Cohen & Steers, Inc. (CNS) Q1 2018 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Cohen & Steers First Quarter 2018 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded Thursday, April 19, 2018. I would now like to turn the conference over to Danielle Brown, Vice President and Associate Counsel at Cohen & Steers. Please go ahead.

Thank you, and welcome to the Cohen & Steers First Quarter 2018 Earnings Conference Call. Joining me are Chief Executive Officer, Bob Steers; our President, Joe Harvey; and our Chief Financial Officer, Matt Stadler. I want to remind you that some of our comments and answers to your questions may include forward-looking statements. We believe these statements are reasonable based on information currently available to us. But actual outcomes could differ materially due to a number of factors including those described in our SEC filings. We assume no duty to update any forward-looking statements. Also, our presentation contains non-GAAP financial measures that we believe are meaningful in evaluating our performance. These non-GAAP financial measures should be read in conjunction with our GAAP results. A reconciliation of these non-GAAP financial measures is included in the earnings release and presentation. The earnings release and presentation as those linked to our SEC filings are available on our website. With that, I'll turn the call over to Matt.

Thanks a lot, Danielle. Good morning, everybody. Our financial results reflect the adoption of the new revenue recognition standards, that was effective on January 1. All prior periods have been recast to facilitate comparability, including all financial information contained in our earnings presentation which can be found on our website. The new standard did not have a material effect on our operating results. My remaining remarks this morning will focus on our as adjusted results. A reconciliation of GAAP to as adjusted results can be found on Pages 12 and 13 of the earnings release or on Slide 16 and 17 of the earnings presentation. Yesterday, we recorded earnings of $0.62 per share compared with $0.47 in the prior year's quarter, and $0.55 sequentially. This quarter's results reflected the lower U.S. federal statutory tax rate of 21%. Revenue was $94.4 million for the quarter compared with $89.7 million in the prior year's quarter, and $99.3 million sequentially. The decrease in revenue from the fourth quarter was primarily attributable to lower average assets under management, combined with 2 fewer days in the quarter. Average assets under management were $59.2 billion for the quarter compared with $58.3 billion in the prior year's quarter, and $62 billion sequentially. Operating income was $38.3 million for the first quarter compared with $35.5 million in the prior year's quarter, and $41.2 million sequentially. Our operating margin decreased to 40.6% from 41.5% last quarter. Expenses decreased 3.4% on a sequential basis, primarily due to lower compensation and benefits, distribution and service fees and G&A. The compensation to revenue ratio was 33% for the quarter consistent with the guidance we provided on our last call. The decrease in distribution and service fee expense was primarily due to a decline in average assets under management in our U.S. open-end mutual funds combined with the continued shift into lower-cost share classes. And the decrease in G&A was primarily due to a seasonal decline in business travel, partially offset by increased research costs which we have elected to absorb in response to MiFID II in Europe. Our effective tax rate for the quarter was a 25.25% which is at the lower end of the range we provided on the last call. Page 15 of the earnings presentation displays our cash, cash equivalents and seed investments for the current and trailing 4 quarters and indicates that portion of cash and cash equivalents held outside the United States. Now that we have a territorial tax system in place, our non-U.S. cash is available for use in the U.S. at no incremental cost. Our firm liquidity totaled $232 million compared with $257 million last quarter, and stockholders equity was $284 million compared with $276 million at December 31. We remain debt-free. Assets under management totaled $58.5 billion at March 31, a decrease of $3.6 billion or 6% from December 31. The decline was primarily the result of market depreciation. Assets under management in institutional accounts totaled $27.4 billion at March 31, a decrease of $2 billion or 7% from last quarter. Open-end funds had assets under management of $22.1 billion, a decrease of $1.2 billion or 5% from last quarter, and assets under management in closed-end funds declined by $518 million. We recorded total net outflows of $95 million in the quarter, an annualized organic decay rate of 1%. This is the first time since the third quarter of 2014 that we recorded net outflows. Page 9 of the earnings presentation reflects net flows by investment vehicle. Institutional accounts had net outflows of $92 million in the first quarter, an annualized organic decay rate of 1%. Subadvised portfolios in Japan had net outflows of $336 million in the quarter compared with $494 million of net outflows last quarter, net outflows were primarily from U.S. real estate portfolios. Distributions totaled $600 million, slightly less than the $627 million recorded last quarter. Subadvised accounts excluding Japan had net outflows of $34 million with outflows from commodities and U.S. real estate portfolios being partially offset by inflows into global real estate, global-listed infrastructure and preferred securities portfolios. Encouragingly, advised accounts had net inflows of $278 million during the quarter with contributions from all of our core strategies, including our first midstream energy separate account mandate. Our pipeline, which Bob will discuss, is the most diverse it has been both geographically and by strategy, and the level of our pre-activity remains strong. Net flows from open-end funds were essentially flat for the quarter with distributions totaling $206 million of which $155 million were reinvested and are included in inflows. I'd like to discuss a few items to consider for the second quarter and remainder of 2018. We expect compensation and benefits to remain at 33% of the ratio, we expect G&A to increase between 9% and 11% from 2017, majority of this increase can be attributed to three items; Europe research costs, index redistribution fees and strategic investments. Incremental costs associated with Europe research and index redistribution fees were discussed on last quarter's call. Strategic investments center around expanding our distribution capabilities, including the broadening of our channels. Bob will provide some color on our strategic investments in a moment. Excluding these three items, we expect G&A for 2018 to increase between 3% and 5% from last year. Finally, we expect our effective tax rate will remain at approximately 25.25% for 2018. Now I'd like to turn it over to Bob.

Thank you, Matt, and good morning, everyone. Needless to say the first quarter was challenging for many of our key strategies and markets. Rising expectations for global growth, U.S. inflation and interest rates, feeling acceleration of the headwinds that have been affecting interest rate sensitive investment strategies for the past few years. To put this in perspective, over the past one and three year periods ended March, the S&P 500 generated annualized returns of 14% and 10.8% respectively. By comparison U.S. REITs returned negative 0.4% and 2.8%. Global listed infrastructures' comparative returns have been 6.6% and 5.1%. And despite the rebound in oil prices, midstream energy has had negative returns of 14.8% and 9.1%. This sustained underperformance despite positive or improving fundamentals has put these strategies in historically undervalued territory, especially real estate, commodities and midstream energy. Interestingly, we are seeing a material divergence in flows by strategy between the wealth and institutional markets in response to these trends. The U.S. open-end fund channel while still net positive, has shifted away from strategies perceived to be the most interest rate sensitive and toward low duration and global strategies. Conversely, institutional investors are eager but hard-pressed to find investment opportunities that deliver positive fundamentals while also trading at historically cheap valuations, a scarce commodity in today's markets. With regard to our results, this was another quarter of outstanding relative performance, and I think some of these numbers, they are repeating. 8 of 10 core strategies beat their benchmarks in the quarter, and 7 out of 10 did so over the latest 12 months. 96% and 93% of our AUM have outperformed over the last 1- and 3-year time periods, and 86% of our open-end fund assets under management are rated 4 or 5 stars by Morningstar. Consistent with our view that over time, there will be a small number of big winners in each asset class, our strong performance is a major contributing factor supporting our ongoing market share gains versus other active managers, and it's a key factor supporting our high success rate in competing for institutional mandates. Turning to the wealth channel, our U.S. open-end funds overall had net inflows of $84 million. However, we saw a $134 million of net outflows from our preferred securities fund, while over $200 million of net inflows went into our low duration preferred fund, which is now approximately $1 billion. As you may recall, we launched this fund in 2015 to provide investors a solution for when interest rates would migrate higher. Also, while U.S. REIT flows were down slightly, our global real estate fund enjoyed its third consecutive quarter of net inflows bringing in a record $107 million in the quarter, as international securities outperformed and our relative performance is strong. As I touched on last quarter, our registered European mutual funds are growing in number and strategic importance. Phase I of our European product and distribution plan is now complete. Today, we offer investors global listed infrastructure; European real estate; global real estate; active commodities; preferred securities; and shortly, our multi-strat real asset strategies. And our business development team is in place and fully staffed. Although, we did experience net outflows due to the rebalancing in the quarter, bringing our total open-end fund flow slightly negative. We've made great progress towards completing distribution agreements with important intermediaries in Europe, which we are confident will translate into increasing flows. Institutional advisory flows continued to be strong with $278 million of net inflows in the quarter. As has been the trend, the inflows were broad-based both by strategy and geography. Mandates focused on U.S. real estate, global real estate and global listed infrastructure were funded in the quarter, and we won our initial midstream energy mandate. In addition, our U.K.-based institutional team is starting to generate traction in Europe and the Middle East. We were awarded our first German sub-advisory account, our first Middle Eastern sovereign wealth fund relationship and a large Swiss sub-advisory client. Again, these are green shoots which reflect our commitment more than two years ago to substantially expand our business development teams in the region. Our current pipeline of awarded but unfunded mandates is a solid $924 million across 6 strategies. In the quarter, mandates totaling $265 million were funded while $345 million of new mandates were added. We removed $255 million of assets in mandates that were previously accounted in the pipeline but that have been delayed or reduced in size, and we are currently waiting -- awaiting the outcome for over $500 million of searches that have been completed. Sub-advisory extra pan flows were a mixed bag in the quarter. Although, we experienced net inflows into global listed infrastructure, global real estate and preferred strategies, we lost $196 million commodities relationship resulting in total net outflows in the quarter of $34 million. Japan sub-advisory net outflows were $336 million in the quarter and distributions totaled $600 million. Net outflows declined by over 30% sequentially which is encouraging. That said, in all likelihood, it will be another 6 to 9 months until we know of the headwinds affecting these funds, including U.S. REIT performance in Yen terms, reconciliation of fund distribution policies and regulators response to lower distributions are behind us. Looking ahead, our focus will remain on listed real assets and alternative income strategies. However, going forward in response to rapidly change -- rapidly changing marketplace, we will need to go deeper and be even more focused to deliver value to our clients. Multifamily offices, super RIAs, OCIO firms, sovereign wealth funds and other large asset allocators are becoming an increasingly dominant factor for active managers. Because of their size and unique investment requirements, they tend to be disciplined asset allocators who typically allocate to real assets. So to better serve these markets, we will be moving beyond our standard offerings to provide portfolios targeting specific objectives such as high alpha-focus strategies, custom combinations of real asset classes and thematic concepts. As Matt alluded to, to properly capitalize on these market segments, we have and will continue to add both investment professionals and relationship managers in support of these new efforts. We're excited about the opportunity to go even deeper into our asset classes, while staying focused on delivering results for our clients. Now with that, I'll ask the operator to open the floor for questions.

[Operator Instructions]. And our first question comes from Yian Dai with KBW.

So first thing, I just wanted to address the business transaction that you guys alluded to in the earnings release. Could you just talk a little bit about that? What was the nature of the evaluation? What about that specific business make you take a closer look? And then ultimately, what make you decide not to proceed with the transaction?

Sure. Thanks Yian. As we've spoken about for years. Although, we've historically grown organically, we do opportunistically evaluate acquisitions which would broaden and deepen our exposure in real assets and alternative income strategies. And -- so the transaction that you're referring to was a -- an entity in the real asset space which would have added investment talent as well as significant assets to the firm. It would have been substantially accretive short term and long-term. And the reason the transaction did not transact was not valuation but it was cultural issues. Unlike other firms which are active acquirers, we're not a -- we're not pursuing a multi-boutique type model. And so any acquisitions would be integrated into our investment culture here. And so for us to make an acquisition successfully, that's probably the most important hurdle.

Okay, appreciate the color. And you know second thing just on comp. In the comp guidance that you're giving, the 33%, just curious with assumptions you're making for and of your AUM or flows in market returns. If you could just give us a sense for what market conditions you're looking at? And then whether there's leverage income, if those conditions don't play out or if we'd expect to see some flags up incorporate if those don't play out? Just some sense around the flexibility of that?

Look it's always difficult to project where the market's going. And as we saw in this quarter, flows reflect but AUM was down, all attributable to the market. You know that said, we have an internal approach that we think about our business, we think about flow assumptions, we think about market assumptions and we forecast where we believe revenue and earnings will be at the end of the year. It's not an exact science but it's our best guess. And then we look at new kind of requests for the year and where we think folks are performing. Because we have a very in-depth comp review that we started earlier in the year. We don't wait until the end of the year and we re-access. So where we are right now with the guidance that we're providing based on the forecasting that we've done, we feel comfortable, all things being equal, that we're going to be able to achieve the appropriate level of compensation and maintain that racial. But there are so many different triggers that can move it. It's just that as of this moment in time, we're comfortable with that percentage. We've been able to hold the ratio pretty consistent in all our years as being a public company. And generally, for the fourth quarter, there have been some minor adjustments up or down. Markets are a little bit more volatile these days than they've been previously. So we're monitoring it every quarter, and we'll do another rigorous review in advance of the second quarter. But right now, we feel good at 33%.

Okay, thanks for the clarification, Matt. Just one thing, is that -- does that include positive market returns in your internal assumptions?

We keep that private.

Our next question comes from Ari Ghosh with Crédit Suisse.

So while the impact was pretty ugly in 1Q, I feel like REITs and some of the other income strategies have started to outperform the broader equities right now, and the dollar is also kind of strengthening a little bit. So just curious if you're more constructive on the macro outlook now, especially given the relative evaluation spread as well. Or if you're concerned about some other factors that you think might cause REITs to continue to a lag?

Sure, Ari, this is Joe. And I'll start with the comment Matt made, which is -- look, it's difficult to protect markets, particularly, in the short term. But as you point out, in terms of our largest asset class U.S. REITs, they've underperformed significantly. And in the context of strong economic growth and the fact that the markets have adjusted to some slowing in real estate fundamentals, the valuations would indicate attractive value. If you look at some of the core property types, they are trading at double-digit discounts to their net asset values. And so that reflects in part, that the market discounting, the upward movement in the -- in bond yields. So while we have that situation, meantime, there's a significant amount of private capital that's looking for investments in real estate. The number for dry powder is in excess of $150 billion. So when you add all of that up, that would suggest that the REIT market is bottoming. But if interest rates in the short term continue to move aggressively upward, it could take some time for the stocks to start to outperform. But we think a large part of the repricing cycle has occurred.

Got it. That's helpful. And then just a couple of quick ones on the model. On the 9 to 11 guide for G&A that you called out. I just want to confirm that, that was versus the adjusted 27 numbers, I think of that G&A which came in around 42.5%, just wanted to confirm that. And also on the fee rate, it looked like sequentially both institutional and the open end ticked up a bit. Is -- will there be any one timers there or is this a good starting point looking forward?

Yes, the guidance is with the new rev rack in there. And if you look at the earnings presentation, we have the current and four trailing quarters. And you can see the G&A amounts on there and they've all been recast to reflect the new rev rack. Remind me of the second part of the question?

Just on the fee rate, it looks like it ticked up a little bit specially on these regional and open-end fund?

Right. So the fee rate went up 1 to 2 basis points and that's primarily attributable to the rev rack where we now have to net from previously fund reimbursement costs were included in G&A under the new guidance that has to be netted against open-end fund revenue. And so, by doing that, it gives the impression that the fee rate is a little bit higher. But the point -- just for some level of guidance on the fee rate, is that the amount of the fund reimbursement cost has been relatively static, goes up a little bit. It had been in my previous talking points, the part of the G&A increases from reimbursement costs. But I would think in terms of basis points, using the one that you just calculated for the first quarter is a proxy going forward, absent mix changes. But that would be a good one to use.

Our next question comes from John Dunn with Evercore ISI.

You talked about that dynamic of outflows on the mutual fund side, and outflows going from funds like preferred and U.S. real estate into newer versions like both the duration or more invoked funds like global. Can you kind of bring that dynamic to life a little bit for us? Like it -- are there -- when that gets sold, are there actual -- is the recommendation from switching to one of the others in that new client money? Can you just kind of bring that dynamic to life a little bit for us?

John, I would say it's all of the above. We -- as I mentioned, we launched the low duration product and expectation that rates would at some point migrate higher. And so as our relationship managers out there are having conversations particularly in the wealth channel, and when they have clients that express concern about rate exposure, they have something very compelling to offer them to migrate into, and the idea was candidly, if rates move up substantially, every bond fund is going to have outflows. The opportunity is to capture all those outflows in something like a low duration fund. And so, we've done that very successfully. And -- so -- but it's interesting, I think as I -- we tried to get across in our talking points. The wealth channel is going through a transition which is in contrast to the institutional channel, which is jumping on opportunities like midstream energy, global real estate, global listed infrastructure, U.S. real estate. They are not concerned about interest rate sensitivity. They're focused on the positive fundamentals and really attractive valuations as Joe mentioned. But retail, I think, is continuing to -- it's more of a lagging indicator. So the money is migrating, just starting to migrate out of things like the preferred securities fund into low duration, global international securities have performed well, and our global fund has performed very well, and so that's appealing to them. We are excited about the potential to benefit from a rebound in the midstream energy sector. We were named by Alerian, the number one MLP manager of the year last year. We have a tremendous track record. And so we think that, that's going to be a great opportunity going forward. Again, an income-oriented investment but also happens to be trading 50% below their prior highest.

Got you. And then just with all the fee pressure out there, can you give us a sense of like where you think you can -- where you're feeling it the most and where you think you feel best you can kind of hold the line? And also within the dynamic of, say, money going from regular preferred to low duration. Seems like some of the for the lack of a better word, replacement funds have a little bit lower fee rate, you think that's the case or what's up?

John, this is John Glickson. Just to comment on your question about fees. I think as we look from left to right, and this is something that Bob talked about a little bit. We've got different flavors of what we do. Some things are more diversified, some things are more focused. They've certainly give us and those have different risk return profiles, different alpha targets. That gives us some flexibility on CE. But we would say overall, one of the things that we do on an ongoing basis is the rationalization of our fees. And based on where we are, we think we're very competitive, continue to monitor it. And really at the end of the day, it gets back to your outflow and how that grades out versus your peers. So we feel that right now across the board, we're competitively positioned. And although, we continue to see fee pressure that generally subsides when you produce significant alpha over time which we continue to do.

John, I would add to that. The points I made at the end of my piece, talking about bloating substantial new product focus as well as personnel on the multifamily office, OCIO, sovereign fund markets. Ironically, I think those investors appreciate and place a higher value on really good active managers than, frankly, the broader wealth channel does. And so our very strong belief is that we're -- as we're producing hundreds of basis points of alpha in our broad-based real asset and preferred and alternative income strategies, creating more targeted, more focused strategies, which is what these other institutional markets are craving. Those investors are willing to pay a competitive active fee relative to the wealth channel. And candidly that's where the assets are migrating. So we see the appeal of migrating into those channels more substantially, is not only are they very excited and demand is high for what we do and some of the more innovative newer strategies we're offering. But the fee pressures are less there.

Our next question comes from Mac Sykes with Gabelli & Company.

I just have one quick one for Matt and then follow up with Bob. Matt, is there some normalized historic reinvestment from the distributions, is there some way to just kind of think about that over time?

Yes, I'd say in the U.S. open-end funds, it's historically been between 70% and 80% get reinvested in Japan, virtually none gets invested. So I've been in the last few quarters, showing that out in my points of the distributions in the open end, how much we've reinvested. So -- and we put that reinvestment in inflows.

And then Bob, assuming a more persistent weaker dollar, can you talk about how you've been thinking about product strategy in Japan?

Well, that's a tough question. We're battling every day. The currency impact on our U.S. REIT performance, which as you're suggesting, has been significant. We're not offering hedged strategies at the moment. And again, we're at least outside of the institutional channel, we're sub-advisor. So we're not the ones that are making that decision.

This is Todd Glickson. I'd say one of the other things that's material, although we continue to focus on our sub-advisory business, we're also growing our institutional business over there. We've had some significant wins over the last several years. And that is, as you know, a slow go. So similar to Europe where we started to see green shoots, we're starting to see that in Japan as well with the progress we're making there. So as it relates to the balance of our business there, it's relatively small but the progress has been meaningful. So that to us, is a way to offset some of that. And then lastly, some of the best ideation that we get really does come from working with our clients and prospects in that Japanese market. So we've got a few things that we're working on that we're hopeful about. And I think that really is the way that we've looked at the market place.

[Operator Instructions]. Our next question comes from Michael Carrier with Bank of America Merrill Lynch.

Maybe just a question on some of the investments that you're making in distribution. I think you're just giving your performance, clearly it makes sense. You will be making investments. It sounds like most of that has taken place in Europe. I'm just trying to like size up how your [indiscernible] has positioned today maybe versus like the past few years. And where you want that to be? Particularly, if we kind of get out of this cyclical phase where there might be some less interest in real estate [indiscernible] rate, but that starts the shift. Just how much has the distribution kind of expanded that could benefit the growth rate over the next few years?

Thank you for that question. Look, we've over the past four, five years, very substantially expanded our distribution, breadth our product range and our distribution wrapped with the expectation as you are suggesting that when the cyclical wins are at our back, the flows in theory, should be like nothing we've ever seen before. So as you mentioned, we've made substantial investments in Europe and that's starting to pay off. We've made substantial -- we've expanded substantially in Asia. As Todd mentioned to not only support our sub-advisory business but grow the institutional business, and we've done that both in Japan as well as Taiwan and South Korea and elsewhere. So DCIO, Europe, both institutional and wealth, Asia, and we're already in the process of launching products in these newer U.S. markets. As I said multifamily office, OCIO, super RIAs. And so we think we're -- from a distribution standpoint, we're miles ahead of where we were 3 to 5 years ago. And again, I think as we repeat in these quarterly reviews, you can already see the breadth of demand of the strategies and the range of geographic demand has expanded dramatically. And we do have a couple of things mitigating that, which is, the Japanese sub-advisory outflows and now the transition that retails experiencing. But we see demand for particularly that are real asset strategies as really coming into their own here, late -- these are late cycle allocations. As was mentioned earlier, over the last month or 2, we've seen some pickups in momentum and outperformance, we'll see if that persists. But we are more prepared than ever to get the word out and to deliver what we do to throughout the world and to both wealth and institutional channels.

And then just a quick follow-up on the other, I guess, like product bucket. I just seems like the outflows picked up. I don't know that was something lumpy. But just any color on there. I know it's a mixed bag in terms of what's in there?

Commodities. Yes. That was primarily driven by redemption from a commodity account.

We have a follow-up question from Yian Dai with KBW.

Just had a quick question around the advisory and the seasonality around that. I was just hoping you could remind us what that typical seasonality looks like around RFPs. When -- how long those RFPs tend to take so when we'd see seasonality around wins usually and then funding as well?

Well, usually the pipeline is seasonally weak starting about now. But candidly, we don't see that happening. RFP activity is really high. We have in the fourth quarter and first quarter some of the mandates we've won. The fundings have been a little slower than usual. So we -- the burn on the pipeline has been a little slower. As you saw, we had a pretty robust addition to the pipeline in the first quarter, it was $500 million between 4 mandates, we're waiting to hear on. I would also add that our pipeline of potential new sub-advisory relationships is very high right now. So in answer to your question, usually the pipeline is seasonally weak in the second and third quarters. Our piece go out in the first and they get work through. But right now we're not seeing that seasonality.

Yes, this is Todd. So last year our rate on the RFPs, was up about 30%, 35%, from the year prior. What I fell in there too and I'm sure you're aware. It's really just a higher level of scrutiny and due diligence going on in the industry now. So our teams are focused on not just that our P volume but due diligence questionnaires and those types of things. I think what's exciting for us is not only our win rate on those RFPs that become finals, but as Bob and Matt alluded to, just the diversity of the things that we have that are in the pipeline. And there's 10 different discrete things, they are one and unfunded. They cover 6 different strategies and not only that, 4 out of the 10 are from outside of the U.S. So I think it just speaks to the development of traction across the broad base of products which is the result of the performance and the investment in distribution.

Okay, that makes sense. On that $255 million in mandates that you mentioned were delayed or reduced, is there any general theme to those? Was it market volatility that led to delays or some may be shift in the types of strategies that they ultimately decide to go with?

I'd say in the case of one, the client just reduced the amount they wanted to allocate. In the case of the other 2 which have been delayed, I'd say they are market driven. In other words, in what case the client was concerned about rising rates. And so they have been letting that play out. That's uncertain whether or not they will ultimately fund, but it in that case is market driven. And I'd say in the third case is the same situation where they already have a large allocation to the asset class and they're just waiting to see how the markets play out.

We have other follow-up question from John Dunn with Evercore ISI.

Just a question on the non-Japan sub-advisory. Used to be -- the large-cap values be a big driver that nowadays. Can you just give us some color on what are the strategies and geographies you think is going to drive that? I suspect the short answer is more broad. But anything you could fill in for us would be good?

Sure, I would say it's more international than domestic. But there is domestic in there as well. And I think a major trend that we're seeing and again it gets back to our -- the comment we repeat about being among the small number of big winners is large intermediaries that have this kind of distribution are both for performance purposes and fee purposes are narrowing down the number of Sub-advisors they're are using. So we're gaining market share and we talked about our performance a lot. But I can't emphasize more strongly. We've really pulled away from the pack in most of our core strategies. And as Todd alluded to earlier, the value proposition that we're offering which is in the best case top decile performance long term with fees that are competitive with anybody is why we're gaining market share -- substantial market share in our core strategies. And so we're getting takeaways, entities are going from 3 sub-advisors and say U.S. REITs till 1 or 2. And that's how the industry is migrating in response to both fee pressures. But the pressure to deliver best-in-class performance.

Mr. Steers, there are no further questions at this time. I would now turn the call back to you. Please continue with your presentation or closing remarks.

Great. Well thank you all for joining us this morning. And we look forward to speaking to you this summer.