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

All right. Good afternoon, everyone. Welcome to -- I think not quite our final session, but one of our final sessions of the day and here. I'm Ben Budish. I cover the U.S. brokers, asset managers and exchanges. And with us for this chat is Ali Dibadj, CEO of Janus Henderson.

Hi, everybody.

Ali, thanks so much for being here. Welcome.

Thanks for having me. It's great to be here. It's always a great conference. I love Barclays every year doing bigger and better. Great leadership under Venkat's. Great to see. Great to see you.

Likewise. So before maybe diving into some company-specific questions, can you talk a bit about how you see the macro backdrop currently? Where are you seeing the strongest investor appetite? What does this all mean for -- potentially for flows in the back half of the year?

Yes. So look, let me start. It's clearly a very broad environment right now, I think what we're seeing from clients is a few things, maybe three. One is that they're very focused on needing help in terms of how to manage through this geopolitical environment. Geopolitics are changing every day. We don't quite know what's around the corner, so they're looking for help. They're looking for help in finding things like real innovation. That's something that we do, Janus Henderson, our 350 investment professionals around the world have a focus on innovation. So we try to deliver that in our small-cap, mid-cap portfolios. And that's something that a lot of our clients are looking for in terms of how to break through some of that geopolitical kind of question. They certainly look for non-U.S. investing. Emerging market debt has become quite popular among a lot of our client base, both on the private side. For us, that's mostly on the Middle East side of things, but also on the public side as well that we brought folks on board. And of course, more broadly, around investing in a non-U.S. equities. We have European equities franchise. We have regional franchises as well. So really kind of the look at geopolitical and how it affects a lot of change in that marketplace. We think about that when you invest in real estate on our REIT side, too. But that's one big question people ask. The second big question people ask is very much around demographics and lifestyle changes in AI. They really need help to try to figure out where opportunities lie. And that very much for our perspective, again, is directly aligned with how we think about our thematics for a broader sense of the work. So we can find opportunities in health care and our biotech funds, as an example, that are growing quite well because there's a specific expertise that we can bring to bear that is related to demographics and really related to AI. Technology is another example of that for us. We look for transformation in technology. In fact, we just launched an ETF, which is the best of breed of all AI within one ETF called JHAI. It's not just technology companies per se, but the other picks and shovels, brick-and-mortar around that, electricity companies, other things that we have to bear. And investors are very much looking for that as well. And then look, the last bucket, and it's kind of more of a recent bucket, I'd say, obviously, is around the cost of capital. And there are many implications of that. People are looking to see what's happening with cost of capital. You are all thinking about it for sure. And that leads to many things. So it obviously leads to thinking through how wheat from chaff can be separated from a hedge fund perspective, multi-strat perspective. Balance funds, I think, are quite interesting right now given that they give the return of fixed income because there is a cost of capital that's there as well as equities being able to pick wheat from chaff. Of course, so the big question on people's minds over the past several weeks for clients has been, okay, what happens to the fixed income desire right now. And we're pretty clearly at the peak of a rate cycle certainly in the U.S. We know that. I think some people expect 3 rate cuts over the course of this year. Our folks expect 2. But look, either way, it's certainly a lower rate environment than we have today, perhaps not going back to historical 0 levels, but certainly a lower rate environment is what folks are thinking through. And so what does that mean? What are the implications for us and for our clients? There are really 2 aspects to it. One is the rates are coming down for, I guess, the right reasons, but perhaps not the most preferential reasons, which is the economy is clearly slowing down. So people will want things that are higher quality. Those are things like our AAA CLO ETF, JAAA. Those are things like our asset-backed privates like Victory Park Capital that we can bring to bear to our client base. So that's one area. And then the other area, not just the economy is concerning, so let's be safer, is around duration and perhaps not long term depending on the curve shape, but certainly going from short term to midterm. And that's, again, the ecosystem of ETFs that we've provided, including JABS, which we just launched is a little bit later in terms of duration along the way. So I guess there's a lot of uncertainty out there in the marketplace, and that's our bread and butter. That's your bread and butter, a lot of the bread and butter of the folks in this audience. People are looking for answers. And the good news is for 91 years, we've been delivering answers to our clients in some form. And again, trying to look at this macro environment as an opportunity is certainly what's been playing out for us.

Great. All right. Let's dig into the business a little bit more. Maybe starting with your partnership with Guardian Life, was announced recently. So this meaningfully scales your insurance and fixed income AUM. Maybe talk a little bit about the background of the transaction. Was it a competitive process? Why did Guardian choose Janus?

Sure. Yes, happy to talk about it. We are very pleased about this partnership. Yes, it was a competitive process. You can imagine all the folks who were involved in the competitive process, all the big names were out there. And we did not win this process because we were lower price, lower fee in the short term for sure. We know we weren't, and we were certainly, I think, more predisposed to suggest a long-term value creation than some others. And it really starts off Ben, because Guardian and Janus Henderson have a very similar culture. That's a culture of innovation. They are creating -- want to create the insurance company of the future, a modern insurance company. We are at Janus Henderson, all 2,000 people around the firm trying to create the asset management company of the future in terms of innovation, in terms of bringing new products to bear, et cetera. And so that melding of the minds was actually quite essential to us. And then on top of that, we brought together the incentivization. So we are very much aligned. The have warrants in us. So effectively, they're exposed to the equity. They see the opportunity for us to grow their business in partnership with them. And just to take a little bit of a step back, the partnership has effectively 4 aspects to it that we find quite interesting. One, which everybody focuses on a lot, and obviously, it's a big number, so I get it, is the originally $45 billion of assets we were going to get from the general account, which is an IMA form. They grow. We certainly knock on wood for all of us hope that they continue to grow. It came in at $46.5 billion. I don't expect that same type of growth, but we certainly expect them to grow. And that's, again, classic general account, fixed income, mostly investment grade but some high-yield public exposure that we can get at accretive margins to our average margin once we are fully integrated kind of sometime next year. And that's the big part of it that people mostly pay attention to. But there are other elements that we find extraordinarily interesting, and I think were things that we have been told we can uniquely bear to not just Guardian, but other players as well, one of which is the $400 million of seed capital that we have partnered on with them. So the whole point of the seed capital is for them to give us access to their needs for the general account and seed things that, in theory, they could use and thus others could use as well. In fact, we just used $100 million to invest in JABS, J-A-B-S, which is very much of a complement to JAAA, right? JAAA is floating rate AAA CLOs. JABS isn't quite as high quality, but in the kind of A range, I'd argue. It is more -- a little bit longer duration and a more fixed rate to complement JAAA. That's something that Guardian wants for their balance sheet. They're giving us $100 million to seed it. And then over time, we're going to bring that to other insurance companies, particularly when it's NAIC rated, hopefully, and bring that to grow that business. That's part of the $400 million element to it. And then, of course, we've taken on board their people who are doing fantastically well within our organization, particularly the corporate credit team is doing really, really well and adding value to us. And we think we can take that team and expand them in terms of the assets that they manage from other insurance companies, particularly in the U.S. because Guardian is an extraordinarily well-viewed insurance company. It's an insurance company that others say, "Hey, wait a second, if Janus Henderson can do this for them, why can't they do something like that for us?" And that's something that we're certainly building up with this team. And last but certainly not least, Guardian has something called Park Avenue Securities. It's close to $60 billion of assets under management. It's a captive distribution system, 2,400 people who are financial advisers there. And with new leadership at Park Avenue Securities, a gentleman named Mike Perry, who we've known -- people on our team know for a very long time and actually are very focused with him on growing the business. He's very aligned with this. He's really kind of a trends setter that are in the industry, and we want to partner with them. We look forward to it, growing our business in the Park Avenue Securities fold as well as Park Avenue Securities grows is another element of the story. So there are several kind of multifaceted, I guess, we said in the press release tentacle to this, and we're quite excited so far about the progress here. JABS being just one example.

Great. We answered a few of my other questions here, but maybe just another high-level question. Outside of Guardian, can you talk a bit about your broader insurance business and unpack your ambitions here. You mentioned, I think, that some conversations are picking up. What does the pipeline look like? Is there a cadence we can expect with new partnerships? Any color along those lines.

Yes. So thanks for that. We, to be clear, don't have exclusivity from Guardian to the opportunity to talk to other insurance companies. And again, the conversations we're having are conversations we've never had before with really large insurance companies around the world. We say, well, wait a second, there's something interesting here. This is not an outsource my general account. to some of the characters out there who can outsource. This is not a private equity-led general account business that I can just give it to and kind of may have questions about. This is something that really suits my needs. And so we're having real conversations. Look, I would talk about maybe a dozen or so conversations that we've had out there. Just to be super clear, I'm not sure if any one of them will get to anywhere, just to be clear about this, but we're having conversations with people we've never had before in the insurance landscape. Now that's probably because we're now on the radar screen, right? We are about $100 billion in assets under management just from insurance around the world. That's meaningful. That's 15th or 16th in the world right now. So we're on the radar screen. We're doing things that are creative. We're doing things that are growing and people want to have access to our ecosystem and our improved skill sets from an investment perspective as well. By the way, to your earlier question, that's something Guardian really wanted is an opportunity to have better returns for their policyholders but getting access to some of the skill sets that we have. Securitized is just one example of it.

Maybe pivoting to ETFs. We've seen a lot of success in the active fixed income side, in particular. Maybe just start, can you give us a bit of an update on JAAA JABS? Do you think this new one could be as big as JAAA? How are sales looking?

Yes. Look, so JAAA has been a great success for us, continues to grow quite well. Candidly, and you know me, some folks in the audience know me and the way we operate, we were watching this like a hawk, both back in the liberation days of April, but also more recently when it was becoming clear and clearer that rates were going to come down and everything acted exactly as we had expected. And in particular, we've seen no slowdown, the information is public. We've seen no slowdown in flows into JAAA. The exciting part to it, though, is that if you look at the other 4 ETFs, we have 5 in total, the other 4 ETFs on the fixed income side that are over $1 billion. We've seen the pace of growth of those being faster than what JAAA was at that same time of growth. To be clear, to set expectations. JAAA, I think, was a confluence of, candidly, luck and other things that got us to that level, but certainly suggests that the growth rate of these other ETFs is clearly on the right path. JABS is a great example of that. We don't expect it to be as big as a $22 billion ETF. But certainly, we do expect it to be complementary to JAAA, again, floating rate versus fixed rate, a little bit longer duration. So we do think it's in the same conversation there. But again, what we definitely want to do is continue to grow the $5 billion active ETFs that we have on the fixed income side. And really, we're delivering an ecosystem, right? So a little bit to your macro question earlier on, we're delivering an ecosystem. So that if a client has a particular view about rates and about credit ratings and everything else that they want, we have that product for them. We're not going to do all things to all people, but we have the broader range of products. across the board in an environment where the market may change from a credit perspective and a rating perspective.

You kind of touched on my next question here. But with short-term rates increasingly likely to come down, that's your house view as well. How do you anticipate changes in demand for these products or maybe across the fixed income franchise more broadly, what would your expectations be?

Yes. So look, it's a great question. And again, it's a question we've been analyzing quite a bit. From a JAAA perspective, we would have anticipated that people are looking for other opportunities that perhaps a little bit of a longer duration to it. But what we're finding with JAAA is not only is it the high-quality element that people are attracted to, but also the spread is quite attractive. So if the underlying cash, let's call it, return rate comes down, the spread that JAAA gives you is actually quite attractive on a relative basis. So people are still sticking to it. But again, to the point, we have a wide gamut of ETFs in the fixed income landscape that we think people can use depending on what they want. If they want a little bit longer duration, right, they can go from half a year JAAA to something closer to 3-ish years on JMBS or they can go to a JSI or JABS, right, which has about a year type plus duration. And by the way, even if they want short duration, but they're concerned about the U.S. We have a great product called VNLA, V-N-L-A, which is another $1 billion ETF for us, which is short duration, but global as well. So people are concerned about what's there. Our point within the ETF category is to create an ecosystem of products on the fixed income side where people can actually articulate, express their views through our vehicles. It's not just a product, it's a set of products that people can articulate their views on it. We're using JAAA, so far the most successful one of them, that's effectively a cross-sell tool in a wedge to show we have the right to play in this area. We have the investment shops to play in this area, and we can service you and operationalize your ETFs better than anybody else in the world, right? That's how we've become the second largest fixed income active ETF provider in the world. We're the eighth largest active ETF provider, period around the world. And right now, we're, as you said, very focused on fixed income. And even in this change of rate cycles, we think we have the products to deliver.

How do you see demand evolving for ETFs? I mean I think you guys have talked about seeing the pickup from insurers, institutions, which have traditionally been less allocated in the retail channel. You've got Tabula, which I think in Europe, the penetration is even a bit lower. So where are you seeing a lot of this demand come from? It seems like in the past many years, it's been a lot of retail advisory. But what are you seeing from some more institutional like clients?

Yes. So if you think of the where trajectory of most of our ETFs have gone in the U.S., and it's a little bit different than Europe, which I'll touch on, on the fixed income ETF side at least, it started very much from RIAs wanting access to this. In fact, institutions saying, no, I don't want access. I've got my CLO investors already in-house, et cetera, or my CLO provider. It went from actually RIAs to then wirehouses to then models. And then comically perversely, those institutions saying, I don't want any came back and said, well, wait a second, you can do BBB CLOs for me at 30-something basis points and you're giving me liquidity both at the underlying, right? I get that there's BBB and there's less liquidity, but you're giving me liquidity there and liquidity from a market perspective now that you're $1 billion. So you're seeing a lot of this flow coming from institutional as well and models as an element to that. In Europe, it's a little bit different. That's why we picked up Tabula, which is it's a very heterogeneous market, right? So could we have built something like a Tabula, which is an ETF specialist? I guess we could have, but it would have taken 3 or 4 years. Instead, we brought on board a fantastic group of individuals who are market makers, know the market makers at least, know how to communicate and sell the product in 15 countries around Europe and on 10 to 12 different exchanges as well. And those are disproportionately on the institutional side from a client base perspective and starting to go to intermediary. So U.S., it's intermediary going to institutional and in Europe, it's institutional going to intermediary. And you mentioned this a second ago, yes, it's absolutely lower penetrated in Europe. But if you effectively time shift Europe, take it back 7 or so years, you're seeing even faster growth and adoption of active ETFs in Europe and ETFs more broadly than you did in the U.S. And candidly, we were behind the eight ball in the U.S. Now we've caught up gladly, and we want to continue to do that, not just fixed income, but in equities as well in the U.S. In Europe, we don't want to be behind the eight ball, and we're certainly not, and you're seeing several hundreds of millions of dollars of flows even just over the past, call it, a year or so since we've picked up Tabula.

Got it. Maybe one last question on ETFs, just on the equity side, which you just alluded to. So I think earlier this year, you launched a fundamental large-cap equity ETF. A lot of the growth in active ETFs has come from things other than that income-generating strategies using corporate calls, levered ETFs on single stocks. Maybe talk a bit about your plans on the equity side of the ETF business. How are you thinking about new strategies, new wrappers for existing strategies, new things altogether? Like how are you thinking about the growth there?

Yes. It's a very important question because I think what you're seeing, generally speaking, on the active equities landscape is almost a hail Mary for a lot of folks, right? Gosh, I have a product. It happens to be a mutual fund right now. It happens to be CITs or the SMA, whatever it is, but it's not growing. And so maybe if I stick into ETF, it will grow, right? It's an undifferentiated business, let me stick into ETFs. So effectively cloning. That's not what we're doing. For us, from an equities perspective, we have a long, long history of being very good investors. Just look at our AUM percent of AUM that's outperforming or beating our peers. We have a long history of actually delivering alpha from an equities perspective. So we have differentiated product, and we can take pieces of the differentiated products or amplify as we call it, build adjacencies to the differentiated products and go into the equities side on the ETF -- on the active ETF side of things. So I think it's -- first off, a lot of folks just clone and a lot of folks just say, look, it's undifferentiated here, maybe the wrapper make it differentiated. We don't think that's the case at all. We're taking our differentiated skill sets and applying that into the ETF wrapper, because it's something that the clients want to ingest. So JXX is a great example of this. If you are trying to express a view of getting exposure to transformational businesses, right, JXX is perfect, and we have a track record as part of a large-cap growth profile. JHAI, if you want exposure to AI, but not just the technology element to it, the broader ecosystem of AI, JHAI is a great strategy to get into. And the PM sits in the middle of Silicon Valley and knows everything that's going on there as well as other parts of the world that inputs into that. We've also had great success on the equity side on more of our quantamental pieces of active equity ETFs. So JMID, JSML, JSMD, that's been there, too. And similarly, in Europe on equities, we found real interest in our best ideas of Europe equities, so concentrated European equities as well as in Japan. And again, the common thread in all these things is we're creating an ecosystem where a client can express their views through a structure that they can actually, in a very efficient manner, take on board for them.

Great. All right. Maybe let's switch gears a little bit. Your overall flows, I think you've seen 8 consecutive quarters of inflows in the U.S. you talk a bit about what's going well here? And then outside the U.S., what do you think needs to happen to see the flow profile improve?

Yes. So look, we're putting one foot in front of the other as best as we can in the U.S. and a big driver of those flows for consecutive quarters with the U.S. intermediary business or the retail business. And we have been very deliberate about how to improve that business and using the same thought processes to apply outside the U.S. as well, where it's a little bit harder to get some of these things done, and you'll get a sense of that when I start describing what we did in the U.S. just because things take time, right, regulatory perspective, et cetera, take time. But in the U.S., what did we do, and we're applying it. So what did we do? Number one, we had to make sure we had the right people in place. We were not shy in changing people. We continue to be not shy in changing people when we need to. And it wasn't just changing a significant portion of wholesalers, it's also making sure that there are specialists involved. It's also making sure that the leader of the group who we pulled over from a very strong competitor, probably the best distribution system in the U.S. competitor, drove that business and improve that. So people was the first aspect to it. The second aspect to us, we kind of touched on a little bit just a second ago, which is you have to make sure that the product was the right set of products. So we still think there's enormous opportunity for mutual funds for Janus Henderson in the U.S. We have killer performance, and we're significantly smaller scale than some of the players out there who have -- who are much bigger than us. And we're slowly chipping away at that when performance is good. So there, we have really great mutual fund products, but we also had to make sure that we had the right products, for example, in ETF form. We brought that forward. We had to make sure we have the right products in alternatives. So Privacore, which is our alternative specialist area, we can really talk about more, if you'd like, is an area from a distribution perspective, we have to make sure we have the right product set. We then had to make sure that the incentive compensation was right. We historically had an incentive compensation that rewarded, for lack of a better word, stagnation or consistency. We are now rewarding growth. That's something that we're very, very focused on. And so people have to grow their business. And then lastly, we had to make sure that the processes were right. We ingest right now in North America, a significant amount of data to be able to predict where we want to make the next call, where we want to make the next move. Now if you take all of those and think about how to apply that outside the U.S., some of those will be easier to come by than not, and you're seeing that in our results where you're just starting to see some improvement. For example, the data in the U.S. is different than the data in Asia or the data in Europe. We don't have the same level of data just as an industry. So we're trying to figure out how to create that, how to anticipate that. You can't quite compensate and incentivize people in the same way. We're trying to figure out how to do that. So things are a little bit kind of taking longer to get there. But what I will say is if you think about the successes we've seen in the U.S., we're starting to see that bear fruit, for example, in the intermediary channel in Continental Europe, which consistently has been growing and improving. Last quarter, it wasn't, but over time, it has. U.K. is still a struggle for us. And there, we're taking time to think through how to improve that. APAC, we're seeing improvement. Australia, we're seeing improvement. So you're seeing things shift. To be very, very clear, and I've said this a ton of time, I don't want people to get over their skis, not everything is working well. We're probably in the fourth-ish, maybe fifth-ish inning as a firm. But there are clear proof points that we're putting one firm from the other. We're applying the same expertise. We're applying the same processes and tweaking them where we have to, to get to some of that growth. So that's not just the U.S. intermediary that's 8 quarters of strong performance and flows, perhaps it starts trends at other parts of the company as well.

Speaking of other challenging parts of the business or really most of the businesses in your industry, active equities have been quite tough despite a pretty constructive backdrop for equities in general over the past few years. I mean, what does it take to buck the trend?

Yes. Look, I started talking about this a second ago. I think that right now is a really interesting time for our clients because they're realizing and noticing that passive isn't the answer to all problems. In fact, when there is such volatility, right, you need to be much more active in the way you construct your portfolios. I don't think it's a coincidence, and I don't know who your guests are over the next couple of days, but I don't think it's a coincidence that every single one of the large passive players out there, and you know them, everybody knows them, all of them are talking about active. Not a single one as they project their go forward is thinking about passive as a big driver of their growth. It's all thinking about active. Well, gladly, we've been doing that for 91 years, and we have a pretty good track record at Janus Henderson. So I actually think that there's a really interesting turning point that we've all thought about and talked about, which is actually starting to happen, which is a shift to active equities. We typically see any shift in the asset management industry, as you well know, starting from the most sophisticated sort of sovereign wealth funds and pension plans trickling down effectively to family offices, ultrahigh net worth, then to intermediary. We're seeing that happen. And for us, we're seeing wins along those lines. So last quarter, for example, we had 15 strategies that are inflowing more than $100 million each. 5 of those -- 4 or 5 of those were active equities strategies. And we expect that to continue to grow and divergent. We have great performance on our small mid-cap businesses and our large-cap businesses on our European equities businesses, on our non-U.S. equities businesses, our global small-cap business is reaping benefits. We're seeing a lot of folks, again, to your first question, look for help, look for wheat to chaff chap separation, look for real drivers of company performance, company-specific performance that will buck the trend of any of these large macro negative trends like geopolitics and everything else. And we're so far being the beneficiary of that. We want to continue to do that. So we don't think active equities in any sense, is a forlorn place or a place you want to stay away from. We are leaning into, and we think this world is more and more ripe for folks like us to deliver.

Great. Why don't we move over to alternatives. Maybe first, you mentioned Privacore. Would you mind giving us an update there? What does the current distribution footprint look like? What does the current product offering look like?

Yes. No, absolutely. So yes, I mentioned Privacore a little bit ago. And just to kind of put some new faces in the audience around what Privacore actually is. So Privacore is a best-in-class platform for open architecture alternative distribution and wealth. That's a mouthful, I apologize, but hopefully, you get the picture of what that is. So it basically sits between GPs and wealth platforms, wealth platforms want to get differentiated, high-performing private or alternatives asset managers onto their platforms. But just because you put it on the platform doesn't mean the financial adviser takes that, right? In fact, lots of stuff gets put on platforms and doesn't sell a luck. We are here and they asked us to be here, our clients did, many of our forward-thinking clients asked us to build this thing on the Janus Henderson backbone so that when something gets on their platform, that's alternatives, the financial advisers can be educated. The financial advisers can be helped in terms of what part of the allocation it should be or shouldn't be for what types of clients. And that's effectively what Privacore does for the wealth manager. On the other side, the GP, and we've all talked about this, you've all heard about this democratization alternatives. Well, some people can do it, maybe ranked by AUM numbers 1 through 5 of alternative managers can actually build a sales force of 100 people to then go sell to the financial advisers. Most of them, call it, #6 through, I don't know, 50, can't do it, but sometimes have extraordinarily strong performance that is differentiated. And again, have no way to get to the wealth platforms. That's what Privacore does. It selects a bunch of folks. So we have 97 people on the waiting list right now, 97 general partners or asset management firms in the alts world waiting list to get on this platform. We're not going to do it to everybody. We're going to not just look at the economics, but the performance. We're going to bring that on to Privacore, and we're going to distribute that to the wealth platforms. So to answer your very specific question, we are growing in terms of the wirehouses who see the value of this. We're in the handful now, but candidly, if you get to north of a handful, you basically cover the landscape of folks who want to use this. More and more RIAs are looking at this as a tool because all of them are incentivized for the appropriate reasons to increase alternatives as a percentage of the allocation of their clients. But again, these things need to be sold, not just bought. And that's what Privacore does. So from a distribution perspective, it's more and more. And again, from a product perspective, there's tons of stuff that's out there from a public domain perspective. We've been quite successful with a big technology fund out there, so hundreds of millions of dollars of money to raise. We've been quite successful with a private equity business that we've raised money for. We now have an infrastructure on the platform. We also have a curated kind of building block of private credit and private equity, where it's our name on the front. And we, with a partner, select what is the best vintage and can rotate that around depending on what the performance is. So we're starting to just develop the pax. Again, it's something that we've had for 24 months roughly, 2 years roughly. It's a de novo build. And so we're just starting to see the progress here. And so far, we feel pretty good about what we're seeing.

Similar question on your other alternatives assets, [ FI, ] VPC, NBK. And maybe more broadly, these were all acquisitions. How do you think about growing that business? Does more tuck-in M&A make sense? Is there a lot of organic growth opportunity as you see it with what you have? How do you think about growing that out?

Yes. So let's just think through our M&A trajectory broadly, and most of that was on the private side. But the first thing, I've been here for about 3 years at Janus Henderson. The first thing was an emerging market debt business, the public fixed income emerging market debt business we brought on board, not on the side, but that was the first kind of lift in, so to speak, of a really great business with fantastic track record, which is just in their 3-year track record, I think, this month, and we anticipate a lot more growth from the $1.5 billion, $2 billion that it already has in AUM. And then to your point, we went down the path of the alternatives. And our thesis was that there are 3 areas of alternatives that we really want to be in. And those are the areas that were not picked over. Those are the areas that we thought we could differentiate. And again, to our DNA, could create alpha, not just beta on the private credit side. One of them we mentioned is Privacore, right, de novo build, but a JV with a great team we brought over from Blackstone to build that business. Again, as we said a second ago, it feels like that's starting to build some momentum, and we hope for more of it there. But then to your very point, we went in other directions as well. So we brought on board, on the ETF side, a team from Tabula. Again, it's an alternative, so I won't spend too much time on that. That allows us to build ETFs in UCIT form, which is not just a European business, but I'd say basically everywhere in the world, Australia and the U.S. business. So Asia, Latin America, Middle East, of course, Europe wants ETFs and UCIT forms, and that's something that we bought with that skill set. Again, as I mentioned, market makers, 15 countries, distribution skill sets, product development skill sets, really great people, et cetera, et cetera. Then we went into more of the alts area in a spinout of National Bank of Kuwait that had a really great team there for almost 2 decades in the Middle East, basically Turkey and Morocco, doing private credit deals for the most part. We brought that on board. It is a unique opportunity to be in a fast-growing business where the sovereign wealth funds have trouble doing $20 million and $30 million checks because it's just not worth their time, but they're happy to allocate somebody else doing it, particularly if it invests locally, which we do. And the banks aren't doing the $20 million, $30 million checks there because they're not necessarily as sophisticated as that. So that's been going well. Spun into us. We call it Janus Henderson Emerging Market Privates. It spun into us. The team is raising money as we anticipated. And so we see demand there, not just in the Middle East, but broadly as well. Then the most recent acquisition that we made is Victory Park Capital. That decision was one that we went down the path of owning private credit because our clients were asking for it. It's effectively a complement to our public credit businesses, particularly on the securitized side. And we looked at basically 2 branches of private credit. One is direct lending and two is asset-backed. On the direct lending side of things, we had trouble seeing it as not beta at this point in the cycle and at this point in kind of the incredible amount of money being thrown into that marketplace for a limited amount of deals, let's just say. And so we're going to hold off on that in the U.S. from a direct lending perspective, although there might be some outside the U.S. that we go for. And what we found was asset-backed is essentially direct lending 15 years ago. So real alpha creation, real differentiation, real origination, real diligence happening at the level. And so there are really a few companies that we looked at, and we bought frankly, the best one. All the other ones were bought, and then there was Apollo that's been doing this for a while. We bought what we think is the best one, and we are continuing to grow Victory Park Capital. We see enormous potential there, not just as an asset-backed business in North America, which is where it's based, it is based in Chicago, but also as we complement it with our own securitized business as well, so the public asset-backed area and also complement that with Privacore and Janus Henderson, for example, the interval fund that we just filed for and soon will launch. So we continue to see these things perform as we thought we were going to perform. Again, as you know, as we've mentioned before on these earnings calls, we do a ton of work to try to make sure these are client-led acquisitions. So we derisk these things. We don't just buy to check the box. We make sure clients want something, we go find the best thing and then we pair that up. And it feels like so far, those are going okay.

Great. With our last bit of time here, I was curious to ask about blockchain and tokenization and what you're doing there. So you've got a couple of tokenized funds in the market, treasury fund, a tokenized version of JAAA. Can you talk about where the investor interest in those is coming from? Is it a new customer channel that's opening up? And I'll just wrap both into one since we've got about 1.5 minutes left. A number of your peers have talked about tokenization technology, not just as a wrapper, but as a new back-end rail. So do you see opportunities elsewhere to implement blockchain in more than just tokenized version of you know.

So I'll try to be very efficient in my answer, given your prompt on timing. First off, from a tokenization perspective, something people don't know. We are the second largest provider of tokenized funds in the world. No one knows this, and I guess now you do. But it's one of the things that for us is a little bit of an experiment for the second part of your question, but also is getting us involved with a whole set of clients that we never would have had access to. And that client, to your specific question, is disproportionately on-chain financial institutions, who would have been okay investing in stablecoin when there was no interest when there was no yield. But now in the past a little while, they're looking for things that have yield. And so JAAA and U.S. Treasuries is the place they want to go, but they want to stay on chain. And that's what we can provide for them with our partnership with Anemoy, Centrifuge and Grove as well. And that's something that we think that we're able to get ahead of our peers on because we can learn about it. Now to your second part of your question, we are seeing some other institutions who are off chain get interested and involved in this stuff, but I think we're all learning. It may take time for tokenization to change the rails, right, to change how we actually do business. But we want to be there when it happens. We're preparing ourselves as opposed to saying, look, at this point, it's going to change or it's actually changing already. We want to be ahead of the game. Again, Janus Henderson, although we're 91 years old, we are effectively a start-up that's 91 years old in the way we think about things. We want to be innovative. Not everything will be successful, but whether it be our ETFs, whether it be tokenized funds, whether it be in new geographies that we go to, we want to continue to build the asset management company of the future, and that's where we're dedicated to doing on behalf of our shareholders and our clients.

Great. Well, we're out of time. We have to leave it there. But Ali, what a pleasure to have you. Thank you so much.

Thank you. Great to see you again. Thank you.