Invesco Ltd. (IVZ) Earnings Call Transcript & Summary

All right. We're going to go ahead and get started here. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. Note that taking of photographs and the use of recording devices is not allowed. If you have any questions, please reach out to your Morgan Stanley sales representative. Good morning. Thanks for staying with us here at day 1 of Morgan Stanley Financials Conference. I'm Mike Cyprys, Equity Analyst, covering brokers, asset managers and exchanges from Morgan Stanley Research, and welcome to our fireside chat with Invesco. And we're excited to have with us Allison Dukes, the Chief Financial Officer. Invesco, as many of you know, is a global asset management firm with over $1.9 trillion of assets under management as of May, the company has significant presence in the retail and institutional market across the globe, serving clients in more than 120 countries. Allison, thank you for joining us today and making the trip up here to New York.

Absolutely. Thanks for having me.

Great. Well, a lot to dig into. Why don't we start with the current backdrop. You posted some pretty robust flows this morning over $6 billion -- $6.1 billion, long-term net inflows for the month of May. So just curious, how are you seeing clients the client behavior shaping up here in the current environment just given the recent market volatility and sort of some of the broad-based macro uncertainty. And ultimately, when we're on the other side of this, how are we thinking about how allocations may shift?

Sure. Maybe I'll start with -- I'm not sure what the other side looks like or if there's ever another side versus the ongoing sort of soap opera we live in. But it's certainly been an interesting last 90 days. And I think 1 of the things that's interesting, if you look at our AUM release from this morning, and as you noted, $6.1 billion of long-term inflows. But you look at the AUM across the different investment capabilities as we disclosed them and we're right kind of back at or above where we were at the end of February. But the round trip to get there has been somewhat nauseating at times. And -- but good to see in the month of May, some improvement, some pickup in demand across the board also bit of a flip flop from April where we were in a real risk-off mindset and starting to see a transition back to a little bit of a risk-on strategy. So yes, $6.1 billion in long-term inflows, about $6 billion plus in the QQQ and nearly $20 billion in money market flows. So real strength across the board. I think unpacking the long-term inflows certainly primarily driven by strength in our ETF lineup. So very strong demand in ETFs, broadly speaking. And really seeing that demand across the globe. It's not just in the United States. It's across Asia and Europe as well. We also saw within our asset class that is not an asset class. But as we disclose it, our China JV and Indian-managed assets. We saw inflows there as well, and that was really in both China and in India that we saw inflows. We saw growth and strength in private credit as well as in private real estate. The private credit flows largely driven by BKLN, which is our bank loan strategy. And then good to see some demand on the private real estate side as well, where I think things have been a little bit softer for some time. So broadly speaking, demand across the board, fixed income relatively flat. Fundamental equity continue to see some outflows there. But albeit I think a moderated pace. I'm not sure that's a trend yet or not. But within the month, we did see, I'd say, some demand for fundamental equities in some parts of the world, continue to see some softness in our lineup in the United States.

Great. I'd say I'm most surprised to hear about the inflows in real estate. Just any additional color you might be able to share on strategies, geographies, sort of what's driving that? How do you think about that?

It looks like -- and again, it's early, and I want to be careful not to focus too much on a month, and we'll certainly give more color on the quarter as we get into the second quarter release next month. But I think we're seeing some demand on the institutional side. We're also seeing continued demand on the retail side. We launched a real estate credit strategy for the retail wealth management channel a couple of years ago, referred to as INCREF, that's up to about $3 billion in AUM. It's on a variety of broker-dealer and RIA platform sitting on 2 of the largest wire houses, and we continue to see real demand for that strategy and good steady growth there as well.

Great. That's a topic we'll come back to in a moment. Maybe we could talk a little bit about the setup for active management here in 2025. How do you see the opportunity such as given some of the continued uncertainty talk about some of the steps you're taking to help your investment teams best capture this opportunity set.

Fundamental equity is -- it's an important part of the marketplace overall. And it's important to investors, it has a role across portfolios, although we've continued to see this secular shift to passive, and I don't think that trend abates in any way. Nonetheless, fundamental equity will be important. And it is important to us while we've diversified our own capabilities quite a bit. It's down to about 15% of our overall AUM, but it's still over 1/3 of our revenue base. So it's important to us, it's important to investors and the focus is on quality. The bar for excellence is now very high. And in order to be competitive, it really comes down to excellent investment performance. And that's been our focus. We have struggled there in pockets of our fundamental equity lineup. In some areas, we've performed quite well over the last few years, but that's been overshadowed by some of our more challenged funds and where we've seen real outflow. So our focus has been on investment quality defending that portfolio, really making sure our sales force is in a good position as well. We have streamlined our overall investment organization over the last couple of years bringing all of our different capabilities under the leadership of co-CIOs. We have invested in our investment risk organization, hiring a very strong leader there and continuing to strengthen our leadership and investment risk, hiring good strong leaders in the fundamental equity side as well. So it's slow, going. It really is dependent upon talent and our focus on really getting performance where we need it to be in order to perform at or better than the industry. I'm not sure where any of us see the industry returning to inflows in active equity. But we've been underperforming even on it from an outflow perspective. And our objective is to get to a place where we are no worse than the industry in terms of outflows and ideally doing a little bit better and starting to take market share.

Great. And just given some of those dynamics on the equity side, maybe talk a little bit about your growth strategy as you look out over the next 12, 24 months. In the past, you talked about private markets, ETFs, China, you also mentioned India, in terms of 1 of the areas where you're seeing strength. I guess where do you think, which areas could be the most meaningful drivers of growth as you look out for Invesco? And how are you leading in?

Yes, sure. Let me -- I'll start with fundamental equities. As much as that's been a challenge, there are pockets of growth there as well. And so we've got some strategies that have been in steady inflows for several years, and we are focused on getting the entire franchise up to that same bar in terms of quality and performance, which we think will have -- which we know will have a more meaningful impact on revenue just from a revenue retention perspective and revenue growth in terms of both organic growth and market growth by really protecting that franchise. And so I'd point to the fact that there is demand for active equity strategies in places like Japan, where we see excellent demand there. We see excellent demand in China. We see demand in India. We continue to see demand in pockets of Europe as well. So it's not to say we've left it for dead. I mean, there is demand for sure, and it will be a big part of our growth story over the next few years. The bigger part of the growth story though will certainly be the places that are most obvious where you see strong demand across the board, and I'll start with ETFs. That's a business that we have scaled over the last few years, and we have, we think, an opportunity to continue to scale that business, inclusive of the QQQ is north of $800 billion today. Even excluding that, it's over $500 billion. So $0.5 trillion ETF business, excluding this 1 very significant fund. It is very diversified underneath that. And again, it is the place that is the primary driver of flows, and we've seen steady, consistent demand for those flows. Minimal investment required to continue to scale that business. So we get excited about a business that is that scalable and it lines up with the pockets of demand, and we think we've got a real foothold globally, and starting to see the broadening of demand for our ETF capabilities across Europe and Asia as well. So it is certainly more than a U.S. story at this point. I'd also come back to the demand we see and the growth we know we have in a business like China. I think it perhaps defies expectations a bit, given the growth we continue to see there and the fact that it has been an inflows even in months like April and May, there is the global sort of geopolitical noise. But as a reminder, that business is about a $100 billion business that is a domestic for domestic business. So it is fully invested in China. It is Chinese assets -- or Chinese money invested in Chinese assets. There's no cross-border flow of money. And it is really -- the growth of that business is really dependent upon the growth of the Chinese economy, but also the growth of the middle class there. And that is a government that is very focused on building out the retirement opportunity for the middle class. And as they continue to facilitate that need that they have to create a retirement system for their population, we are well positioned with a business that's over 2 decades old, to continue to grow with them as 1 of the largest asset managers in China. I'd also then point to other parts of Asia as real drivers of growth. So Japan is another good example. Japan is a business that we manage about $80 billion of assets for Japan today. That's about twice as large as where it was 5 years ago. And that's another opportunity. We have to continue to participate in the build-out of their capital markets and retirement systems, and it's really -- I think we see strong demand for our capabilities there. Let's see. Let me come then to private markets. So private markets certainly well-publicized area of growth for the industry overall. Our business is about $130 billion business, so a pretty sizable private markets business embedded inside of a traditional asset manager. It's about $85 billion in real estate and $45 billion in credit. That's primarily historically been an institutional business. We still see good demand from the institutional channel, but our focus is also in building out capabilities for retail wealth management investors. And we've done so with the launch of several strategies, both on the real estate side as well as on the credit side.

Great. Maybe just on the point on ETFs. I want to dig in there for a moment. Just on the active side, you launched 3 new active ETFs just in May. Talk about your active ETF strategy, the trajectory and traction that you're seeing there and what the product pipeline looks like?

Yes, 3 strategies in May, 3 strategies in the first quarter. So an opportunity really just to continue to capitalize on the ETF franchise we have today and just kind of the smart beta ethos that's really embedded in our ETF lineup today. I mean our ETF lineup is not really a bulk beta focused ETF approach, but rather 1 that is very rules-based. And so active ETFs are really a natural extension of that, of really taking that rules-based approach, but adding a human overlay to it. So our active ETF strategies, I think we have about a true dedicated strategies, active ETF maybe 22, strategies. It's about $12 billion in AUM, but you add our AUM that is passive AUM managed by -- with an active overlay is closer to about $30 billion. And we think we've got a real opportunity to continue to grow from here. So 6 new strategies so far this year. And I think everybody is pretty familiar with where sort of market adoption is there. But as we continue to see demand for these capabilities, they were very well positioned. It's just a natural extension off of our ETF lineup.

What are the other major themes we're seeing on the retail side beyond ETFs is also SMAs? Yes. So maybe you could talk to us about the SMA platform as well as model portfolios. I would put that in a similar category in terms of traction in the retail side. Maybe talk about some of your initiatives there. How broad-based is your offering today? And how you see this contributing to and evolving over the next couple of years.

So on the SMA side, again, we're talking about roughly $30 billion in AUM, largely geared towards fixed income exposure, some on the equity side, but SMA for us has largely been on the fixed income side, I think we have over 50 strategies across 80 or so different platforms. So well diversified, well placed. You add on the index, customized portfolio is probably north of about $11 billion on that as well. So an opportunity, again, for us to really take advantage of the broad client base we have. I think all of this is dependent upon the strength we have with our clients, which is very broad and deep across the globe and the number of countries you mentioned at the very beginning that we're in and really leveraging on the strength of the expertise that we have, both the customization and the scalability and the innovation. And I think in all these cases, that's really what we bring together is the ability to customize scale and innovate which I think we continue to demonstrate with the strength of all of these capabilities.

So $30 billion on the SMA $11 billion on the model side.

Correct.

And 50 strategies, is there a view that you want to take it to 100 or 150? Like how do you see sort of expanding the offering set there?

I think we will expand where the demand exists. So I think it's really -- it's -- I don't want to say it's easy just to replicate from here. Nothing's easy. It takes work. But as you start to see success with some of these, you can create the path forward to scale as you continue to create the demand.

And what are the other topics of growth you mentioned was alternatives and a focus to grow that into the retail channel. A major theme across the industry as we think about democratization of private markets and expectations for private wealth allocations to go higher. You've launched a number of products. You mentioned the real estate credit, just to name 1 there. Maybe talk about your approach, your strategy there, the traction that you're seeing and how you see this ramping in the coming years?

Yes. So we've learned a lot over the last few years. I think there's no question the demand is there. The path to get to the allocation, though is probably not as smooth and easy as anyone would have thought or hoped, we work closely with Morgan Stanley and with others and really creating these capabilities and products be on platforms, cross broker-dealers and RIAs. I think one of the things we've learned is it's a lumpy path to get to size and scale. There are a variety of things that are involved -- everything from adviser education to client education to really a deeper understanding around liquidity and suitability distribution education on our side, creating the right sales force and really getting that right mix of generalists versus specialists and how do you train your own sales force, hitting concentration limits across portfolios when you have too much success and needing to broaden that out and the due diligence that's required across the clients, it's a lot harder than just putting a new ETF on a platform. That said, I think we are as well positioned as anyone. And we've launched -- we've learned quite a bit in our launches over the last few years with a real estate credit strategy, a real estate debt strategy. We have launched certain private credit strategies around dynamic credit and the like. And so I think we are continuing to learn and grow in the work that we're doing across the different platforms. We've also recently announced a product partnership with Barings. So we announced that in April, which we're very excited about. And I think, again, an opportunity to combine, our investment capabilities, our deep private credit experience, their deep private credit experience and really bring that to bear for retail wealth management clients and a terrific opportunity that with just the relationship we have with our strategic partner, MassMutual, to also co-invest $650 million and the launch of those new products. So the growth from here, I think, is the opportunity to grow organically, first and foremost, but also to do that through partnerships. And I think the partnership that we announced with Barings is an excellent example of how you can start to see more growth from us on that side.

Well, that's a good segue to my next question on the Barings partnership. Maybe talk a little bit about how you envision Invesco's contribution to this partnership versus what Barings is going to contribute how you think about the product coming together? And maybe talk about the go-to-market strategy?

Sure. Well, I'll say more to come on that as we continue to work through the various approvals. So there's not a lot I can say until we get through the various approvals and we launched -- or we announced more about the particular products themselves. But generally speaking, I would say we're bringing the expertise of both teams together. So you've got our private credit expertise, their private credit expertise, it's complementary in a lot of different ways in terms of the various focus. We've also got our distribution. And so we've got the retail wealth management distribution, the access that we bring to bear in partnership with our combined capabilities. So honestly, it's kind of the full package in a lot of ways. And then MassMutual, who, of course, fully owned Barings, owns 18% of Invesco, committing capital to get these products launched is incredibly important because, again, 1 of the things we see in sort of path to full adoption is it takes quite a bit of capital to launch these products, so that you diversify the concentration across the various platforms as you start out on 1 platform, you get to 2 platforms. It's really got to be our capital that's necessary to diversify, to manage against the concentration risk that is inherent in just getting these things to scale. So it's really -- I think we've got the expertise, the distribution and the capital that's what you need to really get these things going. We're very excited.

And on the private market side, you mentioned the focus is organic, but you're open to partnerships, you have the partnership with Barings. Is there a scope for other partnerships? How do you think about that?

We're not limited is what I would say. So we've got the opportunity certainly to do other partnerships. Our focus at the moment is making sure we get these products launched and -- on platforms as quickly as possible and really start to recognize the success there, but we are not limited in what we can do. And so yes, we are very thoughtful about other partnerships. Partnerships are a nice way to get these products launched without perhaps the capital invested in full acquisitions. We're -- we look at inorganic opportunities. We're very thoughtful about some of the inorganic opportunities that are out there, but we want to be very prudent as we think about where we're going to get the best return, given everything I've just kind of highlighted in terms of the organic growth potential that we have, the opportunity we have to continue to invest in ourselves and really accelerate the growth we're already enjoying is something that I think we would put first and foremost above any inorganic opportunity that might be out there.

Great. As we think about your areas of focus on the growth side, we talked about ETFs, we talked about private markets, private wealth, last 1 being Asia, China, and the JV. You guys have 1 of the leading JVs in China today. You mentioned it's domestic to domestic. Maybe talk about what's driving those success with this business? How do you sustain that in an increasingly volatile geopolitical backdrop. And sort of what's the longer-term vision that you have? How do you see this sort of contributing?

Yes. again, I think the success of that business and its durability always seems to surprise people, particularly the inflows that we've enjoyed even over these most recent months. what sustains that is the continued development of the retirement system there, the continued uplift of the middle class, the maturation of the investor mindset there as they continue to move from -- on the retail side, more of a savings and sort of money market-oriented mindset to moving out the risk spectrum a bit on to the fixed income side and even on to the equity side. I mean you still see the maturation of that doesn't look anything like what you might expect in the United States. So where do we see inflows over the last 2 months, primarily on the fixed income side. On the equity side, a little bit more risk off, but the opportunity there, and it is in sort of mind-blowing scale, the opportunity there is to move investments and retirement out of deposits and into more of a higher-yielding kind of return for investors. Largely speaking, the average investor is still largely concentrated in deposits there. So when you think about the size and scale and the opportunity just to get the Chinese investor out of deposits and into fixed income and equity strategies, it's pretty broad. We also have been building out our passive capabilities there. And so we're starting to see good demand for passive capabilities. 5 years ago, we wouldn't have been talking about ETFs in China today. We're talking about ETFs as much as we're talking about our active strategies. So I think the demand there, it's a very -- in terms of the economic growth, certainly, they've got their challenges to deal with us. We start to kind of work through the impacts of tariffs on both sides and who knows where exactly that goes, and they're being very thoughtful about replacing their exports with other countries and also really focusing their demand internally domestically. And so as they continue to strengthen domestic consumption, that really improves some of the investment opportunities that exist there, which translates into better returns and creating alpha, and you start see some of the money moving out of deposits and along the risk spectrum. So we've been there for over 20 years. So that's -- I mean, a large reason why we are as successful as we are is we were there early. We've got a strong reputation there. And we're going to be really thoughtful about managing the growth there.

Great. Why don't we shift gears and talk about expenses over the past couple of years. You've taken a number of steps to simplify the organization and adjust the expense base. You've also talked about variabilizing the expense base. So where are we along this journey, and how are you thinking about operating leverage potential as we move forward from here?

It is our focus. I mean it is really our #1 focus is how do we continue to create that operating leverage, how do we return our operating margins to something in the mid-30s, we were at 31.5% in the first quarter, a little bit higher in the fourth quarter. You've seen us demonstrate real improvement over the last 12, 18 months. We think we've got the opportunity to create even more operating leverage, it's a little bit challenging when you have months like March and April. But putting that aside, I think we're on a nice path to continue to create operating leverage from here and improve our operating margin. Our focus is absolutely on managing that expense base and reinvesting in. So I think 1 of the things you've seen over the last few years is headcount relatively flat, compensation relatively flat, expenses relatively flat, albeit some, I'll call it, extraordinary challenges here and there. One of it, and we can come back to it as you've seen our implementation costs related to Alpha have been in the $10 million to $15 million range a quarter. So that creates almost semi-permanent part of the expense base for the last couple of years that we've been managing through that and earning through that and really keeping expenses really well managed despite that. As we think about the variabilization, I think as I said on the earnings call in April, our expense base is probably 25% variable today. So not quite as variable as it would have been when we were maybe a smaller pure active asset manager. The profile is just very different today in terms of our portfolio and the revenue mix, but about a 25% variabilized expense base without additional measures. And additional measures are, you come in and you start cutting expenses. Are you constrained travel or you go into kind of different hiring patterns, all those types of things, we can do those things. But on an unmanaged basis, probably about 1/4 variabilized. Our focus is how do we continue to disinvest in some places and reinvest in other places where we can create that growth. And I think we've demonstrated that by the revenue growth we've created on a relatively flat expense base over the last couple of years. we're not finished. We are constantly looking for those opportunities. We feel really good about the opportunity that we have from here.

Great. And you mentioned Alpha. Maybe let's talk about that for a moment. Just if you could update us on the Alpha implementation. That's the investment system platform. Talk about some of the benefits that you've seen so far, the recent -- as well as the recent announcement where you are going to be shifting from a single platform with State Street to know a hybrid approach with BlackRock and Aladdin and State Street? And how are you going to use each of these.

Sure. So hard to point to benefits just yet because as a reminder, we only moved a very small amount of AUM on to the platform in the fourth quarter of last year, which was very much a designed to test and learn with that amount of AUM. So it's been more of, I'd say, kind of the breeding ground, if you will, to really understand what else do we need to do in terms of design. So that's been beneficial and certainly informing the path forward from here and influences some of the design in the future waves. Yes, as we announced a few weeks ago, we are going to be leaving our fixed income AUM on the Aladdin platform. Some of the benefits that we see today in terms of the integration capabilities between Aladdin and Alpha didn't exist 4 or 5 years ago when the decision was first made to go to Alpha. The opportunity we have to integrate these 2 systems. They're both excellent partners to Invesco today, both State Street and BlackRock are 2 excellent partners that we have been with for quite some time. And as they have developed those capabilities, the integration capabilities, we see an opportunity to get to where we wanted to get to faster and easier. And it gives us the opportunity to really have all of our AUM fully implemented on an upgraded in Aladdin and fully into Alpha and the middle office fully connected by the end of 2026. And more to come from there.

Great. Why don't we shift and talk about AI, 1 of our favorite topics here at Morgan Stanley. We've seen advances in data science and AI impact many industries. But as we look at asset management, curious to hear your thoughts on how you see AI impacting the asset management industry, what sort of role and impact could it have? And maybe talk a little bit about how you're experimenting with it today? And any sort of lessons learned along the way?

Yes. I'd say AI has been a part of our firm and our operating model for a number of years now. I think probably the newer development is GenAI. And as we continue to look at what does that mean for us, we start with -- it's a governance and creating the right guardrails really important for any organization to start with the right governance and guardrails so that we do this in a manner that is -- our data is protected. And that's been a lot of the focus in the last -- probably at the beginning of this journey in the first couple of years is really focusing on that governance and guardrails. Today, we find ourselves with I'd say a real focus on internal efficiencies, and I think that's what gets us most excited about GenAI and the opportunity set we have, we've got a number of use cases in production right now, probably around 15 or so use cases, different proofs of concept, different areas in which we are really trying to bring it all together to create these internal efficiencies. And I think it's a really important element as we think about that operating leverage. And 1 of the reasons we get excited about operating leverage is we see real momentum across our investment capabilities. We think we've got the right investment capabilities. We're in the right areas of demand, we're kind of really well positioned on the revenue side. We want to make sure the expense base is really well managed to support that. And we see GenAI and the opportunity to integrate some of those capabilities, as a way in which we will do this in an efficient manner going forward.

So 15 use cases in production today any that you would maybe elaborate on in terms of...

They're not going to get you really excited. I mean they're going to be everything from the way in which we think about some of the operational tasks that are done every day. And so when you think about what it takes to keep a firm like ours sort of running every day with $1.9 trillion in AUM flowing across the globe, there are a lot of operational tasks, so we think we can use GenAI to just streamline and simplify across finance organization across the technology organization, across the operations organization, certainly.

And what sort of efficiency saves have you seen from this?

I wouldn't say we've seen any efficiency saves yet because they're all still very early where we're actually starting to create -- it's more cost avoidance than it is save. And so where we can use this to start to do things in a faster way and it saves us from hiring the next 2 people that are necessary because of the scale that is being created in our business every day. That's how we're going to continue to remix that expense base and we think realize some cost avoidance in the future.

So cost avoidance, so you're reinvesting it back into the business. But ultimately, what are you seeing in terms of productivity gains as a result?

Too early. I think it's -- I think we're still on the early end of the frontier here in terms of productivity gains, but we we're as optimistic as anyone that we think there's a real opportunity there.

So do you see it more as an efficiency play versus revenue opportunity? How are you thinking about that...

Today, an efficiency play. I think the revenue opportunity is further down the road, and there's more work to be done on that side. We're fiduciaries. We're very thoughtful about that before we bring in too much on the -- and even when you're talking about what maybe is done by investment teams or those that are more kind of client-facing and front office, I think it's still more productivity oriented than it is a revenue opportunity.

So perhaps revenue driven on the product -- on the sales and distribution side, but linked to efficiency.

Correct, more productive sales and investment side.

And do you think there's any alpha to be gained from AI as you think about the investment side of the organization?

Down the road, I think it's a little early, but I think down the road, that's a possibility.

Okay. And as you're implementing AI, maybe speak to some of the challenges around implementation, as you're thinking through that. You mentioned governance earlier. how do you sort of overcome some of those challenges.

I think it's a lot of focus on data management and the integration of the various AI capabilities. So it creates pretty steady employment for a lot of our technology colleagues as they think about how do you integrate these things. So they are not disparate and almost working against each other, but how do they work together? And how do you make sure you've got a tight hold around the data quality as well.

Great. I know we have just like 2 minutes left. And maybe just a question on capital management to wrap up here. Over the years, Invesco has participated in some M&A transactions. So just curious how you're thinking about inorganic opportunities here, where that might be most additive or helpful as you look at the platform today? And what are those M&A conversations look like at this point?

Maybe I'll take 1 quick step back on capital management and start with kind of the sources of capital before we go there. And I'd point to the recapitalization that we announced in April. That was a pretty important part of our overall capital story the recapitalization to pull forward $1 billion of the preferred. We converted that into term debt that has a pretty immediate EPS arbitrage of $0.02, $0.02 for the back half of this year that lags into about $0.13 a share as we continue to repay that. So now we've got a more flexible capital structure than we had before and the opportunity to create even more flexibility going forward. Really important to start there before we can think about any capital opportunities beyond that. From an inorganic perspective, I'll start with the biggest opportunity we have is to continue to invest in our own organic growth. From everything I've already mentioned and the momentum we have across all of our capabilities, I see very few places where we don't have tremendous momentum, and they all require capital. So we want to continue to invest in our own capabilities because that is without question the highest IRR. I'm going to find anywhere. It is the most shareholder-friendly growth that we have. On the inorganic side, we're not missing much. And so a lot of M&A is pretty unattractive to us because it would create breakage at a cost that just doesn't make sense. The only places that we probably still have some gaps in our capability set would be on the private credit side, infrastructure. We've been pretty consistent in our messaging there around -- that would be an area if we're going to look at anything, it would be in that area. And it's a high bar. It's a high bar to find the right kind of cultural fit and the right capability set that's complementary. We look at a lot of things, we'll continue to stay opportunistic.

Great. I'm afraid we're over on time. Please join me in thanking Allison Dukes.

Thank you.

Thank you.