Financial Data and Key Metrics Changes - Assets under management (AUM) decreased to $159 billion from $169 billion due to net outflows and market performance [5][6] - Total sales were $5.3 billion, down from $6.3 billion in the previous quarter [5][15] - Net outflows totaled $8.1 billion, significantly higher than $3.9 billion in the prior quarter [6][16] - Earnings per share (EPS) declined to $6.50 from $6.69 in the previous quarter [9][20] - Operating margin decreased to 32.4% from 33% in the prior quarter [9][18] Business Line Data and Key Metrics Changes - Quality-oriented equity strategies, which represent half of AUM, faced increased net outflows due to market preference for momentum-driven stocks [3][6] - Fixed income strategies experienced modestly negative net flows of $0.1 billion, while certain fixed income strategies saw positive net flows [6][9] - ETFs generated $0.6 billion of positive net flows, continuing strong momentum with a 72% year-over-year increase in AUM [14][15] Market Data and Key Metrics Changes - The U.S. retail funds faced headwinds, but January sales were the highest since June, indicating a potential recovery in investor sentiment [8] - Institutional net outflows were primarily driven by redemptions in quality domestic and global large cap growth strategies [16] Company Strategy and Development Direction - The company is focusing on broadening its product offerings, including the introduction of new actively managed ETFs and expansion into private markets [4][5] - The acquisition of Keystone National Group aims to enhance private market offerings and provide differentiated strategies [12][13] - The company is also exploring opportunities for growth in non-U.S. markets and other distribution channels [29][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging environment for quality-oriented equity strategies but expressed confidence in their long-term performance [3][10] - There are encouraging signs of broadening investor sentiment, with hopes for a recovery in quality-oriented strategies [8][41] - The company remains committed to maintaining financial flexibility while balancing capital priorities [10][11] Other Important Information - The company repurchased approximately 60,000 shares for $10 million in the quarter, totaling $60 million for the year [11][22] - The effective tax rate was 25.3%, expected to decrease to 23%-24% with the addition of Keystone [20][21] Q&A Session Summary Question: What was the driver of the fee rate compression in the quarter? - The fee rate was impacted by discrete expenses, particularly on the ETF side, but remained relatively stable [25][26] Question: Do you see future transactions as an avenue for additional diversification? - The company is focused on diversifying offerings and distribution channels, including potential M&A opportunities [28][29] Question: What is the software exposure across AUM? - The company is generally underweight in technology, which has affected the performance of some quality-oriented equities [36][37] Question: What drove the acceleration in negative flows quarter to quarter? - The underperformance of quality-oriented strategies and seasonal tax loss harvesting contributed to increased outflows [40][41] Question: Can you discuss the go-to-market opportunity with Keystone? - There is significant potential to leverage Keystone's existing capabilities in the wealth management channel and expand into institutional markets [47][49] Question: How might capital deployment priorities shift with recent transactions? - The company will maintain a balanced approach to capital allocation, emphasizing repurchases and dividends while considering strategic M&A opportunities [52][53]