Janus Henderson Group plc (NYSE:JHG) Q1 2025 Earnings Call Transcript

Janus Henderson Group plc (NYSE:JHG) Q1 2025 Earnings Call Transcript May 1, 2025

Janus Henderson Group plc beats earnings expectations. Reported EPS is $0.79, expectations were $0.72.

Operator: Good morning. My name is Lucy, and I will be your conference facilitator today. Thank you for standing by, and welcome to the Janus Henderson Group First Quarter 2025 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 risk 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 is my pleasure to introduce Ali Dibadj, Chief Executive Officer of Janus Henderson. Mr. Dibadj you may begin your conference.

Ali Dibadj: Welcome, everyone, and thank you for joining us today on Janus Henderson’s first quarter 2025 earnings call. I’m Ali Dibadj. I’m joined by our CFO, Roger Thompson. In today’s call, I’ll start with some thoughts on the quarter before handing it over to Roger to run through quarterly results in more detail. After Roger’s comments, I’ll provide an update on our strategic progress, including our recently announced multifaceted strategic partnership with the Guardian Life Insurance Company, which we are excited about and believe will deliver value for our clients and shareholders and Guardian and its policyholders. And then we’ll take your questions following those prepared remarks. Turning to Slide 2. Market conditions continue to be tumultuous as changing monetary and fiscal policies, US recession fears and global trade uncertainty dampen investor sentiment.

While Janus Henderson is not immune to the current market conditions, we believe we can navigate this period of market uncertainty given our truly global footprint. We have a diverse and global client base, which we are proactively engaging and supporting. It’s during challenging times like these, our clients and their clients need our differentiated insights, investment discipline and world-class service the most. Turning to the first quarter, even amidst these significant market challenges, we were resilient and able to deliver a good set of results. Assets under management decreased only 1% to $373.2 billion as market declines were partially offset by $2 billion of positive net flows and favorable currency adjustments due to a weakening US dollar.

We delivered our fourth consecutive quarter of positive net flows. The net inflow results reflect a 44% increase in year-over-year gross sales, positive net flows again in both of our intermediary and institutional channels, and we continue to maintain and capture market share in several key intermediary markets. As we stated previously, delivering positive active flows is a key differentiator for Janus Henderson in an industry with well-documented active flow headwinds. Turning to investment performance. Despite some short-term volatility, which often happens in the industry amidst a fast market dislocation, our long-term investment performance is solid with at least 65% of assets beating respective benchmarks on a three, five and 10-year basis.

Against peers, investment performance is even stronger with over 70% of AUM in the top two Morningstar quartiles over all-time periods. The current market dislocation, while challenging, presents unique opportunities. Tides will not lift all boats and active asset management is critical. In situations such as this, our investment professionals are seeing opportunities to invest in high-quality, innovative and/or undervalued stocks, bonds and other securities to deliver for our clients. We have always had a focus on quality and that quality theme is as important now as ever. Moving to our financial results, which remains solid. Adjusted diluted EPS of $0.79 is an 11% increase compared to the first quarter of 2024. Our financial performance and strong balance sheet continue to provide us the flexibility to invest in the business, both organically and inorganically and return cash to shareholders.

Today, we announced a 3% increase to the quarterly dividend and a new Board-approved share buyback authorization of up to $200 million through April 2026. We also see many asset managers out there looking for a safer harbor to pull into and thus we remain active and disciplined in M&A as well. In summary, our net flows are positive. Our long-term investment performance is solid. We continue to execute our strategy. Financial results are good. We continue to be disciplined and ROI focus on expenses. We have a strong and stable balance sheet and our truly global footprint positions us well for the future and provides a strong foundation to navigate periods of market uncertainty. I’ll now turn the call over to Roger to run you through the detail of the financial results.

Roger Thompson: Thanks, Ali, and thank you everyone for joining us on today’s call. Starting on Slide 3, an investment performance. As Ali mentioned, despite some short-term volatility, our medium and long-term investment performance versus benchmark remained solid with at least 65% of AUM beating their respective benchmarks over the three, five and 10-year time periods. Overall investment compared to peers continues to be competitively strong with at least 70% of AUM in the top 2 Morningstar quartiles over all-time periods presented. Active management in portfolios is essential during times of disruption, times such as these and our over 350 investment professionals are intensely focused on differentiating between the good and the bad companies, separating the wheat from the chaffs and positioning us to deliver the best possible investment outcomes for our clients and their clients over the long-term.

Slide 4 shows total company flows by quarter. Net inflows for the quarter were $2 billion compared to net inflows of $3.3 billion last quarter and a significant improvement over net outflows of $3 billion a year-ago. The year-over-year improvement was primarily driven by a 44% increase in gross sales and marked the best quarterly gross sales result in over four years. The increase in gross sales compared to the prior year is across a broad range of regions and strategies, including ETFs, absolute return on equity, our biotech hedge fund, US mid-cap growth, balanced global small-cap, multi-sector credit and asset-backed securities. Turning to Slide 5 and flows by client type. Please note that beginning in the first quarter of 2025, ETF gross flow activity is reflected in the applicable client type that generated the activity.

Access to improved data transparency enabled us to make this change. For periods prior to 2025, all ETF flow activity is shown in the intermediary channel. This change better illustrates the wide range of clients investing in our suite of active ETFs from supermarket clients in the self-directed channel, advised clients and model portfolios within intermediary and larger sophisticated clients within our institutional channel. The intermediary channel net inflows were positive $1.5 billion. In the first-quarter, the US and Asia Pacific region experienced net inflows with net outflows in EMEA. In the US, net flows were positive for the seventh consecutive quarter. Several strategies contributed to the net inflows in the first quarter, including most of the active ETFs, multi-sector credit and US mid-cap growth.

US intermediary is a key initiative under our Protect & Grow strategic pillar, and we’re pleased that we’ve delivered net inflows in the first quarter and are gaining market share against a challenging market backdrop. Under our Amplify strategic pillar, we’ve talked about amplifying our investment and client service strengths using various means, including vehicles through which we deliver our products. In addition to ETFs, flows into CITs and hedge funds in this channel were positive in the first quarter. In APAC intermediary, net flows were positive for the third consecutive quarter and the best intermediary net flow result in the region in over three years. Net inflows in this channel demonstrate our truly global investment capabilities, which included global technology leaders managed by our Edinburgh team, tactical fixed-income managed by our Melbourne team and the balanced strategy managed out of our Denver office.

Institutional net inflows were $800 million compared to net inflows of $900 million in the prior quarter. Institutional net flows include $600 million of ETF net inflows. We’re pleased to see increased interest and utilization of our high-quality, highly-liquid and stable securitized fixed-income ETFs from institutional clients. Elsewhere, we’re continuing to work to create a sustainable pipeline and we’re encouraged by the leading indicators and the increasing number of opportunities across all of our regions. Our pipeline is growing and is starting to mature, but there is still much more to do. Net outflows for the self-directed channel, which includes direct and supermarket investors, were $300 million. The first quarter includes approximately $700 million of ETF net inflows from our supermarket clients.

Excluding ETFs, self-directed net outflows were roughly flat to the prior quarter and the prior year. It’s good to see self-directed clients taking advantage of the opportunity to invest directly in our ETFs. Slide 6 shows flows in the quarter by capability. Equity flows were negative $4.2 billion. A challenging environment for active equities was exacerbated during the quarter with the market dislocation and risk-off sentiment. First quarter net inflows for fixed income were $5.6 billion compared to $5.2 billion of net inflows in the prior quarter. Several strategies contributed to the positive fixed income flows. Active fixed income ETFs delivered strong positive flows of $5.7 billion in the quarter, led by flows in JAAA. Other strategies contributing to positive flows were multi-sector credit, asset-backed securities and Australian fixed income.

Net outflows in the multi-asset capability were $600 million, primarily due to net outflows in the balanced strategy. Despite net outflows in aggregate for balanced, several regions were net positive, including EMEA, Latin America and Asia-Pacific. And finally, net inflows in the alternatives capability were $1.2 billion, driven primarily by absolute return on equity and pooled hedge funds. Moving on to the financials. Slide 7 is our US GAAP statement of income, and on Slide 8, we explain the adjusted financial results. Adjusted operating results are lower compared to the prior quarter, primarily due to the significant annual performance fees realized in the fourth quarter of ’24. More relevantly, compared to the first quarter a year ago, operating income and EPS are up 22% and up 11% respectively as a result of higher average AUM and operating leverage and improved three-year investment performance, leading to better mutual fund performance fees.

Looking at the detail, adjusted revenue decreased 14% compared to the prior quarter, primarily due to those lower seasonal performance fees and increased 14% compared to the prior year, primarily due to higher management fees on higher average AUM and the improved US mutual fund performance fees. Net management fee margin remained relatively stable at 48.5 basis points, which remains a differentiator for Janus Henderson. I want to remind you that as part of the announced strategic partnership with Guardian, Janus Henderson will manage the $45 billion investment-grade public fixed income portfolio for Guardian’s general account, and we expect that our aggregate net management fee rate will be approximately 5 to 6 basis points lower once the assets are fully on-boarded, which is expected to be at the end of the second quarter.

First quarter performance fees of negative $4 million primarily consists of US mutual fund performance fees. Whilst negative, US mutual fund performance fees have improved significantly compared to the negative $13 million a year ago. Continuing on to expenses, adjusted operating expenses for the first quarter decreased 9% to $330 million compared to the prior quarter. Adjusted employee compensation expense, which includes fixed and variable costs, was down 13% compared to the prior quarter, primarily from incentive compensation on higher revenues in the fourth quarter of ’24. Adjusted LTI increased 21% compared to the prior quarter, largely due to seasonal payroll taxes triggered by annual vestings in the quarter. In the appendix, we’ve provided the usual table on the expected future amortization of existing grants for you to use in your models.

The first quarter adjusted comp to revenue ratio was seasonally higher at 45.8%, which is down from 48.2% in the first quarter of last year and 50.1% two years ago. The higher rate in the first quarter is primarily due to the payroll taxes on annual LTI vesting and the beginning of year reset of payroll taxes and retirement contributions. Adjusted non-comp operating expenses decreased 12% compared to the fourth quarter, primarily from lower marketing and G&A expenses. With respect to 2025 expense expectations, we are navigating an uncertain operating landscape. We remain committed to strong cost discipline, ensuring that we manage our cost base while continuing to support the long-term growth objectives of the business. Our previously stated expected compensation ratio in 2025 remains unchanged at 43% to 44%, assuming 31st of March AUM and a zero market assumption for the remainder of the year.

For non-compensation, including the non-comp related to the new Guardian business and the weakening US dollar, we expect to be at the higher end of the mid to high single digit percentage growth guidance due to the investments supporting our ongoing strategic initiatives and operational efficiencies, inflation, and the full-year impact of the consolidation of VPC, NBK, Tabula and now Guardian. If the market deteriorates further and that decline is prolonged, we have expense levers and we’ll actively manage our cost structure, allowing us to maintain financial discipline and the flexibility to continue to invest strategically in the business where it makes sense to do so. Finally, our expectation of the firm’s tax rate on adjusted net income attributable to JHG remains unchanged at a range of 23% to 25%.

Our first quarter adjusted operating margin was 32%, an increase of 220 basis points from a year ago, demonstrating the leverage in our business. Adjusted diluted EPS was $0.79, up 11% from the comparable Q1 2024 period. Skipping over Slide 9 and wrapping up on Slide 10 with a look at our liquidity profile. Our balance sheet remains strong and stable. Cash and cash equivalents were $1.1 billion as of the 31st of March, which is lower than the end of the year, primarily due to the payment of annual variable compensation. The first quarter cash position is typically our lowest given the seasonal cash needs. Compared to the same period a year ago, our cash and cash equivalents are 19% higher. During the quarter, we funded our quarterly dividend and repurchased 0.6 million shares for $27 million.

Shares repurchased were lower this quarter as we paused our share buyback during the lead up to the Guardian strategic partnership announcement and through today’s release of earnings to the market. As Ali discussed, we are committed to returning cash to shareholders and are pleased to announce that the Board has authorized a new share buyback program of up to $200 million to be completed by April 2026. We will start this in short order. The Board has also approved a 3% increase in our quarterly dividend to $0.40 per share to be paid on the 29th of May to shareholders of record as at the 12th of May. The buyback program and the increase in our dividends do not alter our ability to invest in the business organically or inorganically and return cash to shareholders.

Currently, our liquidity profile allows us to do both. Our return of excess cash is consistent with our capital allocation framework. We’ll look to return capital to shareholders where there isn’t an immediately more compelling investment in the business. In summary, we have a strong liquidity position and we continue to balance the capital needs and the investment opportunities of the business with returning capital to shareholders. With that, I’d like to turn it back over to Ali to give an update on our strategic progress.

Ali Dibadj: Thanks, Roger. Turning to Slide 11, and a reminder of our three strategic pillars of protect and 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 has us on the path to over time deliver organic growth consistently. In protect and grow, we’ve talked previously about the importance of protecting and growing our US intermediary business and the progress we’ve made in capturing market share. Within amplify, we’ve talked about our institutional business, our product development and expansion efforts, the acquisition of Tabula, and the partnership with Anemoy and Centrifuge. We also recently announced our partnership with Guardian Life, which I’ll discuss in more detail later in the presentation.

Under diversify, we expanded into differentiated private market capabilities for clients with the acquisitions of NBK Capital Partners and Victory Park Capital, and we established our joint venture Privacore focused on the democratization of alternatives. We’ve spoken about M&A quite a bit. So how does M&A and partnerships fit into our strategy? Recall that for us at least, M&A is a lever to deliver all three elements of our strategy and not a strategy unto itself. On Slide 12, we outline how M&A and strategic partnerships are contributing to our strategic vision, not yet to Protect & Grow, but so far to Amplify and Diversify the business. We followed a targeted approach. We won’t be all things to all people, but have placed measured bets on growth vectors that have the potential for significantly higher growth rates over the long term compared to our existing business.

As I said previously, we want to skate to where the puck is going on behalf of clients and shareholders, and we believe those with whom we have partnered are uniquely positioned to help us grow faster. Asset-backed lending has emerged as a significant and differentiated market opportunity within private credit, and we believe it will remain appealing to clients as they increasingly look to diversify their private credit exposure beyond just direct lending. Victory Park Capital specializes in asset-backed lending and has differentiated origination. We believe that despite all the fervor regarding asset-backed lending out there, there are actually only a handful or less of asset management firms who have proven track records of doing asset-backed private credit well and have been doing it for decades.

We are fortunate to be a leader among that select group with Victory Park Capital that has been doing asset-backed lending way before it was the cool thing to talk about. Others are attempting asset-backed with a handful of hires, but our scaled platform of 30 investment professionals, a high-quality technology platform to manage risk of smaller balanced credits and a history of relationships in the sector is unmatched. In active ETFs, the European ETF market is undergoing a significant transformation, growing considerably and mirroring trends observed in the US market where active management is increasingly incorporated in the ETF wrapper. This shift represents a considerable growth opportunity for asset managers seeking to broaden the way in which clients access their investment capabilities and capitalize on evolving client preferences in the European market.

The acquisition of Tabula allows Janus Henderson early access to this growing market and builds on our extremely successful suite of active ETFs in the US where Janus Henderson is now eighth-largest provider of active ETFs and third largest provider of active fixed-income ETFs. We’ve quickly moved to leverage the business, launching four active ETFs in the last six months with more to come in 2025. In Emerging Market Debt, we’ve addressed both the private and public markets. We expanded into differentiated private markets capabilities for clients with the acquisition of NBK Capital Partners, which allows Janus Henderson early entry into the rapidly growing emerging markets private capital space. On the public side, we brought in a well-respected emerging market debt team.

This team is a key component of a global fixed income platform that supports single strategy and multi-sector portfolios. Privacore seize to take advantage of and be the leader in the democratization of private alternatives into the private wealth channel. Alternatives as a category represents a several trillion dollar market today with asset growth expected to continue. High net worth investors command $80 trillion of assets globally and are expected to account for much of the growth in private markets. Privacore is selling on three wirehouse platforms and expects to add another this year. They also are expanding into RIAs and broker dealers. Privacore has more products coming online in the upcoming months and they are working with Victory Park Capital on innovative solutions for the wealth channel.

In September of last year, we partnered Anemoy and Centrifuge to manage Anemoy’s liquid treasury fund, a fully onchain tokenized fund issued on Centrifuge’s public blockchain that provides investors with direct access to the short-term US treasury bills. Blockchain readiness and tokenization are key pillars underpinning Janus Henderson’s innovation strategy and the decision to partner with Anemoy and Centrifuge in this way reflects the firm’s commitment to digital assets and our desire to embrace disruptive financial technologies. The partnership has already begun to demonstrate success with initial $200 million allocation now funded as we were one of three firms selected from 40 submissions in the largest tokenization RFP ever conducted. This early validation is very rewarding, and we will continue to expand our offering where tokenization can provide real-world benefits to clients today while we also keep an eye on the potential benefits to a broader range of clients in the future.

Finally, most recently, we further solidified our presence in insurance with the announced strategic partnership with Guardian, which we are very excited about. On that, turning to Slide 13 for more background on the multifaceted strategic partnership with Guardian announced earlier in April. Guardian is one of America’s largest and most well-respected life insurers and a leading provider of employee benefits. Guardian has a history of profitable growth, $172 billion in assets under administration and a 7% annual growth rate since 2019. We are extremely energized to partner with Guardian. This partnership was founded on a shared set of client-focused values, leverages our complementary strengths, creates alignment for mutual growth and intends to achieve mutually beneficial outcomes for policyholders, our clients, shareholders and employees.

Through the partnership, Janus Henderson will manage the $45 billion investment-grade public fixed-income portfolio from Guardian’s general account, expanding Janus Henderson’s pro-forma fixed-income AUM to $135 billion, bringing pro-forma fixed-income AUM to over 30% of pro-forma company-wide AUM. On a pro-forma basis again, Janus Henderson will manage over $100 billion for global insurance companies, greatly expanding the firm’s institutional reach and insurance presence and positions Janus Henderson as a top 15 unaffiliated insurance asset manager. In addition, Guardian will commit up to $400 million of seed capital to help accelerate Janus Henderson’s continued innovation in securitized credit and high-quality active fixed-income products as well as other fixed-income capabilities.

One opportunity area is the further expansion of our ETFs. This would build on the success of Janus Henderson’s active fixed-income ETF suite, which includes JAAA, the largest CLO ETF. JBBB, which provides exposure to floating-rate CLOs, generally rated BBB. JSI, which invests in opportunities across the US securitized markets. JMBS, the largest actively managed mortgage-backed securities ETF. And VNLA, an active global short-duration income ETF. Guardian and Janus Henderson have agreed to pursue a strategic initiative to co-develop proprietary multi-asset solution models for Guardian’s duly registered broker dealer and registered investment advisor Park Avenue Securities or PAS. As a key partner to PAS, Janus Henderson will develop investment solutions for PAS clients, bringing together Janus Henderson’s full suite of global investment allocation solutions capabilities, including Janus Henderson Edge, the firm’s award-winning proprietary analytics platform from its portfolio construction and strategy team.

Guardian will receive equity warrants and other economic consideration designed to support a shared goal of accelerating growth and driving value creation. On a standalone basis, excluding other upside potential from the partnership, the Guardian IMA contributes positively to Janus Henderson’s operating margins and is accretive to earnings upon full integration by mid-2026. As previously mentioned, Janus Henderson’s aggregate net management fee rate will be approximately 5 basis points to 6 basis points lower once the assets are fully onboarded, which is expected to be at the end of the second quarter of 2025. Wrapping up on Slide 14, we believe we have a strong foundation as a truly global asset manager, enabling Janus Henderson to navigate periods of market uncertainty.

We have a diverse and global client base that we are proactively engaging and supporting and we have a broad offering of investment strategies and styles with global and regional focuses. Despite some short-term volatility, our long-term investment performance is solid. The structuring creates opportunity for active managers like Janus Henderson to look at a wider spectrum of companies that we think will outperform over the longer term. Flows were net positive for the fourth consecutive quarter, resulting in a 2% organic growth rate over the last 12 months. Organic growth is a key differentiator for Janus Henderson in an industry with well-documented active flow headwinds. We announced a multifaceted strategic partnership with Guardian, amplifying several areas of our business.

Importantly, this partnership demonstrates that we are a home for some of the most sophisticated clients in the world. Great deals are still going to happen even in this uncertain environment, and we will find ways to win and grow. In that vein, we continue to look actively to buy, build or partner to further diversify the business where clients give us the right. We have a strong balance sheet and good free-cash flow generation, which enables us to return cash to shareholders and reinvest in the business. Looking ahead, in this period of uncertainty, we’ll focus on what we can control, including cost discipline, investment in the business, client outreach and investment performance. Let me turn the call back over to the operator to take your questions.

Operator: [Operator Instructions] Our first question comes from Ken Worthington of JPMorgan. Ken, your line is now open. Please go ahead.

Ken Worthington: Hi, good morning. Thanks for taking the questions. Maybe first, I wanted to dig into CLO ETF capacity. Given the size of money coming in over a short period and the risk that in poor market conditions, money might be possibly flowing out as quickly, how are you thinking about the ETF franchise’s ability to navigate CEO liquidity, particularly in times of stress? And are there any lessons maybe you’ve learned in April that sort of confirm or alter your views on the build out of this product suite?

Q&A Session

Ali Dibadj: Hey, Ken. Thanks for the question. So we’ve been quite fortunate with the CLO franchises that we’ve created, obviously in ETF form preferentially for clients. In fact, year-to-date flows are positive $3 billion, which is more than peers combined. So effectively, we are the category. We’re about 80% of the market share in this category and we’ve created this category. So effectively, we are the market. And what we’ve seen mostly is that investors in this ETF and the franchises that we brought on board even on ETF are medium to long-term type investors. Sometimes that does mean some investors have taken it from a shorter-term perspective, and that’s where you get the uncertainty in the marketplace create the volatility that you’re exactly asking about.

We were watching this very, very closely, as you can imagine. And what we’ve seen consistently, particularly in a quite volatile time in the early couple of weeks of April, since then it’s been pretty stable, but in the early couple of weeks of April, that the redemptions have been absorbed completely as expected, very little impact on the CLO market, on the portfolio. Again, these are underlyingly quite liquid. There’s an in-kind element, obviously, given the ETF piece to it as well. So we’ve seen no dislocations, no surprises. In fact, we are quite pleased with how the market reacted in a very measured and disciplined manner, again, exactly as we’d expected even given our size.

Ken Worthington: Okay. Perfect. Thank you for that. And then just maybe quickly on the institutional channel, second consecutive quarter of positive flows. That part of the franchise continues to perform better. Can you talk about next steps in terms of where you’re going to drive better results from here going forward? What’s sort of next in the pecking order priorities to continue to drive even better results as we look forward?

Ali Dibadj: On institutional specifically, Ken?

Ken Worthington: Institutional specifically.

Ali Dibadj: Yeah. So, look, you’re right, it’s now a couple of consecutive quarters of positive flows. You’ve seen some in the past, but we’re starting to get a little bit more steady in that way. And the pipeline is building. Set aside the one not funded $45 billion from Guardian, that’s obviously a big pipeline win that we’re very proud about, but if you think about some of the leading indicators, for example, in the US, we’re seeing an RFP activity that’s up about 100% quarter-on-quarter or I should say Q1 ’24 to Q1 ’25. We’ve gotten more and more consultant support across the board. In fact, we had a very big firm watch flag that was on us for many years, removed from us just this past quarter, which opens up, as you’d imagine, many more doors globally.

We’re continuing to see opportunities up and being in kind of late-stage opportunities and finals and all this sort of stuff in the kind of 20% to 30% range year-on-year again in the US. And EMEA and the rest of the world is the same thing. There we’re seeing opportunities increase by around 60%. So things are, as we’ve said, it would take some time, but playing out as planned as we’d expected. And part of that is not just because of the products that we’re certainly bringing to bear already, but also some of the new products we brought to bear, whether it be emerging market debt or NBK or Victory Park Capital or things like that we can do with Guardian. So we are seeing a broad-based interest with the products that we already have and we’ve had for quite some time.

We’re seeing a lot of interest in some, what we’d call them, immutable thematics like tech and healthcare and smaller cap equities where there’s opportunities and absolute return equities and high-conviction equities in Europe. We’ve recently seen a lot more interest and investments, I think, given all the headlines around investing in Europe. And gladly, we are a truly global firm and can offer great European investments and global investments. Multi-asset is coming up on the radar screen, securitize obviously. Our balanced fund is showing some progress because people want the balance of fixed income and the yield of fixed income with the upside potential of equities. So I don’t want to give you a big laundry list, I kind of did, but it’s a broad gamut of areas where people are really looking to us uninstitutional and the consultant environment is becoming much more benign towards us as well.

Ken Worthington: That’s excellent. Thank you so much.

Operator: Our next question comes from Bill Katz of TD Cowen. Bill, your line is now open. Please go ahead.

Bill Katz: Great. Thank you very much. Good morning and congrats again on the Guardian transaction. Maybe starting there, it seems like a very intriguing deal on a lot of vectors from my perspective. Can you talk a little bit about where you see the greatest opportunity for incremental growth maybe just with the Guardian itself? I think you mentioned that business has grown about 7% annually, but also in terms of their incremental distribution platform, what kind of products might you see the early opportunities for wins? Thank you.

Ali Dibadj: Hey, Bill. Thanks very much for the question on Guardian. As you can probably tell, we’re pretty energized about this partnership, and it starts with really sharing the same client-focused values, policyholder values, really sharing complementary strengths, and I’ll get to some of that on distribution side for sure, and a very important realignment for mutual growth from an economics perspective. We think we can certainly enhance Guardian’s both investment in solutions capabilities and benefiting its policyholders and its clients. We’re very pleased that this partnership ends up developing a $100 billion global insurance asset manager like us. That’s the number for us. That puts us into the top 15 realm. And we think that there is, point number one, really great growth potential to amplify some of the insurance relationships that we can have with others.

Indeed, we’ve had several phone calls and outreaches from other insurance companies really intrigued by this deal, want to learn more about this deal and trying to understand why the — some of the most sophisticated assets in the world trust us and want to come to us and we think that’s — we’re becoming a true global contender to get more insurance assets to your growth question. And we think we can amplify that. Still in the amplify realm, not only in insurance, but beyond that, we think we have the opportunity to, again, bring to bear the winning opportunity of getting these great assets with other institutional clients as well. And again, there too, we’re getting some more intriguing phone calls and outreaches about what other partnerships we can create.

We clearly have the seed opportunity of $400 million that we can bring to bear. And I think we’ve — the team here has shown a track record of growing products. We think we can take that seed and grow them. And of course, very, very importantly, we have a great set of employees that are still currently at Guardian coming over to us, and we definitely want to leverage their skill sets and their expertise. We’re very, very proud and happy that they’ve decided to join us at Janus Henderson and grow their businesses. Now, in particular, on the distribution side of things, you’re right, they have a great broker-dealer, Park Avenue Securities. It’s about $15.5 billion of client assets under management. We have a partnership with them where we’re developing proprietary both models, diagnostic tools, investment solutions, training modules, et cetera, really to amplify what we have internally from a broader solutions perspective, our multi-asset business, our adaptive asset business, our portfolio construction business, our quant solutions businesses as well.

And we think that’s going to be very, very fruitful because we can bring to bear a better investment platform for those 2,400 clients for those — sorry, 2,400 advisors. We can also bring new products to those clients and grow that business. So we feel very, very pleased about all the different vectors that this partnership can bring to bear to grow the business, let alone the underlying $45 billion that we’re starting with.

Bill Katz: Great. Thank you. And then just as a follow-up, I think you mentioned a couple of times in the commentary just around the pipeline for M&A. Can you talk a little bit about where incrementally you might be interested on — interested in, excuse me? And then as you think about maybe the expectation between the bid and the ask, where does that sit, particularly after such a turbulent year-to-date market backdrop? Thank you.

Ali Dibadj: Thanks for the question. It’s a very, very active M&A environment right now. We will, as always and as you’ve seen, as — and I think Page 12 of our presentation, that kind of additional page, would support the view that we’re always going to be client-led. We’re always going to be market-led. And so we continue to look at opportunities to buy, build or partner across the board. Our balance sheet and cash flow allows us to be a safe harbor, I guess, in these tumultuous times. There is significant interest out there in speaking with us. I wouldn’t say, Bill, that on the valuation point, there is capitulation in any sort, but there’s certainly curiosity given the volatility in the marketplace and joining forces with a firm that has shown a pretty steady not just revenue growth, but organic revenue growth, pretty steady execution on its strategy, pretty steady growth of businesses that we brought on board already and want to continue to do that.

But we’ll continue to be very disciplined on that front across-the-board. But we see a lot of activity out there, I think you’re right. And I would say that the bid-ask spread has come down a little bit, but I’m not sure you’re capitulating yet and some of our peers.

Bill Katz: Thank you for taking the questions.

Operator: Thank you. Our next question is from Craig Siegenthaler of Bank of America. Craig, your line is now open. Please go ahead.

Craig Siegenthaler: Good morning, Ali. Hope everyone is doing well, and congrats on the Guardian Life [IAM] (ph) agreement signing. We actually have a follow-up to Bill’s question. And I heard your comments on the $45 billion AUM and the net 5 basis point to 6 basis point management fee rate. But my question is on the organic growth rate. What do you see as the flow trajectory on this $45 billion AUM base going forward? Or should we essentially assume it’s sort of stable at $45 billion at the 5 basis point to 6 basis point fee rate?

Roger Thompson: So Guardian had a great growth trajectory historically. One of the reasons that we partnered with them is the like-mindedness about continuing to grow. We certainly would expect and hope and continue to see growth in that $45 billion given they’re such a successful company, and we’re both aligned with growing that business.

Craig Siegenthaler: Thanks, Ali. And just for a follow-up, when we take a step back and look at the entire $100 billion plus AUM insurance client business, there’s lots of partnerships now formed between insurance companies and asset managers, especially the annuity business. Is there a lot more AUM up for grabs or is most of it tied-up now either with third-party asset managers or internal CIU divisions where they’re really not looking for a partner?

Ali Dibadj: There’s plenty of room out there actually. And look, I want to underline the obvious here perhaps is that this partnership with Guardian was hard fought, and it does suggest that we are a great home for the most sophisticated assets in the world. And really true global contender relative to a lot of others who were buying for those assets. Again, we’re number 15 now in the world with the real aspiration, Craig, to your question, to continue to garner assets from the insurance clients. That is a growing client base and a growing asset-base as a category. So again, as Page 12 would suggest, we expect growth not only organically, but for us inorganically there. And there are many more opportunities in the insurance world globally, remember for us.

If you think about it, $45 billion is half that $100 billion roughly. There’s another $55 billion elsewhere in the world that we also think has opportunity. So we think there’s quite a lot of opportunity out there, and partnering with a similar culture with a growth trajectory and with the services and investment skill-sets and client service that we bring to bear to insurance clients, we see enormous opportunity there to continue to grow that business.

Craig Siegenthaler: Thanks, Ali.

Operator: [Operator Instructions] We have a question from Michael Cyprys of Morgan Stanley. Michael, your line is now open. Please go ahead.

Annalei Davis: Hey, this is Annalei Davis on for Mike. You guys talked a little bit about the setup for asset management in 2025. Just curious if you could talk a little bit more about how you see the opportunity set just given continued uncertainty. And also what steps you guys taking to help your investment teams best capture this? Thanks.

Ali Dibadj: Annalei, thanks for the question. So let me maybe divide it into two buckets. Talking about the current environment and talking about the kind of what we’re hearing from clients in that context. Look, clearly, there’s a dislocation in the marketplace. It happened all of a sudden, it happened quite quickly. It certainly feels like it’s stabilizing now. We don’t really ever know, but it feels like it’s stabilizing now. And certainly a dislocation may impact some of the short-term flows and investment performance, and certainly I’ll get to that in a second, but also really importantly, particularly for us, offers real great opportunities. We are an active investing shop. We have 350 investors around the world who spent all of their time, as Roger said in the prepared remarks, separating wheat from chaff, finding the good company for the bad company.

And now more than ever, our clients need that help, need that help to not just assume an index is going to drive everything, particularly if it’s focused on seven stocks that are lagging a little bit. And our clients need that help to figure out geographically where they can distribute their AUM. And that is perfectly falling in our lap. Again, not just with the 350 investors we have around the world, but with the roughly 600 marketing and client service people we have around the world who support that client base. So candidly, dislocation in the short-term might cause pause for some others for us across the floors, across our offices around the world, we see enormous opportunity to serve clients better given who we are and what we do. Again, an active asset management shop with great client service and a focus on delivering together for our clients.

Now from — the second part of it is from a business perspective, again, we are a truly global operation. We are not just US, we are global, and we can offer that to our clients. And on top of that, we have a very strong balance sheet that offers, I think to Craig’s question earlier on, offers us a lot of opportunity to both invest in the business, return cash to shareholders, and importantly, be a safe harbor for asset managers who are a little bit more impacted by this — by this uncertainty. So M&A is part of that. We’re also, Annalei, to your question, very, very focused on being disciplined on our cost structure. We are looking at always continuous opportunities to improve our cost structure to become more efficient, become more efficient on behalf of our shareholders as well as our employees and our clients and to be able to deliver that.

So we see this opportunity set greater than the risk set in this current environment. Second part, I think to your question, sorry if I’ve expanded more than you wanted me to, but on the kind of client views part of things, again, I would say that there is a subset of clients that are more short-term oriented, and I’d argue have been a little bit spooked for lack of a better word, probably not a technical term, but for lack of a better word in the marketplace right now. But most of what we’re seeing is people looking to reallocate to active — reallocate to global, reallocate to fixed-income both on the public and the private side and have had really strong areas of interest across-the-board for us. And I mentioned some of them, but some of the technology or healthcare is informatics, some of the small-cap equities, absolute return strategies that we have.

Some of the contrarian strategy is actually people looking for the opposite bet, high-conviction strategies in Europe and around the world, global research strategies, adaptive multi-asset, just go down the list, securitize. We’re actually benefiting quite a bit from folks looking for other areas to invest because we’re global, because we’re pretty broad in what we offer. So hopefully, that answers your question, Annalei.

Annalei Davis: Yeah, that’s perfect. Thanks so much. That’s all from me.

Operator: Thank you. Our next question is from John Dunn of Evercore ISI. John, your line is now open. Please go ahead.

John Dunn: Thank you. Could you maybe talk a little bit about the geographic — looking across regions, the kind of a little color on the different demand, flow demands regionally in the intermediary channel and then separately in the institutional channel?

Ali Dibadj: Sure. Just in terms of what products people are looking for?

John Dunn: The products, but also just like the temperature of kind of demand. Any differences between the regions?

Ali Dibadj: Yeah. So look, we’ve seen similar concern in the intermediary channels in particular. Again, that’s not atypical. That’s quite unfortunately for the end client, it is something that often happens when there is a gyration in the market, people seem to kind of freeze and pull money out. I think that certainly happened in the first half of April. Again, things seem to stabilized right now. But I’d say that was broad-based, certainly in EMEA, UK and the US. I think Asia still continued to be quite strong and Latin America still continues to be quite strong. So our folks have perhaps a little bit more of a longer-term growth-oriented view of intermediary channels seemed fine there. Institutional is typical. It’s a little bit more stable. It’s a little more longer-term focused across the board. We’ve seen a little bit more stability there and not a lot of gyration in that market, John.

John Dunn: Great. Thank you very much.

Operator: We currently have no further questions. So, I’ll hand back to Ali Dibadj for closing remarks.

Ali Dibadj: Thanks, Lucy. Thanks everyone for listening, including our clients, of course, our shareholders, and very importantly, our employees and my colleagues at Janus Henderson who hopefully feel that they’re individually and collectively, across all departments, improving the firm. The firm is clearly living its vision of investing in a brighter future together. And I thank my colleagues for their hard work and hopefully continued success. Thanks, everybody.

Operator: This concludes today’s call. Thank you for joining. You may now disconnect your lines.