Financial Data and Key Metrics Changes - Assets under management (AUM) increased to $1,610 billion, driven by positive market impacts and strengthening flows, partially offset by long-term outflows at Western Asset Management [18] - Long-term net outflows totaled $9.3 billion, a significant improvement from the previous quarter's outflows of $26.2 billion [19] - Adjusted operating income remained flat at $378 million from the prior quarter, influenced by lower compensation expenses and the impact of Western outflows [33] Business Line Data and Key Metrics Changes - Multi-asset and alternatives generated positive net flows of $4.3 billion for the quarter, with multi-asset flows positive for 16 consecutive quarters [20] - Fixed income net outflows improved to $13 billion, with positive net inflows of $3.5 billion excluding Western [22] - Cash management AUM grew to $72 billion, with net inflows of $2.7 billion in each of the last two quarters [23] Market Data and Key Metrics Changes - Global equity markets rebounded sharply, with the S&P 500 rising 25% from its April lows and ending the quarter up nearly 11% [7] - International markets outperformed the US, with the MSCI EAFE up 19% through June [9] - The US dollar experienced its largest quarterly decline since 2022, contributing to the performance of non-US markets [12] Company Strategy and Development Direction - The company aims to manage local businesses with global scale, focusing on local investing and client needs, with approximately 30% of AUM in countries outside the US [6] - The acquisition of Appira Asset Management is intended to expand direct lending capabilities across Europe's lower middle market, reflecting a commitment to growing the global alternatives platform [24] - The company continues to emphasize innovation and the integration of new technologies, such as blockchain, to enhance service delivery and reduce costs [46] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously constructive on the US equity market outlook, citing solid fundamentals but caution due to geopolitical and policy uncertainties [10] - The company expects to see continued positive net flows and client engagement, particularly in fixed income and alternatives [19][20] - Management highlighted the importance of diversification and active management in mitigating risks and maximizing returns in a volatile market environment [17] Other Important Information - The company has seen a significant increase in its institutional pipeline, with a record $24.4 billion in won but unfunded mandates [19] - The ETF platform achieved its fifteenth consecutive quarter of positive net flows, reaching a new high of $44.1 billion in AUM, reflecting a 19% growth from the prior quarter [28] - The company is focused on expanding its wealth management channel, with expectations that it could represent 20% to 30% of AUM over time [72] Q&A Session Summary Question: Integration and growth of private credit platform with Appira - Management emphasized the importance of integrating Appira into the broader private credit platform, aiming for a unified private credit group rather than standalone entities [40] Question: Economic value proposition of tokenization - Management believes tokenization will fundamentally change the financial system, enhancing capabilities and reducing costs for clients [46] Question: Regulatory conversations and capital deployment - Management reiterated the strength of the fixed income franchise and noted ongoing cooperation with regulators regarding Western Asset Management [56] Question: Outlook for private markets growth - Management expects alternative fundraising to be in the range of $13 to $20 billion, with a focus on expanding the wealth channel [66] Question: Expense guidance for fiscal year 2026 - Management indicated expectations for $200 million in cost savings entering fiscal 2026, with expenses potentially flat to slightly higher [82]