Victory Capital Conference Call Summary Company Overview - **Company**: Victory Capital (NasdaqGS: VCTR) - **Assets Under Management**: Over $300 billion as of the end of 2025 [3] - **Business Model**: Operates a multi-independent investment boutique model, combining boutique advantages with centralized resources [3] Industry Consolidation - **Consolidation Trend**: The investment industry is undergoing significant consolidation, with larger firms acquiring smaller ones for scale and distribution [4][5] - **Victory's Role**: Victory Capital has completed 8 acquisitions since its management buyout in 2013 and aims to be a consolidator in the industry [4] - **Growth Objective**: Aiming for $1 trillion in assets under management, which is three times its current level, to remain competitive [5] Financial Performance - **Earnings Growth**: Victory has achieved a 21% cumulative annual growth rate in earnings since going public in 2018, the best in its sector [6] - **Net Flows**: Despite strong earnings, net flows have been negative recently, with active mutual funds experiencing $800 billion in net outflows [6] - **Distribution Investments**: The acquisition of Pioneer has allowed Victory to double its distribution efforts and expand internationally, managing money for clients in 60 countries [6][7] Growth Drivers - **International Distribution**: The international channel is seen as a significant growth opportunity, with a 15-year distribution agreement with Amundi, a $2.7 trillion manager [25][29] - **ETF Growth**: Victory's ETF platform, VictoryShares, is expected to continue growing, with an average fee of 34 basis points and a focus on active solutions [11][12] - **Investment Performance**: Strong investment performance across various asset classes is driving growth, with a focus on independent investment processes [34][35] M&A Strategy - **M&A Approach**: Victory's M&A strategy focuses on acquiring businesses that enhance its platform, expand distribution, and provide size and scale [15][16] - **Pioneer Acquisition**: The acquisition of Pioneer has provided significant synergies, including $110 million in net expense synergies and close to 20% accretion [16][17] - **Alternatives Market**: Victory is cautious about entering the alternatives market, viewing it as richly valued but acknowledges the need for retail investors to access private markets [18][19] Product Development - **SMA Initiatives**: Victory is looking to grow its retail SMA offerings, which are currently net flow positive but not at desired levels [48] - **ETF Share Classes**: There is potential for many mutual funds to have ETF share classes, which could positively impact flows, although not all funds will transition [51][52] Conclusion - **Future Outlook**: Victory Capital is positioned for growth through international expansion, ETF development, and strategic acquisitions, while maintaining a strong focus on investment performance and client experience [20][34]

Group 1 - The article discusses the concentration of market leadership and its potential implications for future returns, citing the dot-com bubble as a historical example where the top 10 stocks' market capitalization rose from 15% to 24% between 1997 and 2000 [1] - Long-duration bonds are regaining their role as core diversifiers as yields on long-term Treasuries and investment-grade corporates have climbed to levels more in line with historical averages, although medium-term declines in yields are anticipated [2] - The ultrawealthy have access to a private stock market for early-stage companies, creating a two-tier market where privileged investors can buy shares before public listings, leaving others with slower-growing options [3] Group 2 - The SEC's initiative to democratize access to private market investments has been criticized as an irresponsible move away from foundational securities laws, according to SEC Commissioner Caroline Crenshaw [4] - A proposed small-business provision could allow mutual funds and other investment companies to omit certain fees from their disclosures, raising concerns about investor protection and transparency [5] - A significant shift is occurring in defined contribution plans, with 25% of advisers likely to recommend alternative investments following a policy change by the Department of Labor [6] Group 3 - The article highlights the convergence of public and private markets, exemplified by BlackRock's shift from traditional asset management to a broader investment strategy [8] - The predictive power of fees on fund performance has strengthened in recent years, indicating a growing importance of fee structures in investment decisions [9] - Ares CEO has expressed skepticism regarding the value of retail partnerships that combine traditional and alternative products, despite exploring potential collaborations [10] Group 4 - Blackstone's BCRED has reported record fundraising and an increase in share repurchases, with an estimated 4.5% of shares outstanding repurchased in the fourth quarter [13]