Good morning. My name is Jordan and I'll be your conference facilitator today. Thank you for standing by and welcome to the Janus Henderson Group Fourth Quarter and Full Year 2023 Results Briefing. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. In the interest of time, questions will be limited to one initial and one follow-up question. In today's conference call, certain matters discussed may constitute forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements due to a number of factors, including but not limited to those described in the forward-looking statements and risks factors' sections of the company's most recent Form 10-K and other more recent filings made with the SEC. Janus Henderson assumes no obligation to update any forward-looking statements made during the call. Thank you. Now it's my pleasure to introduce Ali Dibadj, Chief Executive Officer of Janus Henderson. Mr. Dibadj, you may begin your conference.

Welcome everyone and thank you for joining us today on Janus Henderson's fourth quarter and full year 2023 earnings call. I'm Ali Dibadj and I'm joined by our CFO, Roger Thompson. In today's call, I'll start with some comments on the year. Roger will then go through the results and after that I'll provide an update on the strategic progress we made in 2023. After those prepared remarks, we'll take your questions. Turn to Slide 2. After one of the most challenging market backdrops in 2022, most global markets rebounded and experienced growth in 2023 as concerns about inflation, progressive monetary policy, recession fears, and shocks to the banking system in early 2023 were overshadowed by inflation coming off peak levels, resilient economies, particularly in the U.S., the expectation of the end of rate hikes. Even with positive market returns for the year, headwinds remain as global markets look set to remain conflicted with the consequences of historic rate hikes finally manifesting themselves. Amidst this volatility, we ended the year strongly with fourth quarter results that delivered underlying net flows, revenue, operating expenses, margin and EPS that were all ahead of or in line with external expectations. And on top of that, our teams delivered better than anticipated performance fees and tax rate. As I reflect upon the year, there were several signs of clear progress at Janus Henderson. This progress was the result of the collaboration, hard work, and perseverance of colleagues across the firm and as a squarely on the path to achieving our ambitions of organic growth and delivering superior outcomes for our clients, their clients, colleagues, shareholders and other stakeholders. We're executing our strategic vision, which consists of three pillars: protect and grow our core businesses, amplify our strengths not fully leveraged, and diversify where clients…

Thank you, Ali, and thanks again to everyone for joining us on today's call. Starting on Slide 4, I'll look at the quarterly results. As Ali has already discussed our solid investment performance, I'll touch briefly on AUM, flows, and EPS. Net outflows were $3.1 billion in the quarter, however, ending AUM was up 9% from Q3 and adjusted financial results improved compared to the third quarter. Adjusted earnings per share increased 28% to $0.82, compared to the prior quarter as fourth quarter, EPS benefited from the stable management fee rate, strong annual performance fees and a lower tax rate. Even without the upside from the better-than-expected performance fees and a lower tax rate, our core fundamentals, including flows, net management fee rate, revenues, expenses, operating income and EPS were either ahead of or in line with Street expectations. Finally, on this slide, the board declared a $0.39 per share quarterly dividend and we purchased $62 million of our shares outstanding as part of the buyback program announced last quarter. On Slide 5, we'll look at the investment performance in more detail. Long-term investment performance versus benchmark remains solid, with at least 60% of AUM beating their respective benchmarks over the three-, five- and ten-year time periods. The lower one year number is driven by our equity and multi-asset capabilities. In Equities, the one year performance is impacted by the narrow leadership driving market gains in the U.S. and the low quality rally for small and midcap growth stocks, which weighed on relative returns to benchmarks in the fourth quarter. In the Multi-asset capability, the balance strategy, which is the vast majority of assets in this bucket, is marginally underperforming the benchmark on a one year basis. Balance remains ahead of its benchmark over the three-year and longer time periods,…

Thanks, Roger. Turning to Slide 14 and a reminder of our three strategic pillars of Protect & Grow our core businesses, Amplify our strengths not fully leveraged, and diversify where clients give us the right to win. We are in the execution phase and we believe this strategic vision will lead to consistent organic revenue growth over time. Over the next few slides, I'll highlight the progress being made across the three pillars. Moving to Slide 15, which describes the investment and efforts in the U.S. intermediary channel, which are leading to improve business trends. In Protect & Grow, we've talked previously about the importance of protecting and growing our U.S. intermediary business, which is Janus Henderson's largest client segment. In 2023, we set the foundation for this channel, made several investments, including launching an award winning national brand campaign, selectively upgrading talent and aligning compensation with our growth strategy. We also increased the pace and quality of client engagements. These changes are allowing us to be on the front foot with our intermediary clients and their clients. The progress in U.S. intermediary is tangible. Net flows were positive for this channel for the first time in seven years, resulting in a 1% organic growth rate, a tremendous result given industry headwinds. Very importantly, we're capturing market share in both gross sales and net flows, reversing a trend of losing market share for many years. While there's always much work to do, the U.S. intermediary business is a great example of our ability to create and execute on a strategic plan in a specific area to drive culture change and improve results. As we move into 2024, we'll expand our strategic efforts to the EMEA and Latin American intermediary segments. Slide 16 details the meaningful progress made under the strategic…

Thank you. [Operator Instructions] Our first question comes from Dan Fannon of Jefferies. Dan, the line is yours.

Thanks. Good morning. Ali, I was hoping you could expand upon the fixed income or the active ETF strategy. Obviously a lot of success this year in terms of growth. Can you talk about where those products are being sold through in the intermediary, in those channels? And then as you think about the roadmap for additional products, what does that look like within that active ETF framework?

Hey Dan, thanks for the question. So our active ETF franchise right now just crossed over around $12 billion in assets under management. A very good success in a relatively short period of time. That allows us to have come in fourth place overall on the league tables for active fixed income ETFs in the U.S. and really that means in the world. And the strategy that we've employed there is democratizing a set of institutional level investment skillsets and bringing that to the retail channel, both in the warehouses and in the RIAs to your question. And that strategy has been obviously fairly successful. And so we want to continue down that path. We launched a new ETF last year called JSI, so securitized. And we think there's a lot more opportunity to continue down that path of democratization as a broader theme. Remember, these are active fixed income ETFs, and we're always going to be client led. So we do a tremendous amount of research to understand what our clients' needs are before we launch these. But we think there's more potential.

Understood. And then I guess you're shifting to the inorganic opportunity. Your statements have been consistent. You've obviously looked at a lot of properties over the last year plus, can you talk about what's been the biggest hold up in terms of actually getting to the finish line with a transaction? And has your priority shifted at all during this time to maybe thinking more about lift outs and smaller scale transactions to broaden your product offering versus something maybe a little bit more sizable?

Yes. So I wouldn't say our strategy has changed at all on this. We've continued to be very active in thinking about buying, building and partnering in terms of M&A to support our strategy, whether that be protecting, growing our core businesses or amplifying our strengths, or of course, diversifying where clients give us the right to do so. We're always going to be client led in the M&A. So even when we find something that could be interesting to us, we often figure out whether it's the right thing for our trusted set of clients. And right now there's a very active pipeline, several opportunities out there, both large and small, that we're looking at. And we're going to remain very disciplined in our approach from evaluation perspective and importantly, from a cultural fit perspective. And sometimes, to use your words, that's the holdup is trying to make sure we have the best teams that will fit from a value perspective and a cultural perspective. Look, as everybody on this phone call knows, timing M&A is very difficult to predict. You could get a slew of no activity for quite some time, a slew of a lot of activity for some period of time. And we just want to be sure that we're making the right decisions. We're looking for the right partners who want to grow with us and are, again, the right cultural fit.

Understood. Thank you.

Our next question comes from Craig Siegenthaler of Bank of America Merrill Lynch. Craig, please go ahead.

Hey, good morning, Ali. I had a follow-up here on fixed income. So there was a nice improvement in sales in the quarter. That's not unusual, just given typical seasonality for 4Qs. But I wanted to use this as an opportunity for you to update us on your own view for the potential for inflows in your fixed income business as your clients extend duration fixed income?

Yes, thanks for the question, Craig. Look, our fixed income performance and breadth and depth of product is quite attractive. We're finding to be quite attractive to clients. If you think about fixed income more broadly, there is now reason to own fixed income according to our clients. That's obviously yield number one. Number two, it's actually providing diversification. And number three, perhaps a theme that had always been there for a subsegment of our client base is the regulatory reasons to do it, lower capital charges for insurance companies, et cetera. And those reasons are much more important today for our client base and we're feeling a little bit of an industry wide inflection point here. Again, gladly we are in a lot of great performing sectors of fixed income. We're well positioned on multi asset credit, for example, or multisector income for folks who want kind of more income themed products. We have the ETF suite where again, we've taken something that is an institutionalized quality and level of investment strategies and we've turned that into a democratized vehicle that can reach many broader audiences that are underexposed to those types of categories. We have a lot of really exciting regional strategies as well. Australia is an example of that. There are others. And of course, we've done a lot on the emerging market side in the fixed income world as well. And we think we could have potential to do more in emerging markets as well. So we think we have the right breadth of product. Our clients are clearly looking for these opportunities. And so look, I think us and everybody else are looking forward to serving our clients and delivering fixed income products that fit their needs.

Thank you, Ali. Just for my follow-up, it's on the insurance channel. So I know the insurance channel is quite attractive and you actually have a lot of experience in this channel from your prior role. So I wanted to get an update also on what is the current appetite to form strategic relationships with a third-party insurance company? And are there any recent successes in expanding this channel which you haven't really highlighted yet?

Thanks for the question again. Look, insurance is a very large portion of our fixed income and institutional book here at Janus Henderson. And we have the right skills to broaden that and take that to more clients and ideally more strategic partners as well in that field. We have historically had strong strategic partnership here with insurance companies that are global in nature and want to continue down that path. You're right that I happen to have had a little bit of experience in developing relationships with insurance companies and developing the right product for themselves, for the insurance companies and their policyholders. Very importantly, remember, that's the cultural tie in for us. We think a lot about our clients and our clients' clients. And the insurance landscape is an area that fits very culturally with us at Janus Henderson because we do want to deliver better performance for those policyholders and for the firm. So we do see opportunity there. We have a great base to start with and we do think that it's a place that we have potential to grow in both organically and inorganically.

Thanks, Ali.

Our next question comes from Ken Worthington of JPMorgan. Ken, please go ahead.

Hi, good morning and thanks for taking the questions. You called out the improvements in the intermediary platform and the achievement of break-even flows in 4Q. It looks like these improvements are largely being driven by the success you're having in the CLO and MBS ETFs. I think the $1.3 billion improvement in intermediary sales this quarter equals the increase in sales in those two ETFs. So first, how broad based is the progress in U.S. intermediary, since it seems like the success you're having is concentrated in the two ETFs? Second, outflows seem to be rising in the retail equity fund business, or at least they did in 4Q, where fees are two to three times higher than the ETFs. So what is the outlook for fee rate based on the mixed changes here? And then lastly, can you compare the margins of the ETF business as it scales compared to the fund business? So basically, if the ETF business continues to succeed here, what happens to Janus margins?

Great. Thanks for those questions, Ken. First, from a U.S. intermediary perspective, it is very broad-based success. We are gaining market share and growing across the board. And absolutely being able to deliver something like an active fixed-income ETF just increases both that product breadth and growth and we still have a long way to go, by the way, but also increases our relevance with the client base to bring them other products as part of the suite of products that we bring to bear. The changes that we've made in U.S. intermediary are quite apparent. They include investments in technology and data. They include selectively changing talent, upgrading talent. They include changing the incentive plans, so that they're aligned with growth, growth exactly as you would think about it, Ken, both from a revenues perspective as well as a profitability perspective. And so the improvements are pretty broad. And, of course, there are sometimes some stars in those areas and we're happy to have one, but they're very broad-based. Taking a step even more broad than that, if you think about where we've had the highest inflows, they are exactly half in fixed income and half in equities of our top 10 inflows, call it, over the course of the period of time. So we feel like they're pretty broad-based. I'll start with the equities piece and then maybe hand it off to Roger for the performance fees element to that and the margins element. Even in equities, you are aware and we are all aware, for better or for worse, that the trend in flows in the U.S. intermediary channel has been negative from a flow perspective. So we would be having to gain a ton of share, not just a little bit of share, which is what we're doing, but a ton of share to change that trajectory. That is our intent over time. That is certainly what we're gunning for. But right now, we are gaining share in that marketplace as best as we can tell, even on the equity side. And overall, we're gaining share, obviously, if you then include the active fixed income ETF suite that we have. Roger, do you want to talk about the revenues and the margins?

Sure. Yes, as you say, the fee rates on the fixed income ETFs, as Ali has pointed out, they're active products. So they are – they have real fees on them. They are lower than equity mutual funds, yes. But they are certainly products that have scale to them. So from a margin point of view, as we grow these, then very much they add to the bottom line. And again, as a reminder, as Ali just said, it's a mix of products that we're selling. And our overall fee rate is something that I think does differentiate us. Our overall fee rate year-on-year was down less than a percentage point – sorry, less than a basis point. And that's a trend that we've seen over a few years of a very stable fee rate. And that's because of the mix of products that we sell. And again, what will drive that in the future, in the short term, it's most driven by markets. If equity markets go up, our fee rate will go up probably. And over the longer term, it depends on the mix of products that we sell. Probably the biggest opportunity we have is following the success that we've had of turning around. And hopefully there's more growth to come from U.S. institutional and broader, as you say, is turning around the EMEA business, which has been really tough in the marketplace generally. But obviously that's also a higher fee business, the EMEA and LATAM and Asian businesses. So there's a mix of products that we've got out there with a mix of fees. But yes, we're very – it's a strong product with strong profitability as we add assets to it and we hope to continue to add assets to those fixed income ETFs.

Our next question comes from Patrick Davitt of Autonomous Research. Patrick, please go ahead.

Hi. Good morning. Thanks. So you've been talking about rebuilding the pipeline for a few quarters now. Could you maybe update us on how that process is progressing? And is there any idea when we could see more tangible or visible progress rebuilding that pipeline? And more specifically, any known big wins or losses coming through in the first half of the year? Thank you.

Hi, Patrick. Thanks. You're right. We are rebuilding the pipeline. Remember that last year we had around $7 billion positive in flows in the institutional pipeline or in the institutional numbers that we had in terms of net flows. All of that happened in the first quarter. So as we've talked about before, there was real pent-up demand to kind of figure out what Janus Henderson was all about in a transformation period. And that pent-up demand has been released. So since then, really in the back half of 2023 and ongoing, we're building up that pipeline again. And that, as you know, as everybody on the phone knows, takes quite a bit of time in the institutional channel. The progress we're making is actually quite tangible. So if you think of leading indicators, meetings, as an example, with clients or consulting discussions that we're having, it looks quite positive. And the early to mid-state pipeline, I would call it, looks good, but these things take time. We've talked about things taking 12 to 18 months or more, right, in terms of actually going from a concept or an RFP to actual delivery. And that's the timeframe we should think about. From an early wins or losses perspective, we're finding real areas of interest in thematics for us, in solutions, in areas of income, we mentioned fixed income in an earlier discussion, as well as enhanced index and some multi-asset areas, plus some regional kind of specializations that we have. So we expect that to continue as well for the pipeline as it builds over the next little while.

Thanks. And then for my second question, I have a higher level question. BlackRock highlighted significant acceleration in passive ETFs and ETFs in EMEA on their call. And we can certainly see that in the numbers and regulators, both in the UK and the continent appear to be very focused on value for money and asset management. So with all that in mind, how are you thinking about the EMEA business positioning if that region truly is on the same path as the U.S.? And are you concerned that could complicate your path to consistent net inflow? Thanks.

Yes, thanks for the question. Look, we're aware of what some of our competitors say and we're obviously very much in touch with both the regulators and what happens in the marketplace. I would say maybe three things. The first one is that we clearly have strengthened ETF – ETF franchises that we've built in the U.S. And we do think that there is an opportunity to grow those over time in other parts of the world as well, using some of the similar skill sets. Now, what I would say is the nascence of ETFs in the EMEA and other markets is still early. And in the U.S., we're certainly getting to the party where there is a real resurgence of flows. So it's a resource allocation question. And certainly the U.S. is a main place where we're going to focus for that activity for the time being. The second thing that I'd say is that we have learned a lot in taking a strategic plan, executing it in the North American market, particularly on the intermediary side and seeing results that were broad-based so far, as you can tell. We think that there's a real opportunity to lift and shift those experiences into UK, EMEA, perhaps, LatAm, other areas that have not been as successful for us given some market trends for the past little while. So certainly, that is something that we are very focused on for that marketplace, and the teams here are very, very conscious of what's happened in the U.S. and how we can apply, with adjustments, some of those tools to lift and shift to success in the EMEA market. The third thing that I would say is for that marketplace, we are seeing some success applied there. So, for example, if you think about our market share in some of the areas, take Latin America, for example, take the U.S. offshore market, for example, we continue to do well over long periods of time there and have a brand to build on. As Roger was saying a moment ago, the headwinds of that marketplace have been quite steep from a market perspective, from an industry perspective. So, when hopefully, the headwinds turn a little bit more to tailwinds, we're in a really good position to grow those. And in that case, going to the first point, we should be very flexible and focused on bringing resources in the right vehicles for the right investment strategies that that market in EMEA, in particular, would require. So, last point effectively is to be agile and flexible as you see trade wins move and apply resources in different ways.

Our next question comes from Michael Cyprys of Morgan Stanley. Michael please go ahead.

Great, thanks. Good morning. Just a question on ETFs, you spoke about the Fixed Income side. Just curious how you're thinking about the opportunity with respect to active equity ETFs and maybe thoughts on mutual fund ETF conversions, how you're thinking about that, maybe what holds you back? And more broadly on launching more and driving more growth on the active equity ETF side, how you're thinking about that? What sort of products might make sense there?

Sure. Thanks a lot, Michael. So first off, from the ETF franchise in and of itself, I mentioned this a little while ago, but it's important perhaps to underline that the strategy we're putting in place with the ETF franchise is very much one around democratization of institutional-level investment skill sets. So, taking those skill sets that we have, securitized is the first rendition of that, more broadly in the Fixed Income world and bringing that to our client base. That has been successful, we've learned a lot, we think there are, point number two, opportunities to bring that to other areas of our business as well. Along the strategy of democratizing things that are institutional in nature from an investment perspective. The good news is, as you know, Michael, we have a lot in our menu, a lot in our palette that has institutional-level investment strategies that we can bring to our client base. And so it leads to the third point, which is, well, how do you do that? Well, we mentioned ETFs for sure, but there is a broader palette of vehicles we can bring to bear. In other words, we want to be vehicle-agnostic. We said this before, we said this publicly several times, we want to be vehicle-agnostic and be able to deliver in different forms, again, to democratize and broaden the skill sets that we have to different client sets. So to Patrick's question earlier, EMEA could be an example of that, other channels could be example of that, for example, in retirement to CIT launch that we've had or SMAs that we've had, et cetera, along the way, how we want to broaden the scope, not just in ETFs but be more agnostic from a vehicle perspective and deliver on that client.

Great, thanks. And just a follow-up question on the expense side, I was hoping you could elaborate a bit on the cost savings, where you're finding them, how you're able to deliver better than your initial expectations? And as you look to 2024, maybe you could just elaborate on where you're looking for savings and efficiencies in 2024. Thank you.

Yes, hi. Let me start on that, and then Ali may want to pick up on it. But yes, I mean we started the year and guided to, I think, it was low double digits on non-comp and have done a lot during the year to refine that. There are things that we worked out how to do cheaper, there are things that we paused where it didn't make sense to do it and then there were investments that we obviously made. As we pointed out, what we've done was very much under that ‘Fuel for Growth’ banner. We've taken the money, we've taken it from one place and reinvested in a place where we thought we could see better returns. And the U.S. intermediary space is a good example of that. We invested in our brands for the first time in many years. A lot of people know of Janus Henderson, but a lot of people really weren't considering investing with Janus Henderson, and building that brand is really important. So, there are a number of places we've done that. We achieved the ‘Fuel for Growth’, as Ali said, a little bit more and a little bit quicker than we had originally indicated which is pleasing. And we'll continue to do that. I mean, I think that the important thing is, is that this is a business that you need to constantly manage. You need to constantly be looking at where should you be spending money and refining that. So, we will continue to take some targeted actions and reinvest that money where we can see the strength and the results. And some of those things are hard results, it's flows, and some of them are things that we measure really hard. So a brand campaign is difficult to measure the results of, but we measure that really hard to determine are we being successful and can we take that further. So that's something we've done in the U.S. so far. We're starting to leverage that a little bit around the rest of the world, and should we continue to see success there, then that's something we do more. Again, all of that is built into the guidance that I've given. But yes, it's an ongoing management of expenses, both on the comp side and the non-comp side. And I think the other bit is around automation. As we seek efficiencies and we automate things, you do move a little bit from comp to non-comp. So again, you would expect our fixed comp expenses are pretty flat year-on-year, including the inflationary element, and our non-comp, as I said, we're guiding to sort of mid- to high single digits.

Our next question comes from Adam Beatty of UBS. Adam the line is yours.

Yes, thank you very much. Good morning. I wanted to ask about the retirement channel, which can be seasonally strong, especially here in the U.S. in first quarter and first half. Just maybe using Ali’s construct of leading indicators, just wondering what you are seeing in terms of activity, maybe discussions with planned sponsors or other signs of momentum and how you feel you are positioned for the retirement contribution season. Thank you.

Thanks a lot, Adam. It's certainly an area of focus for us, and that's in the U.S., in particular, part of our North America Client Group, which is newly formed and very much focused on, again, lifting and shifting, but within regions, some of the experiences that we've developed on the U.S. Intermediary channel to that channel. We have strong relationships with some of the leading providers in the space. We see lots of interest from them to develop products that are new but also to support the products that we do have to bring to bear there. One of the big drivers of what we’ve been successful in that channel, and we are seeing some clear green shoots there. Although to be fair, it is a small business for us at this point. We see potential again with this lift and shift is the CIT market, where we haven’t been present, and at least until relatively recently in the right areas. And so we do want to continue pushing on the CIT world where we do see some potential. I don’t have, Adam, kind of short-term beginning of year type numbers to give you, and I probably wouldn’t anyway. But clearly I think you’ve hit on an interesting opportunity for us to continue to grow.

Fair enough. I appreciate that. And just to follow-up, you mentioned products a couple of times and the broad palette that you have and obviously some recent success with product launches. So wondering how you’re thinking about that for this year 2024 in terms of maybe more same or less in terms of product launches, whether it’s number of products or seed capital deployed or what have you, and what areas might be the focus there. Thank you.

Sure. We have had – thanks for noticing some good successes in product launches over the past year. We’ve launched several products, for example, taking again core investment strategies that we have and applying them in other areas. For example, we did Global Life Sciences and Global Property as an OEIC. We did sustainable credit and securitized income as ETFs, as you know, obviously emerging market debt that we have, we turn into SICAV. We have plenty of SMAs. I just mentioned CITs. So we are on pace to continue to grow that in 2024 as well. We don’t actually think about it, and maybe we should, but we don’t actually think about it in terms of number of launches. We don’t have targets in terms of number of launches in the pipeline. We think about it very much as a portfolio of new products and a portfolio of new products that deliver on client needs. So client led, I guess, is how we think about it. That’s our filter for, frankly, everything at this firm, but in particular for new product launches, because we already have a great suite we want to scale, but we do see that there’s more products to launch. We do believe that there’s opportunities for us more broadly. And this could be organic or inorganic in some areas, in areas like ETFs, in areas like emerging markets as well. And again, that fits with client needs that we have.

I guess the last point I’d add to that, Adam is around seed capital that you mentioned. We have a good amount of seed capital. Our current expectation is we’ll probably add – there’s some things that we will harvest as that have been successful and we can bring that seed back and that’s something we manage very carefully. But there are a number of other things to Ali’s point, that either we’ll be seeding something new or where we’ve got something which is very successful is a proven product, but is not yet at scale. And we’ve got clients that are interested in investing in it and we’ll – what we call ramp it to bring capital into it. So you probably expect I’ll see capital to go up a little bit this year net of those things. Again, given that pipeline of satisfying client interests and putting what we’ve got good and making that available in the marketplace.

Our next question comes from Brian Bedell of Deutsche Bank. Brian, please go ahead.

Great. Thanks. Good morning, folks. Maybe just on the back of the continued success in the intermediary channel, Ali, if you could comment on going back to Slide 19, that path to getting to more sustainable organic growth, where you think you are on that journey. I think the – on a prior call you mentioned, obviously it’s still non-linear, but you thought maybe one to two quarters a year could have positive flows. Do you think we’re in a place now in 2024 where that might improve just say every other quarter? I know it’s really hard to predict, but just trying to get a sense of how you feel you’re on that path to more sustainable organic growth.

Hey, Brian. So Janus Henderson is at a point in its transformation where I think we can say we’re squarely on the right path. We’re making tons of progress. And you mentioned flows. I’ll get back to that in a second. We’re making tons of progress in many areas. And overall, we’re probably a little bit ahead of our own expectations at this point, but it’s still – we’re still not at our destination down that path to continue the analogy. We have lots of potential left. We have lots of room to go and look, that’s potential for our clients, potential for our shareholders, our employees, our other stakeholders. So we have a – we do have a long way to go. We are quite proud of having gone from negative $31 billion in outflows in 2022 to $0.7 billion in outflows in 2023. You’re right that the U.S. intermediary business was a great example of that. It was a great example of our ability to create and execute a strategic plan, put that into place and get some good results out of that. We do want to lift and shift that to more areas around the firm. Whether it be an EMEA, LatAm, that we talked about before, whether it be an institutional that was raising a question before as well. Look, we don’t give guidance in terms of on an annual basis or on a quarterly basis for sure, but I would argue that it’s not going to be linear. We still have to fix the pipeline and we’re getting good leading indicators to the Patrick’s question earlier, but we still have to fill the pipeline. On the institutional side, we still have to make sure that we can improve on EMEA and LatAm, maintain the progress we’re making in the U.S. So we’re not there yet is what I would say on firing on all cylinders or being at our destination.

Yes. That’s great color. And then maybe one for Roger, just on the performance fees, obviously very strong quarter in the fourth quarter, just as you think about moving into 2024, I think on the Janus fund side, I believe that’s still trending more consistently. Maybe just your view on that, but sort of a steady but slow and steady improvement. But any other view on any potential lumpiness in 2024. And then also just if you can just remind us, the comp ratio on performance piece, I’m sure it differs by product, but it looked like it wasn’t particularly high in the fourth quarter on the healthcare suite.

Yes, sure. Thanks, Brian. I guess, first of all, we’re obviously really pleased that our teams have delivered on behalf of clients and delivered so well, and that has resulted in some strong performance fees in the fourth quarter, particularly with performance in the second half of the year and the fourth quarter, particularly. As you say, performance fees are incredibly difficult to predict. It depends on future performance, and I certainly can’t do that. The only thing that we can, yes, at least give an indication of is the U.S. mutual fund fulcrum fees, which are three-year rolling and we obviously know what’s rolling off. So an indication of that, if you add flat performance for this year or historical performance, I think for this year, then the 66, I think we were for negative fulcrum fees in 2023 is sort of mid-50s in 2024. Really pleasing to see improvements in things like the research fund that’s got some really good numbers. It’s added since some changes in that were made around a year ago. So moving the right direction there. But you got to expect that still to be negative for the year. For other things, honestly, like I say, it’s a – your guess is as good as mine. We’ve got some great teams. I hope they deliver performance for clients. If they do, we’ll deliver performance fees. From a – when does that happen? As a reminder, the vast majority of our performance fees are annual. We have about $37 billion of assets subject to performance fees about $3 billion of that are quarterly performance fees. The rest is annual. The vast majority of that is Q4, and Q2 has a lump as well, which is really the European SICAVs. So don’t expect much in Q1 or Q3. But like I say, I can’t predict. On the comp ratio point of view, yeah, we don’t provide specifics on compensation, but as you say, it differs by product. And obviously, there’s also discretionary elements in there. And – but remember that comp has deferrals in it. So some of the performance fees that we’ve recognized in 2023 has some tail into the future years as those comp deferrals come through. But again, that’s all built into guidance. It’s built into the table on LTI that we’ve given you at the back of the deck. So again, you can see that, and that’s built into that that lower comp guidance for 2024.

Our next question comes from John Dunn of Evercore ISI. John, please go ahead.

Thank you. Could you just frame how much cash is available cash? And then you mentioned seating, but just maybe a quick force rank of the rest of the capital management hierarchy.

Hey, John. So, yes, cash as it looks is about $1 billion. But within that there is a piece of rate capital and a piece of working capital that we need. So there is probably – it’s a few hundred million dollars of, you could call it surplus cash that we really have. In terms of seed, as I said, that’s also baked into that chart on Slide 12. And I said, if anything, that we’ll harvest some this year. We’ll invest some more that may go up a little bit in 2024. And then the hierarchy of needs, if you like, from a capital point of view, is very – hopefully very well understood. At Janus Henderson, we have rate [ph] capital that we need. We hold capital asides for other things. And then there’s really investment in the business, which is really, in this business, is either seed capital, which we talked about or M&A. And if there isn’t an immediate need for cash for any of those benefits, we’d then consider returning excess cash to shareholders. And you’ve seen that over the last or since 2018, we’ve reduced the share count by 18.5%. So again, that, that hopefully is very well understood. We follow that pretty religiously.

Yes, I think you’re right. And then just maybe sometimes we skip over. But the Privacore relationship, can you just fill in a little more about it and just some of the milestones we should be looking for over the next two years?

Sure. Look, we’re very excited about this relationship we have with Privacore. Just as a reminder, because we haven’t talked about it a lot as you say. It fills a really big need in the value chain for privates. You have a set of GPs [ph] who selectively have extraordinarily good performance and want to get access to the wealth channel, but can’t service that channel. These are not small GPs. These are some of the larger GPs as well. They’re not the top six or seven private GPs in the world. It’s really difficult for them to reach that channel with the right levels of service and understanding of products, et cetera. And then you have the wealth channel, wirehouses, RIAs, others who want to have access to differentiated, higher performing products than the kind of behemoth that are out there but can’t get access to them because they know that their advisors won’t be serviced and their clients won’t be serviced. And so Privacore sits at that Nexus and really closes that gap of needs between those two pieces of the value chain. And we’ve been, I guess, surprised, maybe the wrong word, but pleased about the level of interest that we’ve had from both sides of that Nexus both the clients as well as the GPs, to broaden that relationship. So we’re pretty optimistic about that. We’ve talked about the market opportunity a little bit, but just to give you a sense of it, remember that this is a largely under allocated part of the wealth channel. The expectations are that, depending on who you’re talking to, 3 to 5x current allocations is what you should expect over the next, call it 5-ish to 10-ish years. And that suggests there’s trillions and trillions of dollars of opportunity here that we would love to be a part of as Janus Henderson to leverage our brand and our intermediate relationships along that way. And that’s how we work with Privacore. We have a milestone, which is this quarter to launch our first product with Privacore in the channel. That seems to be going well, we look forward to giving you more details about what that product is and the successes of that product we hope on the – over the next earnings calls. We’re not quite there to talk about it publicly at this point.

Our final question comes from Bill Katz of TD Cowen. Bill, please go ahead.

Thank you very much and thank you for taking the questions. So, Ali, just to sort of circle back, certainly great progress under your helm stewardship as you think about where we are in terms of the flow trajectory of sort of becoming more sustained to the positive. What’s sort of the timeline from here and the reason I’m asking, just so listening to all your commentary as well as reaction to QA, it really seems like passive and fixed income are the primary areas of growth. And just trying to understand like when do you think you can get to more of a positive net organic growth rate. Thank you.

Look, it’s a step at a time. We think we’re definitely again, squarely on the right path. You’re seeing real improvements across the Board. You’re absolutely right, Bill, to point out that they’ve been so far focused on areas that are not yet on the equity side of things or the higher fee rate side of things overall. But as you can imagine, that’s certainly an area of focus for us. It’s tough for me to give you the timing for it. Look, we’re ahead of plan today, but I wouldn’t anticipate again the same type of results as in 2023 from a flow perspective in 2024. What we see from external expectations perspective is probably roughly in the right realm of things. But we’ll get some more sense of it as the year goes on. Improvement is clearly there, tons of progress is clearly there. And we’re not blind to exactly trying to broaden the success across broader piece of our palette of products, channels, geographies, et cetera.

Okay. Just a follow-up, another big picture for you. Just as you think through the M&A model from here, and obviously you have great experience in your previous role, what is the right model in your mind? Just given sort of the blurring between traditional managers and alternative managers. You’ve mentioned insurance a couple of times. Is an Apollo or KKR model intriguing to you? Is a Blackstone model intriguing to you? Or is it more of some of your contemporary peers that are much larger in terms of traditional platform that sort of make the most sense in your mind? Thank you.

Given the successes that Blackstone and Apollo have had, it certainly is something that’s intriguing to us on behalf of our shareholders and delivering for client results. We are open minded to how we can grow this business, again on behalf of shareholders and clients. We don’t close doors. We have a priority list of things which, again, some of which you’ve mentioned, some which we’ve talked about, some which you’ve seen our recent successes in different vehicles, for example. So we do have a priority list, but we’re not blind to opportunities that may arise that are more opportunistic in nature that we might want to tackle. Again, we’re going to continue to be very, very disciplined on culture, on valuation, our potential for growth, and most importantly, very, very client led in the way we bring things in-house or partner with different entities.

With that, I’ll hand back to the team for any closing remarks.

Look, thanks, Jordan. Janus Henderson, at this point in this transformation is feeling squarely like we’re on the right path. We’re making tons of progress ahead of our expectations. I still don’t think we’re at our destination yet. So there’s lots of potential for shareholders, employees and other stakeholders and clients. And hopefully, this quarter starts to manifest some of those proof points. So thank you all for your interest in Janus Henderson today and have a nice rest of the day.

Ladies and gentlemen, this concludes today’s call. Thank you for joining. You may now disconnect your lines.