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 [28] - Average long-term AUM increased by 1% over the last quarter and 12% over the second quarter of last year, reaching $1,340 billion [28] - Adjusted diluted earnings per share were $0.36 for the second quarter, with net revenues of $1,100 million, which is $19 million higher than the same quarter last year [30][38] 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 [10] - The global ETFs and index platform reported 10% annualized organic growth, with $12.6 billion of long-term net inflows in the quarter [11] - Fundamental fixed income garnered nearly $3 billion of net long-term inflows, while private markets experienced net outflows of $2 billion [29][22] 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 [11] - 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 [21] - The company saw net outflows of $3.6 billion in fundamental equities, although there were positive flows from EMEA and Asia Pacific [22][23] Company Strategy and Development Direction - The company is focused on enhancing client outcomes, improving operating leverage, and strengthening its balance sheet [4] - A partnership with MassMutual and Barings aims to leverage private credit strengths and expand product offerings in the U.S. Wealth channel [6] - The company is pursuing a hybrid approach to investment management, utilizing platforms from both State Street and BlackRock to optimize outcomes for clients [40] 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 [10] - The company is optimistic about its ability to navigate market cycles due to a diversified asset mix and strong geographic presence [25][32] - Management emphasized the importance of improving operating cash flow to balance growth and deleveraging efforts [59][62] Other Important Information - The company completed the repurchase of $1 billion of preferred stock held by MassMutual, funded by bank term loans, which is expected to reduce preferred dividends significantly [30][44] - The company intends to continue common share repurchases and aims for a total payout ratio of near 60% from 2025 [45] - The filing of a preliminary proxy statement seeks approval to change the operational structure of the QQQ from a unit investment trust to an open-end fund ETF [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, reflecting changes in market conditions since the QQQ was launched in 1999 [52][53] Question: How will the changes impact marketing spend and incremental margin? - The anticipated marketing budget for the trust is between $60 million to $100 million, translating to 2 to 3 basis points of annual assets, with an expected addition of four basis points to net revenue and operating income if approved [55] Question: How does the company balance deleveraging with growth? - Management stated that both growth and deleveraging are priorities, with a focus on improving operating cash flow to provide flexibility for growth initiatives [59][62] 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 [76] Question: How does the company view the potential for private markets in the 401(k) space? - Management believes there is promise for private markets in defined contribution plans, contingent on regulatory changes and market demand [84]