Greetings, and welcome to the Affiliated Managers Group Second Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Alexandra Lynn, Vice President of Corporate Strategy and Investor Relations. Thank you. Ms. Lynn, you may now begin.

Thank you for joining Affiliated Managers Group to discuss our results for the second quarter and first half of 2013. In this conference call, certain matters discussed will constitute forward-looking statements. Actual results could differ materially from those projected due to a number of factors, including, but not limited to, those referenced in the company's Form 10-K and other filings we make with the SEC from time to time. We assume no obligation to update any forward-looking statements made during this call. AMG will provide on its website, at www.amg.com, a replay of the call and a copy of our announcement of our results for the quarter as well as the reconciliation of any non-GAAP financial measures to the most directly comparable GAAP financial measures. With us on the line to discuss the company's results for the quarter are Sean Healey, Chairman and Chief Executive Officer; Nate Dalton, President and Chief Operating Officer; and Jay Horgen, Chief Financial Officer. With that, I'll turn the call over to Sean Healey.

Thanks, Ally, and good morning, everyone. AMG reported economic earnings per share of $2.18 for the second quarter of 2013, which is a 31% increase over the same period of last year while our assets under management, now approximately $470 billion, grew by 22% year-over-year. Our results were driven by continued strong business momentum with outstanding organic growth from net client cash flows and excellent investment performance across our equity and alternative product set. We've generated a record $13 billion of net client cash flows in the second quarter, which was our 13th consecutive quarter of strong positive net flows. Through the quality of our Affiliates and the diversity of our business across market beta exposures, product areas and client geographies and channels, AMG has consistently generated strong organic growth over the past 3 years through varying market environments, including periods of volatility. For example, even on a difficult quarter for emerging markets equities, our Affiliates in this area continue to generate meaningful net inflows and we remain confident that this will be an area of strong secular growth over time. As in prior quarters, our flows were broadly distributed across our equity and alternative product set and positive across all channels and all client geographies including Asia, Australia, Europe, the Middle East and, of course, the U.S. Our success in generating organic growth reflects both the marketing efforts of our Affiliates, as well as a meaningful contribution from our global distribution platform, including new mandates through every covered region during the quarter. We are continuing to make strategic investments to build on the success of our global distribution platform and further enhance the marketing reach of our Affiliates by expanding the breadth and depth of our capabilities with additional coverage and personnel in key markets and channels around the…

Thanks, Sean. Good morning, everyone. As you saw in the release, we had another outstanding quarter with record net client cash flows and strong relative investment performance. Our results for the second quarter illustrate the themes we've been talking about for several years now. By far, the most important component of our ongoing success remains the investment performance of our high-quality, diverse group of Affiliates, which are focused on truly differentiated return-oriented investment discipline. As you know, we have multiple outstanding products across a broad array of Affiliates in global, U.S. and other developed markets equities, emerging markets equities and a diverse range of alternative products. We also believe that there is some significant favorable macro trends. First, as Sean described, clients are increasing allocations to focus performance oriented managers such as our Affiliates for the alpha portions of their portfolios. Second, while the timing remains uncertain, clients need to increase their allocation to return-oriented asset classes in order to achieve their objectives. Regardless of whether or not a great rotation has started, we are confident that these increased allocations will occur, creating significant additional opportunities for a number of our Affiliates. Now while these macro trends are taking place, we continue to build out our distribution platform to increase our organic growth. We've taken a very strategic approach to leveraging AMG's scale to successfully bring our Affiliates products to clients located around the world. As you know, outside the U.S., our distribution platform focuses primarily on institutional clients. However, we see a very significant incremental opportunity in more retail parts of the markets and, in particular, the U.S. retail markets. Now the natural extension of our U.S. retail platform and to take advantage of the macro trends I referenced, we're increasing our strategic focus on U.S. retail and beginning…

Thank you, Nate. As Sean and Nate discussed, we are pleased with our second quarter results, which reflect our continued outstanding organic growth as well as the strength and diversity of our Affiliates. As you saw in the release, we reported economic earnings per share of $2.18 for the second quarter with net performance fees contributing $0.15. On a GAAP basis, we reported $1.18 for the quarter. Turning to more specific modeling items. The ratio of our EBITDA contribution to end-of-period assets under management was approximately 16.8 basis points in the second quarter. We expect this ratio to return to approximately 15 basis points for the third quarter and, for the full year, we expect it to be approximately 16.2 basis points, which include a reasonable assumption for performance fees. Holding company expenses were $24.1 million in the second quarter and we expect them to remain at this level for the third quarter. With regard to our taxes, our effective GAAP tax rate for the quarter was 35.8% and our cash tax rate was 19.7%. In the third quarter, we expect our GAAP tax rate to decline to approximately 30% as a result of a further decrease in the U.K. tax rate, and we expect our cash tax rate to be approximately 28%. For the fourth quarter, we expect our GAAP tax rate to return to 36% and our cash tax rate to be approximately 26%. Intangible-related deferred taxes for the second quarter were $12.3 million. We expect this number to be approximately $5.6 million for the third quarter, reflecting the U.K. rate change, and expect it to return to approximately $14 million in the fourth quarter. Our share reported amortization for the quarter was 27.8 million and, together with 10.3 million of amortization from Affiliates accounted for under the…

[Operator Instructions] Our first question is coming from the line of Craig Siegenthaler with Crédit Suisse. Craig Siegenthaler - Crédit Suisse AG, Research Division: Sir, I heard the guidance related to share count for 2013. I'm just wondering, given how much free cash flow you're generating now, is there any potential to take out the dilutive impacts of the equity forward sale? And also, what are your thoughts on mixing kind of buyback into the capital return mix, especially if you're doing maybe 1 deal a year going forward here?

So Craig, it's Jay. Let me just take a step back. Clearly, just on the balance sheet, broadly, we continue to position our balance sheet for simplicity, flexibility and capacity. And I think we noted and we have noted that we've lowered our cost of capital this year both through our upgrade as well as the retirement of the senior convertible. And then looking forward, we do have nearly $600 million of after-tax earnings and $1 billion in the quarter of revolver. It affords us the opportunity to not only execute on new investments, which is meaningful -- new investments meaningfully accretive to our earnings, but also we will consider reducing our share count through either share repurchase or the forward on the line.

And just for the record, Craig, we don't like hypotheticals generally, but I definitely don't like your hypothetical about 1 deal a year. We see a very substantial opportunity over the medium- to long-term without trying to time it in the short-term. Craig Siegenthaler - Crédit Suisse AG, Research Division: Got it. And so just a follow-up here, as you become bigger and each of these deals potentially come smaller, if you're still looking at asset managers $10 billion to $20 billion AUM, they're going to be less accretive and require less capital cash upfront, what are your thoughts on, at some point, introducing kind of a nominal dividend as a way to return cash flow to shareholders still?

Well, I think, if you trace the evolution of AMG, we obviously started from nothing and built through the early years as a public company including through the issuance of hybrid securities. There are periods where we didn't want to issue common equity and, obviously, didn't have a large base of cash flow to fund new investments. As we, following the financial crisis, have continued to build our business and generate now a relatively large -- have a large base of recurring and growing cash flow, that, of course, is available to fund new investments. And I think, if we're in the sort of $500 million to $600 million range, we obviously have had many years and expect years in the future where we will have well more than that in terms of new investments. Last year, we had, for example, $750 million in new investments. The question about how the world changes for us and how we look as the company that has $1.5 billion in EBITDA, how we think about capital management and how that affects our new investment strategy, we'll have the same strategy. We'll put the same amount of money to work, maybe more money to work in some years, our position keeps getting stronger and there are still a very large number of outstanding firms for us to invest in. But of course, inevitably, we will find years where we can't put all the cash the business generates to work and in that event, we'll be an even more active re-purchaser of our equity. And we are certainly considering and, I would expect at some point, would have a dividend. But there's no specific plan around that.

Our next question this coming from the line of Daniel Fannon with Jefferies.

I guess just looking at the quarter, wondering if you could talk about the progression of flows throughout the period and if there was any real slowdown given the macro impacts of June, or if there's been any changes as we've kind of gone in to July in terms of your inflows.

Okay. So I think the biggest -- this is Nate, the biggest thing I'd say is, obviously, the lumpy nature of some of the institutional sub-advisory flows, dwarfs the kinds of things you're talking about there were in some product categories. Again, they tended not to be places where we had -- in the main, where we had that much exposure. But if you look at something like -- I'll pick a detail, if you look at something like muni bonds, for example, you would have seen strong first 2 months and then sort of tail off in the third. But I think there's no -- all of those things are sort of dwarfed, as I said, by the bigger sized wins. To the second half of your questions or looking forward, I think we see a really strong -- again, it's a little -- practically it's very early days but both within the Institutional channel and on the more retail side, we see those strong flow patterns continuing.

Okay. That's helpful. And I guess that would imply that the demand for the non-U.S.-based investor for your products still remains quite strong.

Absolutely.

And then, I guess, a follow-up just on the distribution, you talked about the U.S. retail being a focus of improvement or investment. And can you talk about what you're looking to do there? Is that just adding additional personnel or there are other things you're looking changing or improving?

Sure. So let me say one thing to start right. So the basic model, right, is -- for all of our distribution is to bring the benefits of scale where scale matters, and it's helpful without getting in delay. So at this stage, I'd say, the main thing we're still doing is figuring out how exactly to position that business. I mean, we already do have a scale retail business in the U.S., but the main thing we're still doing is figuring out how to position that business given the macro trends that Sean described. We are beginning to make some incremental investments and we expect to do more. But the exact shape of that, I mean, again, the fundamental principle is how do we get the scale that we have and keep adding scale to it to benefit our Affiliates ahead of these trends that we see.

Our next question is coming from the line of Michael Kim with Sandler O'Neill. Michael S. Kim - Sandler O'Neill + Partners, L.P., Research Division: First, just on the deal front, I know timing is always difficult to predict, but just to play devil's advocate, it seems like you've been pretty optimistic on putting capital to work for quite some time. So just wondering if there's anything more specific that you could point to as a reason why you haven't announced any transactions for a while or is it really just a function of markets continuing to trend higher here in the U.S. combined with maybe some volatility overseas?

Well, I think volatility is certainly a factor. But as you heard, we remain very optimistic about our prospects. The short-term is inherently difficult to predict around the pace and timing of new investments, and so we don't really try to guide in the short term. I the medium- to long-term, we see enormous opportunities. And maybe to give you a sense of what you can't see from the outside, we have relationships that we have developed over many years with many of and, I'd say, most of the very best boutique firms worldwide. I've been, in the past 6 months, in 11 countries. And 10 of those, I've met with prospective Affiliates. It's an increasingly global, increasingly broad traditional as well as alternative prospect universe and our position has never been stronger. And so what we have learned over the years is that we need to be patient and wait for the opportunities with the very best firms to develop, which they, as we said, inevitably will because all of these firms will inevitably face succession planning need and want some kind of a transaction to solve that, and we are ideally positioned for that. So I don't worry about -- we don't worry about the short-term quarter-to-quarter impact really at all because we know that the important thing is to wait for the very best opportunities. And our position and opportunity set is -- continues to be outstanding. Michael S. Kim - Sandler O'Neill + Partners, L.P., Research Division: Okay, that's helpful. And then I know it's still a ways to go here but just given the step-up in performance fees in the second quarter and some of the strong absolute and relative returns that you highlighted across of what seems like a pretty diverse set of Affiliates and strategies, just curious to get your take on the outlook as you look out to the fourth quarter and beyond and just kind of thinking about the mix of performance fees going forward.

Jay, why don't...

Yes, I'll start on the current year and then maybe Nate or Sean will do the outlook. I guess, Michael, just as Nate had said, our performance fee opportunity is growing and it's diverse across products and, I'll just add, across structures as well. Our Affiliates have continued to produce excellent investment performance, which is obviously the critical agreement of -- ingredient to the performance fee itself. So we believe that performance fees will continue to contribute in a consistent and meaningful way to our earnings. And as we said in the past, in just a typical year, we see performance fee in the 5% to 10% range of our economic earnings. Of course, this year, with the $0.15 in this quarter and the $0.25 in the first quarter, we've already booked $0.40. So this year, we can't go below $0.40. And in good years, we can see that go beyond 10%. And I think we're well positioned, still early in the year, but with already $0.40 in the bank and then looking forward, there is a good opportunity for us this year.

And in terms of looking forward, I mean, I think Jay sort of captured that, which is the book is very broad both across Affiliates and then certainly even within Affiliates, across strategies, this trend towards including maybe more in across different quarters is, I think, a very positive thing. And then the book is just growing, partly it's just the organic growth of these businesses, some of it's also new product coming online and all the rest of it. So yes, the opportunity set keeps growing. I mean, the base business keeps growing as well, but the opportunity set for performance fees keeps growing. And it is -- again, I'd echo, it's a very broad book across both firms and strategies. Michael S. Kim - Sandler O'Neill + Partners, L.P., Research Division: Got it. And then just finally, any update on Veritable in the wealth management platform now that it's been about a year since that deal closed. And then more broadly, just curious to get your thoughts on just the outlook in terms of potentially adding more Affiliates in wealth management?

Well, Veritable is doing very well. We're quite pleased with that investment, and I think the partnership is doing great. The wealth partners team is hard at work, they have a strong pipeline. I'm obviously not going to comment beyond that but we feel terrific about their prospects. I think, inevitably, given the growth of our base business and the size of the new investment opportunity set amongst asset management boutiques, wealth management is never going to be a huge piece of our earnings picture. But we think it's a terrific opportunity and I'm very pleased with the progress that the team is making.

Our next question is coming from the line of Cynthia Mayer with Bank of America.

So on the proposed increase in the U.S. retail sales, what -- can you talk a little about what specifically you'll be adding and over what time period? And also maybe I missed this, but why, in particular, now?

Well, of the U.S. -- so I don't think we can -- as I said in answer to an earlier question, I think at this stage where the lot of what we're still doing is sorting out exactly how we're going to position this business ahead of the trends that we see, which is the second part of your question, I think we think, as re-risking happens, as people move more assets to return-oriented asset classes, we think the opportunity to participate in that on the retail side is really significant. We have lots of appropriate product that's not really being distributed in those channels today, right? So that's sort of a base piece of it. In terms of things we've done so far, we're done making some incrementals hires and you would see us make some, but it's more, at this point, still work on positioning business.

And as Nate said, this is a business that is at scale, it is a business that is generating very strong flows. I mean, I think, we'd view our U.S. retail flows relative to the industry as being right at the top of the group. So we're talking about building strength on strength and anticipating client flow trends that we're beginning to see, but we're expecting to unfold over the coming years.

Okay. And then also you guys are, of course, quite global. And to the extent that U.S. equity is gaining traction in Institutional channel, do you see any need for more institutionally-oriented U.S. equity managers than the ones you have because -- correct me if I'm wrong, but many of your traditional U.S. equity managers are a little more retail-oriented, right, than say, some of your global and emerging markets managers?

We have a broad set of Affiliates in the U.S. equity category. And I think there's no question that over time, we will find outstanding new Affiliates to broaden that product set even further. And so I wouldn't necessarily say it's a need. I mean, our business is performing very well. Obviously, the addition of more great Affiliates or more new products from the existing Affiliates is going to be helpful. But we think our business is positioned quite well and, certainly, don't find any gaps or needs as much as we see ongoing opportunity.

The only thing I would add to that is, I think, we have -- a number of our U.S. equity Affiliates are institutionally-focused and have -- historically, had largely U.S. -- and it's really an opportunity for us and have had, historically, largely U.S. institutional client bases. And so the opportunity to bring them, as we've done with others, bring them around the world and introduce them into -- through high-quality relationships that, in many cases, are already client service relationships, where we've made a sale already and has found this demand. Again, I'm not sure whether it's a trend yet. I mean, my personal -- I'm not sure if it's a trend or just happened to be a bunch of replacements sort of just coming all at once because the number of firms are having challenges or something. But yes, we were able to play U.S. equity into relationships that our guys are already built around the world over this last 6 and 9 months.

Including with very large sophisticated global clients.

Yes. Yes.

Okay. And also, did you give the mix of flows from overseas clients versus U.S. clients?

I mean, I think it's pretty well split. But I think U.S. might have been a little more, but yes, pretty well split.

Our next question is coming from the line of Chris Shutler with William Blair. Christopher Shutler - William Blair & Company L.L.C., Research Division: Just one quick one for me. On the strength in sub-advisory in the quarter, it sounds like there were a couple of larger mandates, so just curious what product areas or geographies those might have been in? And that you also talked about some larger outflows which, obviously, it's not the bigger picture, but just curious to see what's going on there?

Sure. So the -- I think the bigger sub-advisory wins were mostly -- again, sort of interestingly, U.S. equity and to U.S. clients, to the first part of your question. And then on the losses, there were a couple of large outflows which were -- I'm kind of thinking of 2 in particular -- one was a client closing down a program and another was a client internalizing a product category. So those are 2 that just come to mind, that included the 2 biggest in the quarter.

The next question is coming from the line of Robert Lee with KBW. Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division: Just curious, and going back to kind of the deal with the pipeline. It seems like I can't pick up an industry rag without reading about someone else coming up with the great ideas, raising money to buy stakes in alternative managers and then take them public. So I'm just kind of curious, understanding that why do that if you guys exist, if there are quality managers. But how was that affecting pricing expectations amongst some of the managers you deal with because it would seem like there's a lot of money all of a sudden out there chasing alternative managers and looking to do something along the lines of what you guys have historically done?

Well, I think back, looking here at Nate, and remembering 19 years ago when I was joining AMG, there was AMG and, I think, 4 other competitors that were emulating our approach. And maybe we haven't established our approach yet so they were -- they're trying to do the same thing as well as larger entities like United Asset Management and Legg Mason and Envest, et cetera. And so there has always been competition. I think for most of the past 20 years, the toughest competition has been, what I would call, sort of uneconomic buyer appetite from banks and insurance companies and, occasionally, the public market. And I think in the current period, not only is our competitive position, the strength of our business performance and, most importantly, the quality of our Affiliate relationships and their recommendation of us as a partner, those are all better than ever, the competitive landscape has changed. So there are far fewer competitors. The private public market, I think, is going to be, at least for a while, I think more discriminating. And there are more boutique firms that are quite hesitant to try to go public after what happened and, following the financial crisis, banks and insurance companies are net sellers. So the other entities that are out there that are trying to compete, and I'll separate the sort of other large asset management firms that have a very different business model, which we don't really compete with, so if you look at the universe of competitors that remain, of course, in every given situation, you have to compete, you have to make sure that the prospective Affiliate knows you, trust you, is willing to commit to you. And that's something that we do very well with and we've built, as I said, a strong set of relationships over time. And I think that's going to be the foundation of a series of very attractive investments. So competitors are out there, but they've always been out there and it's not affecting our ability to make new investments and it's not affecting pricing. Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division: Okay, great. And just a follow-up question on distribution. I know, Nate, you mentioned that one of the opportunities in the U.S. retail is just getting more of existing product into the channel. But I'm just curious, if I look more globally, do you feel like all your Affiliates at this point are making -- are starting to make full use of what you've built or are there still Affiliates that are -- maybe just provide some momentum to the channel, too, but more Affiliates you can kind of bring into the channel who aren't currently using it?

Yes. So I would say, I -- the way I would answer it is, the Affiliates are -- almost all the Affiliates with appropriate products are using us somewhere, right? And I think the opportunity set is as we -- and some of this is just, honestly, is prioritization, both on our part and on their part, right, as we work together, thinking out where the highest return opportunity is today -- and I'm playing them into that -- and then beginning to leverage that within a specific geography. Also, as you work with us in the geography and our teams builds expertise in comfort and knowledge, beginning to move that to other geographies, some of that's made easier by working with consulting firms, for example, who really help you bring that around the world. So I think everybody is working with us. That doesn't imply at all that we've got everybody working with us in all the places that they could or should ultimately be as the business scales. Some of it's also, as we do channel development within geographies, that will open up additional opportunities, right? So we're still at -- there are places where we built -- Australia where we've been for 7 years or the Middle East for almost the same amount of time where we built large scale businesses now. But in each of these geographies, there's real opportunity to continue to expand into other channels, which opens up opportunities for additional Affiliates. So an example would be Australia where we've just brought someone on to focus on the sub-advisory channel, which will open up opportunities for Affiliates that didn't really want to build separate account business there but who are happy to build a more packaged product business there. So yes, sorry, long answer but I do think there's much more opportunity to go even though if we are working with most Affiliates.

And the thing that I would add is that, in addition to the extent group of Affiliates, there will be future Affiliates. I mean, you look back a year ago, we had just brought on Yacktman. You look several years ago, there are a number of Affiliates that have been added. And as we look ahead, there will be, we're very confident, a number of really outstanding Affiliates who will want to take advantage of our distribution platform to some extent. Again, we're happy to get flows wherever they come and don't really regard use of our distribution platform as necessarily an end in itself. But I would say, and it is a point that I didn't make earlier, the strength of our distribution platform and the track record of success with industry-leading organic growth over the past 3 years, there's no firm in the industry that is anywhere close in terms of the ability to generate worldwide organic growth in return-oriented product categories. And I think that is very attractive to prospective Affiliates. Again, Affiliates that are successful already, but look at the challenges of building a scaled global distribution business and infrastructure and recognize that, for many of them, that the opportunity to partner with a global scale asset management business that is already successfully generating sales for its existing Affiliates, that's quite attractive. And so that's both an added element to our new investment opportunity and gives us confidence as we look forward that we'll have an increasing set of products and capabilities to offer to clients which, of course, makes us an even more valuable distribution counter-party to our clients. Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division: Just one more follow-up question on the distribution. To what extent has, what I'll call, reverse inquiry helped drive product development or flows? I mean, to the extent you establish a relationship, let's say, it's in the Mid East with some particular large asset owners or sovereign wealth funds, and they're saying, "Look, these guys are great, but here's really a particular thing we're looking for," and then you kind of go back and figure out which of your Affiliates is the right one and try to develop a strategy from that. Is that becoming a part of the mix, too? Are there some successes you can point to in that regard?

Well, I'd break your question in 2 parts, right? So the first part, which is leading the flows where maybe we wouldn't have been expecting them other than that way -- and here, I go back to my answer on U.S. equity, which was absolutely what you described, right, which is we've been engaged in conversations with both prospects and increasing the clients. And because of our breadth, we're able to have much more complete conversations, which are what is it your -- what are the challenges you're facing? What are you interested in? We're broad enough that they let us have those conversations and want to have that conversations with us increasingly. So the first step of that is that then let's us play into its existing products, so it certainly does allow someone who had been more focus on global or emerging markets or alternative product sets to come back, and say, "Look, there's real opportunity with this client or that client," [indiscernible] large super, whatever it is, to play U.S. equity into those, right? That's part absolutely, in this quarter, was an example of it, frankly, some of that happening. The other -- the product development, I still think the opportunity to do that, ultimately, is there. I don't think we've yet to even scratch the surface of that.

Our next question is coming from the line of William Katz with Citi.

First question is maybe, Jay, I'm curious, with the spread between GAAP and cash taxes seems to be narrowing over the next couple of quarters. Can you still talk through some of the dynamics that might be driving that? And longer-term, as you're scaling up your assets from organic growth, and just giving a share denominator of your assets, should we now start thinking over the long-term that the GAAP and cash tax rate might sort of go asymptotic with each other?

So the nature of the difference, of course, is the -- the main element is the intangible-related deferred taxes, Bill, that you're aware of. And that is, of course, as you think about it, it protects us on the first dollar and up to a level. And I'd say, I guess, well, say, a deductible level. And then if we grow beyond that, that is exposed to our marginal tax rate. So yes, if our IRDT remains static, then ultimately, they would converge over time, but it is a long time from now because we have, in magnitude, quite a large amount of these deductions. But we do expect substantial new investment activity in the future and, therefore, we don't imagine it being static. So I think if you're modeling both concept of the tax rate but also new investments over time affecting that, we expect that to be a meaningful gap between GAAP and tax, no pun intended. What's happening in the next 2 quarters is really just some noise. The U.K. has given us another tax rate decrease and then, because of that, we're revaluing our balance sheet deferred tax liabilities, which causes a onetime rate change to GAAP, so that was just noise. And then the retirement, the convertibles, create some nice because there are -- there's a small amount of excess deductions that we won't -- that we'll have to give back, but a very small amount. So the next 2 quarters is noise. Longer-term, there will be a gap and it will influenced by the rate of new investments.

Okay, it's helpful. And I know you've covered this now, a substantial amount, in both your prepared remarks and in Q&A, but I'm still not quite clear on exactly what you're going to be doing on retail to try and generate growth. Is it a branded campaign? Is it a great investment spend? And does it come from the Affiliate bucket or does it come from the owner's allocations?

I think you will see, as the quarters unfold, a range of initiatives at the Affiliate level and, certainly, at the AMG level. And the message that we want to convey here is that we are -- it's an area of strategic focus. We're going to commit increasing resources ahead of an opportunity that we see reflecting broader client demand trends. And right now, in the interim, we have a scale business that is generating very strong flows, which we're happy to put up against anybody in the industries, and we feel good about the prospects.

Okay. And just one last one for me. I've been looking at your retail business and my analysis about you now, about 50% of your volume comes from outside United States. Was there anything unique in the second quarter, it really does stand out quite nicely relative to peers, or is it just sort of the cumulative buildup of momentum and diversification of the business?

I think you might be -- so the way I would describe it is there's 3 big parts, probably one of which you're seeing clearly and then the other 2 are probably just much harder to see. So the one you see clearly is probably the U.S. retail flow picture. And then the other bits are both, as you say, non-U.S. retail flows and that includes Affiliates like Artemis who's having very good flows, firms like Beutel Goodman who's having very good flows. So there's some sort of retail flows outside the U.S. that you described. And then the other piece is sub-advisory wins which -- sort of both sub-advisory wins and then just also sub-advisory flows, so flows within existing sub-advisory accounts that are separately branded, branded away. And some of the last 2, that is probably the number you're thinking about, not just in non-U.S.

Our next question is coming from the line of Greg Warren with Morningstar.

You sort of touched on a little bit there in that last answer, but I was kind of curious to see where the bulk of the positive flows are coming from on the U.S. equity side because, as you know, it's an area that has not seen a whole lot of flow on the active management side, and then, I guess, on the international equity side, too, where you're seeing kind of the bulk of the flows coming through and whether you expect that to fall through the rest of the year.

Yes. So let me do those in reverse order. So when you say international, I'm going to take that to mean both sort of the broad, global as well as international as well as emerging markets, so all the non- sort of U.S. but also global, including U.S. flows. And I think there, we're seeing very broad -- and then have, for a while now, we've seen very broad flows in both developed markets and emerging markets, both institutional and retail. And so it's hard to sort of pick one very specific thing. I think the first part of your question on U.S., as we said in the prepared remarks and as we sort of said and answered to a couple of these questions, some of it's been, I won't say, surprising to us because we saw a little bit of it last quarter as well. I'm not sure if it's a trend or -- we're sort of seeing demand both in the U.S. and outside the U.S. Some of what we see in both categories, I would say, is countertrend, broad trend. And some of that's because we are just -- we have very good performance across a range of Affiliates and are adding distribution resources to them, so just as bringing them to places they haven't been might be part of it. And so that's -- sort of overstating it, it's a version of market share that was -- we're taking to places. And then may be related to that -- again, U.S. equity, hard to tell, I don't know if it's -- again, maybe a little bit surprising to us, right, as you suggest. Some of it might be. People allocating to it are beginning to allocate the U.S. equity active. And we have that maybe going on. Some of it, maybe there are some other managers struggling, so -- because a lot of these do seem to be replacement searches. So hard and still early to try to call exactly what's happening.

I would add to that by saying part of what we're seeing, to the extent there's a broad reallocation, is the benefit of a global platform and getting Affiliates, many of which would not have otherwise been exposed to global institutional clients in markets like the Middle East or Australia getting -- having them presented to clients in a way that is leading to some flows. As Nate said, it's too early to call a trend, but I think there's no question we're seeing the benefit of the breadth and scale of our business and of our distribution platform reflected in a number of areas. And obviously, the overall growth is very strong and very broad-based.

I guess, that's kind of a perfect segue to my next question then was you're looking on Yacktman a year on, I mean, the performance has been fantastic for them year-to-date. Have you guys been surprised with the level of flows you've been able to generate pulling that on to your own distribution network? Has it been stronger than what you're anticipating when you initially signed the deal?

No. We obviously believed Yacktman is a tremendous firm, and so I think we had lots of comfort for that. And as we said at the time, we thought we could be helpful. So they had good flows already, right? But we also said, we thought we could be helpful to them bringing them on to a few platforms on things where maybe they weren't. So I wouldn't say we're strived, but also think they are a significant contributor to the flows in the quarter. But for a large number, there were a number of various significant contributors to flows in the quarter including in the Mutual Fund channel, so it's -- it really is a -- it's a breadth story rather than a specific story.

Ladies and gentlemen, we have reached the end of our question-and-answer session. I would now like to turn the floor back over to Mr. Sean Healey for any additional, concluding remarks.

Well, thank you again for joining us this morning. As you've heard, we're pleased with our results for the quarter and we're confident in our prospects for continued strong growth ahead. We look forward to speaking with you again in October.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.