Financial Data and Key Metrics Changes - The company reported a record total assets under management (AUM) of slightly over $2,000 billion, which is $157 billion or 8% higher than the end of the first quarter and $286 billion or 17% higher than the end of the second quarter of 2024 [29] - Average long-term AUM increased by 1% over the last quarter and 12% over the second quarter of last year, reaching $1,340 billion [29] - Adjusted diluted earnings per share for the second quarter were $0.36, with net revenues of $1,100 million, which is $19 million higher than the same quarter last year [31][39] Business Line Data and Key Metrics Changes - The company generated $15.6 billion in net long-term asset inflows, representing a 4.7% annualized growth rate [11] - The global ETFs and index platform reported 10% annualized organic growth, with $12.6 billion of long-term net inflows in the quarter [12] - Fundamental fixed income garnered nearly $3 billion of net long-term inflows, while private markets experienced net outflows of $2 billion [30][24] Market Data and Key Metrics Changes - The Asia Pacific and EMEA regions accounted for 40% of overall long-term client AUM, generating $31 billion of net flows in the first half of 2025 [12] - The China joint venture and India capabilities delivered $5.6 billion of net long-term inflows, with a record high AUM of $105 billion in the China JV [23] - The company saw net outflows of $3.6 billion in fundamental equities, particularly from U.S. clients, while EMEA and Asia Pacific clients showed positive flows [24][25] Company Strategy and Development Direction - The company is focused on enhancing client outcomes, improving operating leverage, and strengthening its balance sheet [5] - A significant partnership with MassMutual and Barings aims to leverage private credit strengths and expand product offerings [6][8] - The company is pursuing a hybrid solution for its platforms, optimizing outcomes for clients and enhancing operational capabilities [42] Management's Comments on Operating Environment and Future Outlook - Management noted that the second quarter experienced pronounced market volatility, but strong momentum carried into July, leading to a global rebound for equities [11] - The company remains committed to driving profitable growth and enhancing capital returns to shareholders, with a focus on both organic and inorganic growth opportunities [61][99] - Management expressed optimism about the potential for private markets in defined contribution plans, contingent on regulatory changes [86] Other Important Information - The company repurchased $1 billion of preferred stock held by MassMutual, funded by bank term loans, which is expected to strengthen the balance sheet [31][45] - The net revenue yield for the second quarter was 23.2 basis points, indicating a smaller decline than in prior quarters, suggesting potential stabilization [35] Q&A Session Summary Question: Why is the company proposing changes to the QQQ structure now? - Management indicated that the proposal aims to modernize the structure to enhance outcomes for clients and shareholders, as the current unit trust structure has been in place since 1999 [53] Question: How will the changes impact marketing expenses and incremental margin? - The anticipated marketing budget for the trust is $60 million to $100 million, translating to 2 to 3 basis points of annual assets, with an expected addition of approximately four basis points to net revenue and operating income if approved [55] Question: How does the company balance deleveraging with growth? - Management emphasized that both growth and deleveraging are priorities, with a focus on improving operating cash flow to provide flexibility for both objectives [60] Question: What is the company's strategy for private markets? - The company is focused on partnerships and acquisitions to enhance its private markets capabilities, with a strong emphasis on organic growth as well [78] Question: What are the expectations for private markets in defined contribution plans? - Management believes there is potential for private markets in defined contribution plans, contingent on regulatory changes, and is prepared to meet market demand with existing capabilities [86]