Victory Capital(US:VCTR)2026-02-11 14:02Victory Capital Conference Call Summary Company Overview - Company: Victory Capital (NasdaqGS: VCTR) - Assets Under Management: Over $300 billion as of the end of 2025 [3] - Business Model: Operates a multi-independent investment boutique model, combining boutique advantages with centralized resources [3] Industry Consolidation - Consolidation Trend: The investment industry is undergoing significant consolidation, with larger firms acquiring smaller ones for scale and distribution [4][5] - Victory's Role: Victory Capital has completed 8 acquisitions since its management buyout in 2013 and aims to be a consolidator in the industry [4] - Growth Objective: Aiming for $1 trillion in assets under management, which is three times its current level, to remain competitive [5] Financial Performance - Earnings Growth: Victory has achieved a 21% cumulative annual growth rate in earnings since going public in 2018, the best in its sector [6] - Net Flows: Despite strong earnings, net flows have been negative recently, with active mutual funds experiencing $800 billion in net outflows [6] - Distribution Investments: The acquisition of Pioneer has allowed Victory to double its distribution efforts and expand internationally, managing money for clients in 60 countries [6][7] Growth Drivers - International Distribution: The international channel is seen as a significant growth opportunity, with a 15-year distribution agreement with Amundi, a $2.7 trillion manager [25][29] - ETF Growth: Victory's ETF platform, VictoryShares, is expected to continue growing, with an average fee of 34 basis points and a focus on active solutions [11][12] - Investment Performance: Strong investment performance across various asset classes is driving growth, with a focus on independent investment processes [34][35] M&A Strategy - M&A Approach: Victory's M&A strategy focuses on acquiring businesses that enhance its platform, expand distribution, and provide size and scale [15][16] - Pioneer Acquisition: The acquisition of Pioneer has provided significant synergies, including $110 million in net expense synergies and close to 20% accretion [16][17] - Alternatives Market: Victory is cautious about entering the alternatives market, viewing it as richly valued but acknowledges the need for retail investors to access private markets [18][19] Product Development - SMA Initiatives: Victory is looking to grow its retail SMA offerings, which are currently net flow positive but not at desired levels [48] - ETF Share Classes: There is potential for many mutual funds to have ETF share classes, which could positively impact flows, although not all funds will transition [51][52] Conclusion - Future Outlook: Victory Capital is positioned for growth through international expansion, ETF development, and strategic acquisitions, while maintaining a strong focus on investment performance and client experience [20][34]