Welcome to the Franklin Resources Conference Call for the Quarter End June 30, 2022. Hello, my name is Daniel and I'll be your call operator today. As a reminder this conference is being recorded. And at this time, all participants are in a listen-only mode. I would now like to turn the conference over to your host, Selene Oh, Head of Investor Relations for Franklin Resources. You may begin.

Good morning, and thank you for joining us today to discuss our quarterly results. Statements made on this conference call regarding Franklin Resources Inc., which are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 just described in more detail in Franklin's recent filings with the Securities and Exchange Commission including in the Risk Factors and the MD&A sections of Franklin's most recent Form 10-K and 10-Q filings. Now, I'd like to turn the call over to Jenny Johnson, our President and Chief Executive Officer.

Thank you, Selene. Hello, everyone and thank you for joining us today to discuss Franklin Templeton's third fiscal quarter results. Matthew Nicholls, our CFO and COO and Adam Spector, our Head of Global Distribution are on the call with me. Since January, macro economic and geopolitical factors have contributed to global financial markets experiencing a period of volatility not witnessed in decades with substantial drawdowns of both equities and fixed income markets. These declines have challenged investor sentiment and industry flows, particularly in fixed income. Assets under management and flows were impacted by these industry wide pressures. We continue to benefit from a diversified mix of assets. As investors look to reposition their portfolios, we've seen interest in our alternatives and multi-asset strategies, which both experienced strong net inflows during the quarter. In addition, notwithstanding flow pressures in fixed income, investor interest remains robust across the asset class. Over the past few years, we've been very deliberate in transforming our company by expanding our investment capabilities, and deepening our presence in key markets and channels. This diversification combined with our financial flexibility serves us well across market cycles, and is creating broader sources of revenue, positioning our company for future success. This quarter, we continue to make progress building our alternative asset business, which is less correlated to public markets, and a source of increasing client demand. We now have specialist investment managers that represent a meaningful portion of the key alternative categories. On April 1, we closed the acquisition for Lexington Partners, a leader in secondary private equity, where current markets create further interesting opportunities. At the end of May, we announced the acquisition of Alcentra, and we're pleased to welcome the Alcentra team to Franklin Templeton. This acquisition was an opportunity for us to enter the European alternative…

Thank you. [Operator Instructions] Our first question is from the line of Glenn Schorr from Evercore. You may proceed.

Thank you very much. So Jenny, I enjoyed the comps in prepared remarks on the wealth management alternatives and everything that you're doing on the education front. So I'm curious from a product standpoint, how you're thinking about just making drawdown funds available or putting retail-specific products in motion, specifically semi-liquid products like order and liquidity? Because we've seen some hiccups lately as markets pull back and seeing gross sales free up, so I'm just curious how you're thinking about the products that you're bringing into that channel?

Yes. No, thanks. I mean -- and Glenn, you know this well. Like the opportunity, obviously, in the wealth channel is tremendous, but it's really complicated, right? And we're learning that through the process of -- the first battle is to be able to get to the gatekeepers, and you're finding that there's a massive amount of education that you have to do. It's complicated to sign up clients, and so we've made investments in companies like Case. We now have our -- several of our products on both iCapital and Case. And then the education piece is a big deal, and so we're actually working with Case through our FT Academy to actually do education and the alternatives. We have things like the BSP, BDC. CP Reef is actually getting interesting traction in the RIA channel. You have to get some size before the wirehouses will put you on their platform even if you pass their due diligence, and so it's really important that you have the relationships in the RIA channel. You may recall small acquisition that we did in the private credit space. So they'd actually -- Benefit Street Partners purchased it, but it was -- they had experience in REIT with the RIAs. So there's a lot of fronts where you have to get it right to actually get the traction. But we feel like our opportunity zone fund, which is on quite a few of the big wirehouses, CP Reef, the BDCs, we even have -- on our venture fund, have managed to get that on some of the private banks. So those are the types of products. It's really more of kind of the interval fund, for fund. Adam, do you have anything you want to add on?

Yes. Glenn, I just might add that when we talk about the distribution of alternatives to the wealth platform, yes, that's a broad strategic effort, but each platform is a little bit different. And so I think one of the things we've been able to do well over the last few quarters is to engage with kind of the head gatekeepers of each platform to say what type of a strategy is really best for you. Some want perpetual, some want other things, some want a product where there's going to be a broad consortium of banks participating the deal, others want something that's more bespoke for their platform. So we've really been able to be a little more specific about what we're offering on each platform, and I think that will pay significant benefit.

I appreciate all that. Maybe just one quick follow-up. You know that there were fixed income flows since 2000. It is what it is, the market was a bit nuts. Now that we've gotten some reprieve in terms of the rate move, the spread move as they've settled in, could we hope and should we expect that fixed income, especially U.S. taxable, settle in with those conditions?

Well, interesting -- sorry. I'll start and then, Adam, you can fill in. I mean, you're saying some of our biggest growth flows are still into fixed income. So while I think there's been redemptions, and obviously, much heavier redemptions on the retail channel than on the institutional channel, we still see strong flows into asset class. And then I would just say one thing that I'm not sure is fully appreciated, we cover the spectrum on views on -- in the fixed income market. So when you look at Brandywine, the Franklin fixed income and Western, we actually -- their alpha generation only correlates 0.15x, right? So there's always something performing in that category. And what you see is whether it's insurance companies or others, there is a need for fixed income types of investments and returns in income generating. And frankly, that may be in the private markets as well as the public markets, but there's definitely demand there. Adam, do you have anything to add?

I would add, Jenny, that -- yes, I would add that -- a few things. One, the asset class is just more attractive flat out with higher yields, and it's less risky with lower degradation, so I think there's just a better data to be had in the fixed income. The other thing we've seen that is on the pension side, as we see folks a little better funded at this point, looking to the eye type strategies, which we're now offering, it's another area where you might see some growth in fixed income allocation.

That definitely makes sense. Thank you.

Thank you. The next question comes from Ken Worthington with JPMorgan. Please proceed.

This is Michael Cho. I'm in for Ken today. I wanted to shift gears a little bit and ask a little bit about the recent launch of the blockchain-based money market fund. I realize it's been in the press for a little while now, but some time has passed. I'm just curious, kind of a few things. One, I mean, what are kind of your objectives of launching a fund on the blockchain? And then two, I think I saw on the seller chain, but -- but kind of what were your considerations when you pick that one versus Ethereum or versus a private chain? And then query, like, again, sometimes has passed. Any lessons learned you like to share so far?

Sure. So let me get -- one, we picked Stellar at the time because Ethereum was something called proof-of-work and Stellar was proof of stake. And the difference as you hear on the criticism of Bitcoin is all about how energy -- what an energy drain it is, and that's because its concept is you have to solve algorithms to be able to post on the chain, and so that's a big energy drain. Whereas we knew that that was going to become more of an issue. Ethereum is trying to shift to proof of stake. And so we ended up -- Stellar was designed as proof of stake, and so we selected that. We decided to build this money market fund, honestly, because we think there will be a convergence. Over time, these types of tokenized assets will become -- I think they'll become securities and they'll be regulated. Now there's other countries that are further ahead probably than the U.S. in this, and -- but I think that there's going to be a convergence, so we wanted to make sure that we understood it and we were able to get in front of the wave. We think ultimately, it will drive down cost in this environment, so we'll be able to deliver the same kind of quality investment products at a lower cost when you build these types of things on the chain. And starting out with the money market fund just made a lot of sense. Honestly, we looked at and we still think it, and you've already -- now you're starting to see it, that some of the products that were deemed "stable coins" that we're yielding 7% and 8%. Anybody who has an investment background knew that there was no way there could be a stable coin. And so we just felt like it made sense for us to to come out with a money market fund. And we worked with the SEC, I mean, literally throughout it. As we both became educated on it, it took a while, and we are an approved 40x money market fund. Where it goes, well, the market's going to evolve as people get more comfortable with this asset class or -- it's not even an asset class, with the technology where they can hold their tokens in a secure wallet, which is complicated in itself. And right now, it's a lot of people kind of playing around that space, but it will become more institutionalized. And we can take all of these learnings. What we built on the Stellar system can launch other 40x funds. So again, it was just really a way to make sure that we're understanding disruption as it comes to our industry, and that we're riding the wave forward.

Okay, great. That is wonderful, thanks Jenny.

Thank you. Next question comes from Dan Fannon of Jefferies. Please proceed.

Yes, hi. Good morning everyone. This is actually Rick on for Dan. So I wanted to tack on to the fixed income discussion from earlier. So just looking at the data that we have available to us, and you guys living this business well, clear that a sizable chunk of the deterioration you guys are seeing in outflows are coming from retail. But just like thinking about the large institutional base and nature of the Western franchise, could you maybe speak on trends and conversations you're having with that client base and the platform more specifically?

Yes. I mean, a couple of things. First of all, in the past 10 years, Western has absolutely outperformed in nine of the 10 years. And in the 1 year, they underperformed 2018. They crushed it in 2019 and made up for any underperformance, so I always like to say be careful betting against the Western. And as a matter of fact, while it's a little early to tell, my CFO constantly reminds me that quarter-to-date Western is in their top decile. So they're proving out that maybe their positioning could be right. So -- but as I said, from here managing the business, we're happy that we have really diversified perspectives on end products in the fixed income space with low correlation. Now, institutional investors, Western has a lot of conversations with them. They understand Western. As a matter of fact, Morningstar just maintained their Gold rating and talked about how they have high conviction on the investment team and that they are an excellent investment team. And so I think we're continue to be very optimistic. I think people slow down for now, but it wouldn't be surprised. And yet, I believe the Core, Core Plus is our top selling from a gross sales fund. So there's obviously still a lot of money going in there.

Yes. And if you look at --

Depreciating sales were --

Yes, we're up quarter-over-quarter. Remember that Core and Core Plus are about 1/3 of Western's total AUM. They have a lot of other things that are doing exceedingly well. And on top of that, even within the Core and Core Plus plan, we've got a very significant institutional pipeline.

Understood.

The next question comes from Alex Blostein of Goldman Sachs. Please proceed.

Maybe we could start with some of the dynamics and some of the numbers around the alt products for you guys. Obviously, with Lexington coming in, there's a couple of moving pieces. So I was hoping maybe just to get a reset on what the fee paying AUM is for the old bucket? I think you guys gave us total AUM, but I was hoping to get the fee paying AUM, the management fees that are being generated by Lexington, not as it's fully in the run rate as well as the kind of the total gold bucket. And then on Lexington specifically, any updates you could provide us with from a fundraising perspective? I think they're in the market with Fund X. How that's going, what the expectations are, when that fund AUM will start coming into the run rate?

Do you want to start, Jenny, okay?

No, no, you go ahead.

Okay. Alex, on the management fee incomes from -- on the management fee revenue from the alternative asset managers that we have, we'll likely aggregate something like, on an annualized basis, $1.2 billion to $1.3 billion. I think we've communicated that in the past, and that's consistent with what we said. That's about 50% up from the previous year. And that excludes performance fees, of course, as we've explained. So that's where we're at on the management fee revenues.

And I would say on the Lexington that they are on schedule despite the environment on their fundraising. So as --

And then -- and then if you're looking for the -- for an idea of what the overall alternative asset business is relative to the size of our franchise, if we pro forma the business for Alcentra, for instance, where about 19% of our alternative management would be in the alternative asset space, 21% of revenue roughly in, probably up to something like 1/4 of our operating income will be from Alternative Assets as a whole.

Got it, all right. I will hop back in the queue. Thanks.

Thank you. The next question comes from Patrick Davitt from Autonomous Research. Please proceed.

Hey, good morning guys. There have been a lot of questions out there about the quality of the Alcentra business, given what looks like fairly stagnant AUM over the last few years, obviously, some high-profile employee losses. I understand it looks like you've got a very good price relative to what they're hoping to get in and obviously, put a lot of protections into that price. But could you flesh out a bit how you see the process of running the ship there and getting back up to the level of growth we expect from a private credit manager?

Yes. Well, first, I mean, the turnover that happened obviously happened all before the deal was announced. It was really at the senior level, and I think that the area of concern was the direct lending. And the rest of the business has been growing very well and has had very good performance. And so I think it's important to block the noise around that, but I think that it's important to understand that was just at a very senior level, which is why there's an opportunity with the fact that we can roll it in with Benefit Street Partners that already has a good senior leadership team. And then one of the things that I think we understand really well and why we've been successful in acquisitions is we understand that you're buying an investment team and their investment process, and so it's important that you have retention. And so we've built in retention to ensure that we minimize any kind of -- the future, anybody leaving in the future. I think that what's really exciting is that we are -- our distribution in Europe has continued to improve. And now you take a product like this that we think that -- our distribution is incredibly excited about having private credit to be able to sell. And so being able to bring these 2 things together, we are very, very optimistic. So I don't know, Adam, anything else you want to add?

Yes. I would just say that Alcentra brings two things that, one, is a product capability that's very European-specific in addition to other products, but that really helps us out with our alternative franchise and a real distribution capability as well. Both of those things are added.

I'll just end by saying, Patrick, that as you know, we study M&A pretty hard in the asset management arena, including both traditional and alternative assets. And we felt that globalizing, as Jenny just mentioned, globalizing our alternative credit capabilities by adding Europe is very important given the growth potential in -- across that region, frankly, both the U.K. and Europe. And we concluded, while we like to grow things organically ourselves, it's our #1 priority is always to grow organically where we can. There are some things that just take too long to become a leader. Too long to grow, too long to be relevant, frankly. And in our opinion, it would have taken us perhaps a decade to create what Alcentra has become, just like it's taken 15 years to become what Benefit Street Partners has become. And we just concluded that this was the best way to become a true global leader in alternative credit. So that's why we did what we did. And to your point on price, the price is driven a little bit around some of the uncertainty in the overall market. But also it's just a function of how M&A can be structured, and we've done that very carefully. And we've got in the growth of the business, and we expect there to be growth. As Jenny mentioned, there are multiple sectors, multiple strategies at Alcentra, and most of them have grown quite nicely, and we expect that to continue post-close.

Just to add, during the due diligence process, as you can imagine, we checked on the reputation of the firm with the consultants and institutions, and we're very comfortable with that. We think they still despite some of the headline stories around turnover have excellent reputation in the market.

Great, helpful. Thanks. And just one quick follow-up. Would you be willing to give the total AUM in kind of this core flagship strategies at Western? There's so much of institutional that we can't see. I don't think we've got an update on that in a while.

The Core Plus strategy or Core and Core Plus strategy?

Core and Core Plus.

Core and Core Plus together is about $150 billion approximately at West.

Sure, great.

Thanks, Patrick.

Thank you. The next question comes from Stephanie Ma of Morgan Stanley. Please proceed.

This is Stephanie on for Mike Cyprys. My first question is on expense and performance fee outlook. So hoping you can just give us an update or mark-to-market on expenses given lower AUM levels? And then performance fees, that continues to be much stronger than you had guided. So any color on that outlook would be helpful as well.

Yes. So on overall expenses, I think in the last call in the last quarter, we guided to $3.9 billion to $3.95 billion of adjusted operating expenses for the full fiscal year ended 9/30. The update to that I would say is that we expect to be on the lower end of that. So instead of just saying $3.9 billion to $3.95 billion, we expect to be closer to $3.9 billion and then to $3.95 billion. And remember, that includes Lexington. So we -- a couple of quarters ago, I think I explained that we were in the $3.9 billion to $3.95 billion excluding performance fees and excluding Lexington. Last quarter, we said $3.9 billion to $3.95 billion excluding performance fees, including Lexington. This quarter, we're saying $3.9 billion to $3.95 billion excluding performance fees, including Lexington and would be on the lower end, we believe, all else remaining equal for the year. In terms of specifics around that, I think last quarter, I guided to the different line items and we'd expect those to be approximately the same. So G&A to be approximately $140 million, occupancy around $57 million and IS&T to be around $125 million, and all those things are obviously inclusive of Lexington partners. And then our comp ratio, we've guided to around 45% for the year, and we expect that to also be at 45% for the year. In terms of performance fees, we don't guide on performance fees, frankly. I mean, the way I've communicated this in previous calls is to say that we think for modeling purposes, $30 million to $40 million is reasonable. Obviously, we acknowledge the fact that we've been higher than that for a few quarters now. But again, it's very hard to calculate where our performance fees are going to be. But all I'd say is that obviously, the reason why performance fees have gone up is because we're performing well in a number of our asset classes, both across real estate and credit. And other areas, frankly, we've crossed about 9 of our specialist investment management companies, although it's concentrated AB&3. It's because we're just getting larger in alternative assets that the potential to earn more performance fees is going up as we continue to increase our alternative asset business. But I'm sticking with --

That's very helpful. If I can just place my follow-up in here. We noticed a reference to the China JV of $12 billion of AUM. So hoping you can expand on some of the initiatives there? And are there any plans to raise your ownership? And then what sort of growth are you seeing in that region?

So I believe that we have said that we would like to extend our ownership in there now that the regulations have changed, and so we're in discussions to do that. We also have a wholly-owned fee, which would give us other optionality if that -- we were not able to buy 100%. Look, China is a massive, important market. We were early as far as firms, asset managers who did joint venture partners. We have unbelievably excellent performance, have had really stable investment teams there. We hired Dr. Ben Mang, who is our Chairman of Asia-Pacific and is well connected. And we -- it has been a profitable business for us. We think it can be much more meaningful as far as its contributions over the long run.

Great, thank you.

Thank you. Next question comes from the line of Alex Blostein of Goldman Sachs. Please proceed.

Hey, thanks for follow-up. A couple of quick ones here. So I guess just go back to performance fee discussion for a second. Matt, given the fact that it's gotten a bigger portion of the overall business model, maybe you can frame to us sort of the sources of performance fees that you saw this quarter and any kind of ideas on performance fee accruals that could be realized over time as investments kind of crystallize? Or just to kind of get a better sense of what that -- the bucket of potential performance fees are going to look like going forward?

Yes. I mean, a good portion of the increased performance fees quarter-over-quarter has been from our real estate franchise, Clarion Partners, where the performance has been outstanding. So I'd say a good 60% of it or something like that and then probably a higher percentage of the increasing performance fees that we've had is, frankly, just from performance thresholds being met and quarterly realizations of that performance has made the performance fees actions. So that's the -- that is the primary source of the increase in performance fees. But I wouldn't want to understate the performance of our credit business also that has led to performance fees, performance fee increases over the last two or three quarters, in particular. The -- it's really a combination of realizations, quarterly performance thresholds and annual performance fee thresholds. Maybe it's helpful to say that we think that our performance fees will probably peak at the calendar year-end, so that would be the end of our first quarter. And then perhaps another useful point is out about $127 million this quarter, approximately 70% of it is specifically quarterly performance fees. So you might get to argue that something between $60 million, $70 million could if we have exactly the same performance next quarter or this quarter. Again, I'm not guiding you this way for modeling purpose. I've already explained how I'd look at that. But you could argue that we could at least get up to $60 million, $70 million if we were to repeat that.

Yes. Okay. I got you. That's helpful. And then another quick one for me just around the balance sheet. So lots of moving pieces. Obviously, election payment came out. You guys have contingencies coming up as well. How are you thinking about sort of the discretionary cash balance today? So if you were to think about maybe both cash and investments, and you would say, okay, how much of that is sort of truly available for corporate purposes or whatever else? And how much do you guys think you're going to need to use towards future GP co-investment or GP balance sheet commitments, given the fact that your liquids are getting bigger over the next couple of years here?

Yes. So firstly, out of our roughly $2.6 billion of investments, let's say half of that is very liquid, highly liquid, like well over $1 billion of it is highly liquid. But it's been important to see new funds in order to accelerate access to distribution opportunities. I think we've explained that we've got a very good multiple on that feeding in terms of the AUM that's been created from it. So that's sort of number one. So we wouldn't want to liquidate that, but we can recirculate that. We've got much more disciplined, but not just letting seed capital sit in funds for like 5 years. So every year, we're able to circulate several hundred million dollars, I would say, out of the $2.6 million. And a portion of that recirculation, Alex, is going into more of the alternative asset area. We probably have $800 million or something like that now invested across the alternative asset businesses that we have, which is more longer term in investments versus the rest. It's more short-term seed capital. So number one, we're getting better circulating it even without increasing the $2.6 million. But number two, every year, we are earmarking a meaningful amount of income, and our cash if we need to, to continue to invest in GP level alternative asset opportunities. I should say that we -- when we provide that commitment, we also allow our senior employees at both the Alternative Asset business and across Franklin to invest, and we're getting so much interest from employees to invest in these areas that the actual commitment of Franklin and making off the balance sheet is reducing versus increasing. But again, if we -- we don't have that interest because of general market condition or something. Franklin is there, and we could expect that to increase meaningfully. In terms of the amount of cash that we think we have, so let's say, excess cash or cash available to do further investing, and then including M&A, put that in excess of $1 billion. But obviously, in this current market conditions, we are very cautious, very disciplined. And we think having cash on hand for opportunistic situations is going to be a competitive advantage of ours. So that's how we look at cash. We felt that we're in a good position with the around $6 billion or more of cash and investments. Disciplined with circulating the investments, adding to it carefully each year. And with the cash piece, you mentioned upcoming acquisition-related things, you're right. That's why we're concerted with it because we do have $1.6 billion of acquisition-related payments over the next four years. We also have $1.4 billion of debt over the next five years coming due, which we can reason adds, but we also like to be able to delever where it's -- when debt is getting more expensive. So that's how we look at that.

Awesome, thanks a lot. I will leave there.

Sure, thanks Alex.

Thank you. And the next question comes from Brennan Hawken of UBS. Please proceed.

Good morning. Thank you for taking the question. This is Adam Beatty in for Brennan this morning. Kind of a two-parter a multi-parter on alts distribution. In particular, we're wondering about some of the nuances of alts distribution in the European market, particularly for European retail and what you're seeing there? And then in kind of a separate angle, just wanted to get your thoughts on how much sort of product and distribution crops over you're expecting between Alcentra and BSP?

So I think -- I'm not sure I know sort of the detailed nuances other than there's a couple of just trends that are relevant everywhere for all, right? And we've talked about it before where you're just seeing companies waiting longer to go public. You're seeing less opportunities on equities to invest in, that universe has shrunk. I think banks -- Basel III capital requirements have made it such that banks are much more careful with who they're choosing to lend to, which has created this proliferation of private credit. I think that is a direct response to some of the capital changes that have happened in the banking industry. And so you see meaningful excess returns in the private markets. And there is such an opportunity to naturally bring that to the wealth channel. The problem is it's a bit like running with scissors where you've got this illiquid assets to often people who require it. And so creating those types of vehicles is important and being really aware about how you do that. And so that's the type of thing our product development team is working on. And then same as in the U.S., it requires just a massive amount of education plus the complexity of things like signing up for these. And so big opportunity there, but it is -- it's a lot of blocking and tackling that happens before you really start to see the traction. I think in the U.S., we are finally starting. I mean, we've been talking about this for 2 years. It's a core priority, and we're only now starting to finally see that traction. We think it's going to be similar -- again, we all say Europe, but the reality is every country is different. You might have EU regulations, but then they get interpreted. And so it's definitely even more complicated to bring the customized products to those markets. Adam, anything you want to add to that?

Yes. I would add that if you think about all of the transactions that Franklin Templeton has done, one of the real hallmarks of them has been a lack of overlap in product. As you get larger, that gets harder and harder to have 0 overlap. But in general, we feel really, really good about the transactions we're doing and how little overlap there is across the product set. I think there's also a real advantage of having a regional specific alternatives manager, which means that those products will be even more geared towards the local market. Two other comments I would add is that within Europe, there's really two different pieces of the -- of bringing alternatives to the wealth channel. One is really at the ultra-high net worth level, and the other is more at the mass affluent level. We want to make sure we address both. And then finally, I would say, sustainability continues to be a big trend around the world, but especially in Europe. So in Europe, to the extent that you can add sustainability to your alternatives in the wealth channels, that's where I think the real growth will be.

And to answer your question about BSP versus Alcentra, very little overlap there.

Yes, and so are you planning to sort of be able to cross distribute that, similar to what you've done with Legg Mason legacy?

I mean, yes -- sorry, there's a little overlap, Adam. But the opportunity to work together, whether it's on transactions, flow with -- from a distribution perspective, helping raise capital together. I mean, there's really meaningful opportunities on a global scale with the two together. And obviously, the relationships across two are also complementary, so we think there could be some really interesting opportunities there as they work together.

That's perfect, thank you very much. That is all, sorry go ahead. Okay.

But just saying, BSP was very, very U.S.-focused, right? And so -- and Alcentra had very little footprint in the U.S. A little bit, I think, on CLOs and things. And so Europeans tend to like to buy -- everybody loves to cheer for their home team, so Europeans tend to like to buy European private credit as opposed it's much harder if you can even do it to sell U.S. private credit into Europe. . And so there can be global products. You can have some of the deals worked on together from a team, some of the research can be shared. But the good news is it was really hard for BSP to sell their products into Europe, and now we have excellent private credit to sell into Europe and even Asia.

Very interesting. No, no. Thank you so much, Jenny. Appreciate it.

Thank you. This concludes today's Q&A session. I would now like to hand the call back over to Jenny Johnson, Franklin's President and CEO for final comments.

Great. Well, I just want to thank everybody for participating in the call today. And once again, I want to thank our employees for their hard work and remaining focused on our clients, particularly in this type of market environment and also for supporting each other. We look forward to speaking to you guys again next quarter, and I'd just say enjoy the rest of your summer and stay healthy. Thanks, everybody.

Thank you. This concludes today's conference call. You may now disconnect.