Janus Henderson Group plc (JHG) Earnings Call Transcript & Summary

All right. For important disclosures, please see the Morgan Stanley disclosure website at morganstanley.com/researchdisclosures. [Operator Instructions]. With that out of the way, good morning. Thanks for staying with us here at the Morgan Stanley Financials Conference. I'm Mike Cyprys, equity analyst covering brokers, asset managers and exchanges from Morgan Stanley research, and it's my pleasure to welcome Ali Dibadj, the CEO of Janus Henderson Investors. Janus is a leading global asset manager with over $350 billion of assets under management across equities, fixed income, multi-asset and alternatives. Ali, thanks so much for joining us here.

Mike, thanks for having me. Great conference, great set of meetings today.

Great. Great to hear. So you joined the firm about 2 years ago. Maybe you could talk about how your priorities have evolved since you've joined as CEO? And how you feel the business has changed most and what excites you most about the future?

Sure. Absolutely. Yes, it's been almost 2 years at the end of this month, I've had the privilege to be at Janus Henderson leading a fantastic team of people across the organization, not just the investment group and the client service group, but across IT, ops, infrastructure, et cetera, all 2,000 people of our firm. It's been a great couple of years. But I will say there has been 88 years before that, that the firm was in existence. We're a 90-year-old firm. We started in 1934, and the foundation that was created, is a foundation that I was privileged to step into. The foundation has essentially 2 elements, right? One is excellent investment acumen. You look at that across the board from a performance perspective. We performed extraordinarily well. Our percentage of AUMs over short and medium terms is very, very strong. What we needed though, is that investment acumen to be manifested in different vehicle types. We'll talk about that, I'm sure, later and also manifested across many different strategies as well. So a very strong foundation, have to expand on that. Part number two of the foundation that has been created at Janus Henderson for 90 years so far is the client service. Very deep client relationships. Very focused on servicing and supporting our client bases. The opportunity there was to expand the number of clients that we met with and talked with. And that was a very big opportunity for us. So building on that foundation, what we were missing, Mike, to your point is there's a couple of things. Number one, we didn't have a clearly articulated strategy. So we brought together 40 people from across the firm, not the next hierarchy 40 people, but just the people who have backgrounds that are diverse across the firm, investors, client service people, et cetera. and had them develop a strategy with client input and be a client-led strategy that it was. They also had buy-in on the strategy. So that was something that we're missing, and we certainly are focused on that. The next part, though, is strategy is as good as the paper or the kind of megabits it fills. And so we had to have real accountability and collaboration from a team perspective. That did mean surgically changing some people on the team. But certainly, the buy-in is there. And the good news to what you mentioned a second ago in some of your reports, which we're grateful for. We're starting to see some of the proof in the pudding, so to speak. Our investment performance has gotten a lot better over the past couple of years. Our net flows are looking better. Our net new revenues are looking better. Our margins are looking better. Our stock performance is doing better. Our return to cash to shareholders is doing better. And we think this is just the start of it, perhaps for the next 90 years but certainly for the next 3, 4, 5, 10 years of building a new foundation for the firm, given the team that we have to deliver for our clients and our shareholders.

Great. And you've outlined 3 strategic pillars: first, being Protect & Grow, the core business, second, to amplify the strengths, and third, to diversify. I want to dive into each of those. But maybe first, before we do, which of the 3 do you feel that you are maybe further along with and which opportunity do you think could be the biggest needle mover for Janus Henderson?

So you are right. That was our strategy that we developed with a strategic leadership team, the 40 people from across the firm that was client-led. And we're making progress on all of them. To your question, a little bit differentiated on different pieces of them, and I'll get to that. But the 3 elements probably worth repeating. One is Protect & Grow our core businesses. That's our U.S. equities -- story to U.S. equities franchise. That's our EMEA, APAC equities franchise. That's our fixed income global franchise. Those are the kind of core elements. And part of that has been a push into the U.S. intermediary market and a much more focused push there. So that's part of Protect & Grow just as an example. Second element is amplify our strengths. We have clear strengths within the organization that have not been amplified. They have not been brought to a broader group of client bases. Some of those are fixed income active ETF portfolio that we've developed. There are other things that we're working on beyond just ETFs in different vehicle classes, like SMAs and CITs, which have grown quite well for us as well. We've amplified some of the skill sets that we have an investment perspective. For example, our health care franchise had a really good biotech background, really good biotech attribution and performance. So we amplified that into a hedge fund. We had really great smaller cap investing across the world. We put that into a global smaller cap business. So that's part of the amplified story for us. And the third is to diversify where clients give us the rights. We won't be all things to all people, but we will diversify where clients are asking us for demand, and we can do that. And the pattern there is hopefully pretty clear. We started with a team lift out. So the emerging market debt team lift out that we did back in 2022, that was simplest form of diversifying where clients give us the right. Then we went to a joint venture with Privacore. So we're a 49% owner in a open architecture distribution for privates and the intermediary channel, and that was a little bit more complex. And now we've done 2 deals. One is NBK, which is an emerging market private credit deal. The other one is Tabula, which is a non-U.S. ETF deal that we went into, again, full acquisition is a little bit more complex. We think that's just the beginning of more M&A that we can deliver on to diversify and deliver for the clients. Now to your specific question. Although we're making progress on all 3, I'd say the first 2, so Protect & Grow our core, pushing into the U.S. intermediary business and amplify our strength, play around the ETF business and other vehicles are probably where we made the most progress and likely where we'll deliver the most value over the long term even for the firm because the foundation is so strong, we can leverage those things to develop further. M&A is effectively icing on the cake.

Great. Why don't we just dig into them starting with Protect & Grow, the core franchise. The intermediary business is a core focus here. You posted inflows in the channel in the first quarter. U.S. intermediary is now showing inflows for now 3 consecutive quarters. So maybe you could just talk a little bit about some of the steps that you're taking in the U.S., and then we'll come back with a separate question on Europe. Just in the U.S., what is driving the success there? What are some of the steps that you've been taking? And how can you build on that as you look out from here?

Yes. So the U.S. intermediary channel is our most important largest channel. So we've really focused on that first. And then, to your point, trying to take some experiences and bring them elsewhere and we're putting those into place. So what do we do? Look, it might not sound like rocket science, but there's a clear process to go through it. We effectively did, call it, 4 or 5 things. The first thing that we did is we had to make sure that the productivity of our salespeople were appropriate. Are they meeting enough with the right people. And that was very much a data exercise to bring for the opportunity set to make sure that they're very productive. Number two is we have to make sure we have the right product. So not only are we talking to the right people, the right amount of times, but did we have the right things to bring to them. So we have to make sure the product set was appropriate. And those really had 2 elements to it. One is we have a focus list process. We prioritized that focus list in a different way to be very, very detailed on what the clients' needs are, the much more collaborative process between distribution, client-led and the investors that we [indiscernible]. And of course, we brought in new vehicle. So SMA, CIT and, of course, ETFs. So that was on the product piece to it. Third element to it is we have to make sure we have the right people. We did look at upgrading people across the organization, both internally upgrading people as well as bringing people from the outside, and that has been a really great change to the organization, really great energy, really great focus, again, both internal and external. We then have to make sure people are being compensated appropriately. Our philosophy as a firm is that we pay for performance. If you perform outstandingly well, you should get paid outstandingly well. That wasn't always what was going on in that world. And so we created much more diversity of pay, the average is going up because people are doing better. But if you're doing really well versus you're not doing so well, you should get a differentiated pay. And that's what we did align with our KPIs for growth. The last element that we have been focused on is really our brand, making sure we're in the consideration set for our client bases. Now this is not branding on mid-afternoon TV or anything. This is very surgical branding with great ROI. So when there's a conference around, we own that conference from a advertising perspective. We're very, very focused there. So those are the things that we've done. Again, we're seeing pretty good proof points, 3 quarters, as you mentioned, positive growth. Before that, we were gaining market share even before those 3 quarters. We can't promise linearity, obviously, on the U.S. intermediary business. There's always going to be ups and downs, but we feel pretty comfortable with the changes we're making are sticking and that we're on the right track in is intermediary again, which is our biggest business at this point.

Great. Moving over to Europe and LatAm the intermediary channel, they are seeing improved outflows. How are you looking to drive change and improve results overseas within the intermediary channel?

So let's first talk about that business. We talk about it as Western Europe, LatAm business, but let's kind of break that out. They're effectively 4 pieces to it. There's the U.K. business. There's a Continental European business. There's the Middle East business and there's the Latin America business. Three of those 4 businesses are clearly showing improvement. U.K. is the one that's still very much of a work in progress, and it happens to be the biggest business of that grouping. What have we done? Well, very similar to what we did in the U.S., we're applying those same processes to Europe. Now everything has to be a little bit more customized. There are regulatory differences, there are client differences. There's not the same wholesale model. But we're applying effectively the same concepts, making sure that the sales folks are productive, making sure that we have the right product. Part of that is the ETF acquisition that we made with Tabula, bringing that product to bear, which has not obviously closed yet, but will help that market deliver better growth. We want to make sure we have the right people. We've made some changes, most notably in the U.K. We changed the lead of the U.K. very recently and some other changes that are going on in that business. We changed in Switzerland and other places, but making sure that people are there, compensation, matching to performance, again, very different structure. It can't be commission-based as it is in the United States, but you can build a base in bonus that's appropriate with growth. And then, of course, over time, making sure that we can brand the business in those regions, which we have not done at this point. Some of these are going to come, but we're already seeing some improvement across the board. That's what we're doing. Again, it doesn't sound like rocket science, but it takes a lot of effort, takes a lot of process. And again, knock on wood, we're starting to deliver some signs of improvement there.

And as you look across those 4 regions and you think about the products that you have overseas, any particular product set or a country that stands out within the intermediary channel that you're most excited about that you see the biggest potential.

We see a lot of potential in the Middle East. We see a lot of potential in Latin America. Within Western Europe, I would argue that Switzerland, Germany and Italy are real areas of progress for us and really areas of future hope for us. Those are probably the geographic areas that we'd be most focused on right now.

Great. Moving over to your second pillar, which is to amplify your strengths. Here, your institutional business had a lot of success last year with some very large fundings. Maybe you could talk a little bit about how you're going out rebuilding the pipeline from here? What strategies and parts of the institutional marketplace, are you seeing more traction?

Okay. So Amplify is one big pronged strategy. Institutional is a piece of that for sure. And it's an important piece of it as we focus on it. Just to give you a little bit of a background for those of you who haven't followed it necessarily. Back in 2023, we had about $8 billion of net inflows from the institutional channel in the firm. Now what we said then is that it was very much of a pent-up demand. Let me just describe that a little bit. What does that mean? It was pent-up demand because we were, as Janus Henderson, either close to the finish line or a favored partner with some of these clients, and they saw a bunch of change going on in the organization. And they called that was a part of that change as well, and they say, well, hold on a second. Let's figure out what this firm is all about. Again, let's do some more due diligence. Let's meet with this new random CEO, let's start to get to know these folks. And the good news is that we passed [indiscernible] on all those fronts, and so those floodgates are open, and they happen all in once in 2023. Now that's $8 billion of net flows. Now we weren't really in the market aggressively looking for business during that time frame because of all the changes that are going on in the firm, some of those, including some of what was going on in the institutional sales force that we had. We have to rebuild that pipeline, and that's the process we're in right now. We've been talking about rebuilding the pipeline for 12 or 18 months now, and it's still rebuilding. Now the good news is we're in all the right conversations. Our RFP team says that they've never been as busy. I can't actually check that, but that's good news that they feel like they're busy and things are going quite well. So we're in the right conversations, we're getting the right RFPs. But we have to remember from an institutional perspective, the complexion of our business is important to know. We have a very large deep client relationships with a few clients. So really big clients. And then we have a long tail of very small relationships with a number of clients, with many, many clients. So what happens is somebody rebalances, that's a really big client. You get some lumpy inflows and outflows. Not the fault of our own, to be fair, sometimes it might be because of performance or something. But on average, it's rebalancing that happens with the large clients. So you get an inflow or outflow of $2 billion or $3 billion a quarter, that's what a big institutional player will do. And it's not being offset by this long tail of small relationships. We have to fill the middle. The middle of institutional clients is what we have to fill in. Now the reality of what happens when you try to fill in the middle part of the institutional client base is that a lot of those firms rely on consultants, which adds another layer, another delay in that process. We have really good relationships with consultants. They're getting better and better every day, but it's just a longer time frame actually before we can fill in that pipeline. So we're in the right conversations. There's lots of activity, but it's taking time. And it's particularly taking time because we're also being very selective in terms of AUM that we want to take on board. All AUM is not created equal, there are different categories for different types of AUMs and just we're being very, very careful on that front as well. So we're happy to be patient as long as we get the right type of AUM in the door.

Anything to be mindful of near term just in terms of that pipeline rebuild?

We're not seeing anything positively or negatively at this point.

Okay. Great. ETFs, active ETFs, you guys have had tremendous strength across the board, in particular, with your CLO ETF JAAA, that's now over $10 billion of AUM. Congratulations on that nearly 4 years. Can you just talk a little bit about the go-to-market strategy with this product. What do you see driving the success? And how might you apply any sort of lessons learned here elsewhere?

Yes. So thank you for that. We just put out a release today because we crossed that mark, I believe on Friday, on the JAAA. But it's a perfect example of the amplified prong of our strategy. We had a very strong set of investment acumen on the secured tax side of things. We were going to market, either in mutual fund forum or knocking on the doors of institutional players and institutional players would say, "well, I got one of those, right"? So what we did is we took that business and we turn it into a form factor that was more digestible by the client base who wanted access to that. And that is in the ETF form. It's not just JAAA, AAA CLOs. For those not familiar with it, it's JBBB, BBB CLOs as well, which is really ramping up in people's interest levels, JMBS. We also have a more kind of short duration cash plus vanilla, VNLA piece to it. So we have a whole set of fixed income active ETFs on the platform that is very much what people are looking for, and that whole platform is going quite well. We're very pleased with it. Now we had investment acumen, but we also made a change organizationally. What we had organizationally is a completely separate ETF sales force an ETF product development arm, which served its purpose for a while to be separate. But we were ready to integrate that into the overall North America Client Group, our U.S. intermediary business effectively. That integration was a very important step because what it allowed is our ETF expertise from a sales force perspective, to be megaphoned, if that's a verb, megaphoned by our wholesalers and our salespeople. And that really shot this thing out of the canon. And so that is a great learning is to bring those investment specialists on the ETF side partnering with the right set of incentives put in place with the wholesalers to grow that business quite consistently. So that's what we've done. We think there's a lot more room on the investment acumen side outside of these ETFs and also outside of fixed income to bring to bear in the ETF space as well. And another lesson learned in this process is the cadence by which we launch these. So what we did was we drove RIAs first. That was quite successful. Wirehouses then came in. That was kind of the next leg of growth. And then models took some of these ETFs on board, again, more sticky, more sets of growth. And what's really exciting right now that's happening, which suggests that there's more room to go on this, is that we're back channeling effectively into the institutional marketplace. A little bit to your earlier question. So let me give an example. JAAA going to AAA CLO, ETF, so purely liquid franchise has NIAC-1 status which is the lowest risk status for insurance companies, but has, call it, high single-digit type returns, yields. So in fact, some insurance companies at this very conference are looking at this for their GA given that whole piece to it. So they're really steps to this. And those are things we certainly can learn in other places as well of the business. Now again, the last thing I would say and people who know me will probably appreciate this comment. Humbly, we also got lucky because if the rates were not the way they are today, we probably wouldn't have been successful at this. But with rates being higher and people wanting floating rate exposure, this is clearly something that fit into what their needs were, again, being very client led with our lineup here.

So you started a number of newer strategies to the marketplace over the past couple of years, including some income and alternative products across range of whole different vehicles. So maybe you could talk a bit about the pipeline -- the new product pipeline, how that looks today, what we might see from Janus Henderson over the next year or 2 in terms of new products?

So it's a very robust pipeline. We have a very active seeding and recycling of seed process for us. We think about it as an R&D process. And we see a lot of potential to grow, first and foremost, certainly on the ETF franchise of things, both in the fixed income world, but also perhaps in other areas for us, too. On the fixed income world, Outside ETFs, too, income is a big driver of where demand is from a client perspective. So again, we're very client led from the client -- from the pipeline elements as well. And so we do see income there. We see interest also in SMAs and CITs. So we want to broaden that landscape as well. We only have 17 CIT as an example. We want to continue 17 SMA as an example, we want to continue to grow that too, there's real potential for us to continue there. We do see opportunities as well in non-U.S. asset classes and non-U.S. vehicles; too, there is a demand among our clients to look away from the U.S. given the multiple discrepancies, the valuation discrepancies of these that have played out in the marketplace. So we want to provide them for that. And then I said it was a full pipeline, and this is why our product development folks are very, very busy right now as well. There are 2 other elements to it related to M&A. We have done a private credit acquisition in the emerging markets. There are new products that are going to be launched out of that. We are partnering obviously with Tabula, which is our non-U.S. ETF franchise to develop and grow some of the products there. And of course, we have this joint venture with Privacore, who is also seeking has actually filed publicly for new products that our product development team supports and helps out with as well. So again, it's a very full pipeline. We're very pleased with what's going to be around the corner here. But again, we have to maximize what we have today as well.

Great. And that's a great segue to the whole next set of questions, starting with Tabula. You're extending your ETF business with this recently announced acquisition of Tabula European ETF manager. I think they have about $500 million of AUM across 9 different products. I guess, why acquire versus building out an ETF lineup since you already have footprint in Europe, you've built out organically in the U.S. over many years. What attracted you to Tabula?

Yes. So a couple of things I'd say. One is the patterns we're seeing in Western Europe around active ETFs, but ETFs more broadly, are exactly the patterns we've seen in the U.S. before, call it, 5 further plus that years ago. So our strategy is to skate where the puck is going. Western European ETFs is exactly that. And so we want to get into that frame before it's too late as we are trying to be ahead of the game. Now why buy as opposed to build ourselves? Several reasons. Number one, this team is extraordinary. The individuals on this team, whether it be from a relationship perspective on the sales side, whether it be from ECM perspective, whether it be from an operations and IT perspective, whether it be from a product development perspective, all that team together is premier team in Western Europe. In fact, they're one of the only independents out there, and they are the best one that there is independent or not from a team perspective. What does that mean? Well, that means it allows us to accelerate our growth in that marketplace by call it 4 years or so. So yes, we could go build this up from scratch accelerates our growth in that marketplace. Why? Well, it's not only 9 funds and $500 million of capital, it's a great base to start from, but 15 regulatory bodies that they have to deal with around the region. It's a bunch of ECM relationships that they have to have that you'd have to establish. It's all of those things put together. And so because we're seeing the same patterns as in the U.S., we want to be on our front foot in that marketplace, particularly given the success, as you mentioned that we had in the U.S. Tabula is the perfect acquisition for us, the perfect partner for us to bring to bear to, again, amplify our strengths and the investment acumen in that region. And we're already seeing clients that are lining up to get access to it.

Just sticking with that for a moment. With mutual funds, there's established revenue share arrangements with the intermediary platforms and sales commissions for your own team. But maybe you could talk about how that differs with ETFs, particularly in Europe, as you're navigating that versus the U.S.

It is very different. So the U.S. is much more, obviously, the commission-based structure and a fee-only structure from an adviser perspective, it is different than that in Europe. But you're seeing the tide shift a little bit more slowly. What you do see in Europe, however, which is really an accelerator to this, you see a very big movement that's more regulatory driven, but certainly exists in the U.S. on a nonregulatory side as well to deliver the best outcome for clients. ETF, in some circumstances, not all, but ETFs in some circumstances for that client in Western Europe is the right product, right? It doesn't have the same tax benefits that you get in the U.S., typically, right? But it does have a cost benefit, generally speaking. It is something that you can actually put in our advisers account and you can margin, right, against it. There is transparency to it. It's more easily tradable and more immediately tradable. It can go into models more easily. There are some benefits there for sure that help the adviser and in the end obviously help the client. And that's what we're all striving towards. So that kind of vector of helping that end client out. We have 60 million end clients, we feel responsible for around the world. That's going to continue to drive the ETF trajectory in Western Europe and not just Western Europe, in Latin America and in Asia as well within that Tabula structure.

Great. Now shifting gears to the last prong of your strategy, that is to diversify. Let's talk about your recently announced acquisition or strategic partnership, excuse me, with the wealth management arm of National Bank of Kuwait and the acquisition of their private investment team there. Can you talk about your vision here? How does this partnership expand your access to pools of capital in the Middle East?

Yes. So that's another place where we're skating where the puck is going. Private credit, as we've said for quite some time is an area we want to expand into because our clients are asking for it from us. And this team, which is specialized in emerging market, private credit is the best team in the region. They've been investing in the region for 20 years. Their private credit funds started 15 years ago. It's delivered high teens of returns with relatively low risk in that marketplace. It's a place where our client base wants to invest into and get that benefit. Again, it's a new form of private credit, an area where people are really not present. The team is extraordinarily good, as I mentioned before, their performance is extraordinarily good. And the relationships that they have are very, very good. One of them was with NBK National Bank of Kuwait. So it was sitting, their business was sitting within National Bank of Kuwait. We have a great relationship with the folks there. We really just frankly -- I personally like the people there as well, and we seem to get along. And so what we're finding is that this team, this private team, was constrained, not on the capacity of deploying, but more on the AUM capacity. And so that's where we step in. We're going to fit together with this private equity and private credit shop quite well. We're going to get AUM for them, and they're going to be able to deploy in a region that is growing extraordinarily quickly. But the banking businesses are less sophisticated and that's going to drive better results for our clients globally and importantly, importantly, drive better results with our relationships in the Middle East region, which is an extraordinarily important high-priority regions as we're talking about before, high priority region for Janus Henderson.

And they're primarily private equity, but they also have -- excuse me, primarily private credit, but they also have some private equity capability?

Correct. The future trajectory is on the private credit side of things.

Okay. And maybe you could talk a little bit about some of the steps that you're going to take to help accelerate the growth you mentioned, helping them, I guess, gather AUM for them to be able to deploy and invest. How are you going to go about doing that? And maybe just share some thoughts around distribution, how you're thinking about broadening that out?

Yes. So they have very good distribution on a local basis. We're obviously a global firm. We are a truly global firm. We have 24 offices around the world. We have clients from all over the world. And so our ability to have them plug into our distribution channel is what we want to do with NBK. In fact, I'd say that from an M&A perspective. That's what we want to do for most investment acumen investment strengths that we bring on board. We want to partner with teams that want to plug into our distribution system and grow both on the institutional side and over time, the intermediary side. That's exactly what we plan to do with this private shop in the emerging markets. We also can invest in their business. So for example, although they're in the emerging markets, they don't have a presence in India at this point. Could they over time have presence in India? Absolutely. That's a really interesting market for them to be into. If it's a good ROI, we'd be willing to invest in that as well. So it's both on the distribution side of things as well as the ability to put resources against a very high priority business for us.

And can you give us a little bit of a flavor of the type of private credit this is? Is it sponsor finance, direct lending, structured credit?

It's all of the above, but it's more on the direct lending side typically nonsponsor with direct relationships, so you can get a little bit of a better protection on some of those investments that you're making there. The investments they're making also match the client base that they had, which is disproportionately sovereign wealth funds and pensions. We think there is a -- I'm sorry, in ultra-high net worth family offices. We think there's an ability to broaden that both geographically and broaden that as well in more of a retailer and community platform too.

Great. Shifting over to Privacore, you acquired a 49% stake in Privacore a couple of years ago, that is democratizing access to alternatives. They're working with third-party managers there. Can you talk about their approach to the marketplace and update us on the business there?

We are very energized about what we're seeing at Privocore. We talked about this just under a year ago. And we just launched it at the start of this year. So remember what Privacore is. Privacore sits at the nexus of GPs who want access to private wealth but cannot get it because either they raise frequency, their fund raise frequency is too low or they don't have the understanding to create product, do aftermarket service after sales service, education, et cetera, from a wholesale force that has to deliver on to advisers. On the flip side, it serves that other side, which is the wire houses who want access to not the big 6 or 5 private shops out there because they want to differentiate because they want to get sometimes more specific better performance but they can't put those companies on the platform because they can't distribute them. They don't serve their advisers. So Privacore is just as the nexus of those 2 things. We've been very, very pleased with the outcome so far. We have a brand name $200 billion alternative asset manager that's on the platform right now. They're getting distribution now. It's gone so well that they now want to do their next fund already. We have a $70 billion technology-focused asset manager who wants to partner with us. We have a $45 billion private equity asset manager that I think we signed or will soon sign to deliver on. We have another $50 billion asset manager that is a very well-respected alternative manager that we just filed on for 2 funds in the marketplace. So I go through those AUMs, not to kind of say, gosh, look how big these folks are, but to say that there's a very large amount of people who are very big who are in the private world who cannot get access to private wealth and want to do it through Privocore, through Janus Henderson. And that's something that we think has a long tail to it. a lot of potential and the benefits to us and obviously, most importantly, to our client base is extraordinarily high. So we're very energized about what we think we can do with Privacore.

Great. We're almost up on time, maybe final question here just on AI, getting a lot of attention across many different sectors. I guess how do you think about the role of artificial intelligence in terms of the role it will play in asset management. Is this more of an expense efficiency play? Or is there alpha to be had? Are there revenue opportunities here? How is Janus Henderson experimenting with this today? And what's your outlook here over the next couple of years?

So it's a big topic conversation, obviously, and I think it's still very, very nascent. I've been on record saying, and I truly believe this and the data so far would suggest this that AI plus human is better than AI. It's probably better than human. But AI alone, again, I don't think is where people are going to go for a lot of what we do. Our -- in ignition hub, we call it is a group of people who are focused on many things that are innovative for us, led by our Head of Innovation and AI is one of them. And we look at it 3 ways. Number one is, how does AI help our investment teams deliver better results. So we're applying it in that manner, better results and better performance for our clients. Number two is how do we deliver better for our clients. So how do we figure out how to serve them in the manner that they want to be served, easier. And number three is, yes, from an efficiency perspective. Now the first and the second one are particularly interesting because AI at this point is very strong at taking a lot of data, spitting out patterns. And both our investment teams and our client service teams ingest a ton of data, and I can help them do that better and more efficiently, again, for the end client benefits, whether it be from client service or whether be for investors. So we think there's a lot of room to go on AI. We do think there's room for it. You have to make sure all of your governance is in place around AI, but we're doing that and we're applying that in our day-to-day basis. And there are lots of examples where we found both efficiencies as well as better investment performance and better client service.

Anything you'd like to elaborate on in terms of where you're finding the most success or any most compelling use cases at this point?

Well, look, there are plenty. A couple of that are more temporary top of mind as opposed to perhaps size wise, we do a lot of focus groups with our end clients. We take those focus groups and we pump them through AI and they give us really interesting insights that you can then query and test as opposed to reading hundreds and hundreds and hundreds of pages of transcripts, you can really go after that. We do a lot of diligence requests, and we can use the AI to simplify that for us to really hone in on some of the things that we can add value there. We use AI to look at transcripts and 10-Ks and kind of analyze that from the investment side of things. Now there are lots of examples of how we're using it. Again, I think it's just going to be a tool that humans use to make us even more efficient. And again, for us, deliver better for those 60 million clients around the world, and for the next 90 years of Janus Henderson's history.

Great. Very exciting. We have to leave it there. Thank you so much, Ali. I appreciate you taking the time.

Thank you.