Johnny Randel: Hi, Ken, it’s John here. Just let me talk a little bit about that. I think what you’ll see over time is, anyone — fund rolling off won’t have much of an impact if we had a series of these over a short period of time, perhaps. But the reality of it is there’s just so many SMAs flowing through. There a mixture of rates. It might move a little bit, but we don’t expect a dramatic change over time, just given the kind of ongoing pricing of what’s in the pipeline and what has been reupping. So we don’t expect a material change.
Ken Worthington: Okay, great. Thank you.
Operator: One moment for our next question. Our next question comes from Adam Beatty with UBS. Your line is open.
Adam Beatty: All right. Thank you, and good evening. Just wanted to take a quick pulse on the Investor Day target of doubling FRE by 2028. Sounds like. the top line, as both Mike and Johnny mentioned, the top line looks to be in good shape, but the AUM has some puts and takes that seem like they’re going to maybe even out over the coming quarters. So I guess my question is, over the longer term, say post calendar ’24, should we look for kind of AUM growth and fee growth to converge maybe in the high teens, given the target for margin expansion? And if so, what areas do you look to, to be the primary drivers of that through 2028? Thanks.
Scott Hart: Yes. And thanks for the question. This is Scott. Maybe I’ll start and Mike may jump in here as well. Obviously, he spent quite a bit of time on this topic during the Investor Day. But a few things, I mean you referenced, some of the step downs and distribution activity that took place this quarter obviously that didn’t come as a surprise to us. It doesn’t really have an impact on our five year plans that we laid out and one of the things that we talked about during the Investor Day was the fact that there are multiple ways for us for to get there and to achieve those targets. And so as we think about what we’re seeing in the business and really the fact that all of the key building blocks for continued growth as it relates to fundraising, continued strong re-ups despite a tough market environment, continue to be there, really the biggest factor in the near term.
And as we look at the business just for the quarter has been one of deployment, right. And so, with the slower deployment really driven by overall market activity M&A activity, et cetera being down has resulted in some of the funds that we’ve now raised or had first closes for not yet activating some of the accounts that pay invested capital investing in line with the three to five year pace that we’ve always talked about, but maybe a slower pace than what we had seen over the last few years and some of those re-ups taking a bit longer to arrive. But when we think about the business over a five year time frame or really the next few years, I would say no real change to what we talked about on Investor Day. And if anything, feel like with some of the positive news around the private wealth channel, the venture capital fundraising, the progress we’ve made on different commingled vehicles, feel quite good about the longer term trajectory.
But Mike, you may want to jump in with additional thoughts there.
Mike McCabe: That’s right. Thanks, Scott. So we feel really good about the way our gross AUM flown for the first half of this year, has developed and we have six more months left in this fiscal year to continue to deploy as well as form new capital. So, on a gross AUM basis we feel really good about our progress. It’s the fee earning AUM Adam that you’re pointing to where there are certainly some puts and takes as certain mandates either expire or roll off as we bring new mandates onto the platform. And what we’re seeing a little bit on the revenue side, as you pointed out correctly, it’s still is very healthy and looks good, but there is a little bit of a delay this year which does to your point, make fiscal 2025 a really important year for StepStone across all key metrics. At the timing of activations and the timing of deployment really go live as we enter that fiscal year. I hope that addresses some of your questions here.
Adam Beatty: No.
Scott Hart: Maybe last — Adam last thought I would share is I mean look in our view,, right. Our continued ability to meet those longer-term goals. It’s going to have a lot more to do with how successfully we invest on behalf of our clients and the great level of client service that we provide more so than whether a fund gets activated, this quarter versus next quarter. And so we’re going to maintain that very selective approach, that client first approach that has served us so well over the last 15 years here.
Adam Beatty: Yes. Back to the touchstone makes sense. Scott, thanks. And then just one follow-up. Scott, actually, you said just a phrase that kind of caught my attention and congrats, by the way, on the Wealth Management Channel getting on the new platforms. It seems like a lot of the work there is coming to fruition. You talked about it contributing to operating leverage and I guess maybe I have a prejudice in my mind, but I always think of the Wealth Management Channel as needing a fair bit of sales effort, needing a fair bit of education effort. I don’t think of it as like high leverage, but maybe there’s something I’m missing that you can help me with? Thanks.
Scott Hart: Sure. Look — while that is certainly true. One of the things that we are also offering to clients in that channel is the ability to invest alongside and with the same high degree of quality with our institutional clients. And so when you really think about what we’re doing from an investment team and from an investment standpoint, it is really participating alongside of our institutional clients and institutional funds. And that’s really where some of the leverage comes into play given how much of the sort of fees drop to the bottom line on the investment side, there?
Adam Beatty: Perfect. Got it. Now. Thanks, Scott.
Operator: One moment for our next question. Our next question comes from Alex Blostein with Goldman Sachs. Your line is open.
