate more towards a minority structure. I think one of things that's good about where we sit is we can look at any of those type structures and plug them into the value proposition that we have.

Okay, great. And just as a follow-up, I know that you spoke just briefly about performance fees. But as we -- as Landmark starts representing increasing percent of AUM, I mean, should we expect a little bit more contribution from performance fees from that affiliates?

Not for a long time because as I think we've talked about the carry-on individual funds doesn't flow through the Landmark P&L. It basically is shown separately from the P&L that we purchased. So, for the current set of funds, the real estate and private equity funds, we're committing to an investment capital to those products along with the management team, and therefore, we would participate in a share of the carry. When that carry gets calculated and book X years down the road, it would come through as performance fee, but that's a long way off.

Okay, got you. Thanks.

Sure.

Your next question comes from Andrew Disdier year from Sandler O'Neill. Please go ahead. Your line is open.

Hey, good morning everyone.

Hey Andrew.

Hey Steve. So, I guess with the expectation of introducing a new CEO in the next call and you kind of couple that with the expectation of HNA closing at the end of the year, I guess question is are candidates and their subsequent hirings, is it contingent upon the close of that deal? And then are there kind of preferred candidates who would like to inherit OMAM with a particular financial structure, i.e. you thinking about leverage and thinking about cash on hand?

Andrew, its Jim. The simple answer to both questions is no. We don't have anyone that's holding out to see when the closing takes place and there is no one who's lodged economic considerations relative to that. It's just actually, it comes down to frankly an embarrassment of riches. We have a lot of good candidates.

Understood. And then I guess on the deal front, markets, they have been quite favorable for some time. Would you expect some type of pick up in a more stressed environment?

In M&A?

Yes, as far as potential partners.

I think it actually depends a little bit on what type of M&A. So, I actually think positive market environment encourages a lot of people to go out and try to sell their company, because why not sell when markets are high. We've typically found that given the margins that are in the asset management business, markets themselves don't necessarily drive a lot of these firms out of business. I mean, it's sort of outflows combined with the down market may take some capacity out. But I'm not -- if there was a firm that had significant outflow issues and you had a down market, I'm not quite sure who would want to take that on. So that would be a difficult environment. I think where there is maybe more activity in a down market, maybe sort of stock-for-stock-type deals and just general stock-for-stock consolidation within the industry, because that's an environment where people are looking for cost savings as part of their acquisition strategy, now they didn't have the market to help support them. So, I think our type of investment in affiliates, we're seeing a lot of that right now and that's more of that in the strong market because sellers can just sit back and wait for the strong market to come back, they don't want to sell their company for less than it was worth. That's what you saw in 2008/2009. But I think when you have a weak market in this environment, you probably will see an acceleration of consolidation within the industry.

Got it. And one more, if I may. If I understood the comments correctly, I heard a minority transaction was something that you're looking into, is that -- does that differ from the prior strategy for majority type position?

Not really. I would say we have historically spent probably more time my majority transactions. But today, we're looking at a much wider array of opportunities in that space. So, I don't think it's a change.

I think our first M&A transaction as a public company, we thought it should be right down the fairway and that meant a majority transaction, but we've been preparing and we've been speaking about how our model works within the minority contacts, and we think it absolutely works and as we talk to potential partners for minority stakes in the industry, I think that sort of confirms to us that the same things we can bring to the table as partner to a majority transaction, many of them we can bring in a minority situation as well.

Understood. Thank you.

Thanks.

Your next question comes from Michael Cyprys from Morgan Stanley. Please go ahead. Your line is open.

Hi, good morning. Thanks for taking the question. Just curious, if you could share some color on the institutional pipeline, how that compares today versus a year ago? What sort of opportunities are you seeing out there by, say, client-type and strategy? How active are you today with RFPs?

Look, I think the best way to answer that is just look at the trends and dynamics that have driven the portfolio thus far, which would be a combination of non-U.S. kind of global assets as well as alternatives. We continue to see those trends for sure driving us forward and also pointing us towards where we will go from an M&A standpoint. Beyond that, you got to remember, there is a certain lumpiness and a seasonality to our business that we lived through, but there's nothing that's really changed in terms of the order of magnitude and the outlook in terms of growth.

I mean I think probably one of the differences from now versus a year ago is I think you almost had a systemic issue a year ago of underperformance of active managers and that was sort of accelerating the passive headwind. And I think now -- and this is probably true not only to us, but many of our peers, active management has performed much better relative to benchmark in the current investing environment. And so I think the validity and the ability to add alpha is more proven out and is lessened out in this environment than a year ago.

Great. Thanks. Just as a follow-up question, I just want to circle back to some of the points that you mentioned on the scale. And Steve, I know you mentioned some scale but it wasn't to 2018. So, just curious, if you could share your perspectives on scale, it's increasingly important in the industry today, but as I look across your affiliates, most are under $25 billion in AUM. So, I guess how much scale do you think you have, what actions you're taking to improve your scale, and what's the opportunity set for maybe considering centralizing more functions at the center as most are done at these later today?

Well, actually, I mean, that's a really good question because I think a lot of our scale will come first at expense structure we have at the center as the affiliates grow, but also a lot of it really -- I mean, the interesting thing about multi-boutiques is that you sometimes have to put aside sort of the business locate study and think about the culture and what makes them strong businesses that clients want to give their money too and a lot of that relates back to culture and having their own brand and that sort of thing. And so what we try to do is to have the best of all worlds and to try to -- except the certain parts of that might look subscale or actually probably the best thing from what a client would want and what is best for generating alpha. But at the same time, what we do at the center is to try to figure out where are the areas that we can bring the benefits of a $235 billion asset management firm to help the affiliates grow and that's a lot of the activity we do in the center in terms of product development, in terms of global distribution, because it would be very inefficient for all of our affiliates to have their own global distribution teams. But when we look at -- and then we try to look at technology and are there things that we can do on a coordinated basis, but I think the challenge is that each of our -- I mean, most of our affiliates that are really driving the business forward are its scale. If you think about the scale being a multi-boutique, our boutique should be in sort of 35% to 45% margin -- or call it 40% to 50% margin. If you look at the P&L of our affiliates, they are absolutely generating margins that are a lot better than some of the -- some larger organizations. And so we think what we're trying to do is can we keep those margins, can we keep the culture and also try to be thinking towards the future and bring things to bear at the center that are going to help those affiliates continue to grow in a scale kind of way.

Okay. Thanks.

Great. Thank you.

This concludes our question-and-answer session. I'd like to turn the conference call back over to Jim Ritchie.