Q: The management fee margin fell year on year. Is the competition coming from passive funds or EM active competitors? A: The competition is a bit of both, but more from passive funds, especially in indices that are easier to replicate. Passive funds can be a leading indicator for us, as they often see flows before active managers do.
Q: Regarding flows into IG and equities, why does high yield still see outflows? Is it due to performance or risk appetite? A: It's not due to performance, as numbers are strong. It's more about risk appetite and the high US rates, which discourage taking fixed income risk outside the US. Additionally, there's been a significant allocation to private credit, which has affected high yield flows.
Q: Can you provide an update on the fee margin and expectations for performance fees? A: The second half average fee margin was around 35%, with an exit rate just above 34%. We expect a basis point decline every 12 to 18 months for the liquid side. Performance fees for the liquid portion are expected to be around GBP5 million, but the timing for e-liquid fees is uncertain.
Q: With the variable comp ratio at 35%, are you concerned about morale and turnover? A: Morale is good, and turnover is expected to be higher after difficult markets. We see opportunities to hire valuable talent during these times. The 35% ratio provides flexibility to reward performance, and we aim to maintain this cap unless communicated otherwise.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.