Financial Data and Key Metrics Changes - First quarter adjusted earnings were 80¢ per unit, up 10% year-over-year, benefiting from strong markets, sustained organic growth, and solid margin expansion [47][48] - First quarter net revenues were $838 million, down 5% year-over-year but up 6% on a like-for-like basis, excluding Bernstein Research [48] - Total operating expenses for the first quarter were $555 million, a decline of 10% year-over-year, reflecting lower occupancy costs and a lower compensation ratio [50][52] Business Line Data and Key Metrics Changes - All three distribution channels experienced organic growth, generating $2.7 billion in firm-wide active net inflows [10] - Active fixed income inflows were $1 billion in Q1 2025, despite $1.4 billion in taxable outflows, while tax-exempt strategies generated $2.4 billion in inflows [11][12] - Retail tax-exempt AUM reached $46 billion, more than doubling since 2020, with a 19% annualized growth rate [12][33] Market Data and Key Metrics Changes - Institutional sales inflows rebounded to the highest level since Q4 2022, driven by alternative deployments [37] - The pipeline grew to $13.5 billion in Q1 2025, up $2.8 billion sequentially, reaching its highest levels in seven quarters [38] - Retail posted its seventh consecutive quarter of positive net flows, with strong demand for tax-exempt and multi-asset strategies [33] Company Strategy and Development Direction - The company is expanding its private market platform and aims to grow private market AUM to $90 billion to $100 billion by 2027 [22] - The focus remains on enhancing operational efficiency and maintaining a durable fee rate, which has held steady over the years [19][55] - The company is leveraging its relationship with Equitable to scale higher fee, longer-dated private alternative strategies [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fixed income market despite volatility, highlighting attractive yields compared to long-term equity returns [77][78] - The company anticipates continued strength in its tax-exempt franchise and growing ETF offerings, despite short-term challenges [73] - Management remains cautious about market volatility and is prepared to adjust expenses as needed [53][54] Other Important Information - The company reported a solid margin expansion with an adjusted operating margin of 33.7%, up 340 basis points year-over-year [62] - Performance fees for the first quarter totaled $39 million, reflecting sustained alpha generation from specific strategies [49][58] - The company is focused on investing in growth while maintaining expense discipline amid market uncertainties [63] Q&A Session Summary Question: Asset allocation trends in the second quarter - Management noted volatility and uncertainty affecting retail channels, particularly in taxable fixed income, but expressed confidence in long-term prospects [68][72] Question: Equitable's role in management - Management confirmed that Equitable continues to operate independently and there are no restrictions on acquiring more units [90][91] Question: Impact of potential changes to municipal bond tax exemptions - Management believes full repeal is unlikely but acknowledges potential short-term market reactions if changes occur [95][96] Question: Performance fee outlook - Management revised performance fee expectations to $90 to $105 million, up from previous projections, due to strong public market performance [59][129] Question: Private markets activity and investment-grade focus - Investment-grade private credit is a significant growth area, particularly within insurance, and management is expanding capabilities in this sector [134]