The Goldman Sachs Group, Inc. (GS) Earnings Call Transcript & Summary

All right. We're at 10:30. So we are going to continue. Next up, very pleased to have Goldman Sachs. From the company, it's Julian Salisbury, Global Head of Asset Management. He's also a member of the operating -- of the Management Committee. With assets under supervision approaching $3 trillion, Goldman is a top 5 global active asset manager with -- and with almost $400 billion in alternative assets, a top 5 player in that segment as well. I think people appreciate that. Last year was about $15 billion in revenue business. That's about 1/4 of Goldman. And while its contributions declined this year, last year, you had revenues of over $1 billion. So it's a meaningful business over time.

We'll kick off with some quick ARS questions as everyone kind of finds their seats. The first one we've asked for all the companies -- and just current position in Goldman. [Voting]

Better than one. We'll rank these at the end of the day and see who shows up where. And maybe go to the next one to help frame the discussion. Do you think that size and scale of the asset management business is appropriately reflected in Goldman's valuation? [Voting]

Somewhat. Kind of cop-out answer. And we're going to get into that. But maybe, Julian, maybe we could just start kind of big picture macro environment. It's been challenging, growing concerns of recession. Obviously, market volatility, we're all contending with. Maybe just focus on what are the key risks that you're focused on for your business? And how has that impacted your outlook for 2022 and beyond?

So notwithstanding the market volatility and the somewhat challenging environment you referred to, I would say the secular trends remain clear. And therefore, the medium- and long-term outlook for the business remain the same. Strategy continues as we laid out at our Investor Day, continue to scale and grow each of our businesses, grow traditional assets, grow alternative assets where we think there's a significant opportunity and reduce capital in the business. So I would say the near-term environment, market environment, certainly hasn't impacted the strategy. If you think about the risks, I kind of break it down into 3 buckets. There's asset volatility and what we're seeing in terms of performance in the business. There's liabilities, how we raise money and what the market environment is doing to our ability to raise capital and how it's impacting flows. And then finally, it's -- from a capital perspective, the impact it's having on the disposition or reduction of capital in the business. So on the first, we have a world-class team of investors that built to navigate markets like this. Some of our businesses are doing better in an environment like this. Some are having a more challenging period of time. One of the benefits we have as a diversified business is that in around, we're performing well through this environment. Something like our money market business has had a terrific first couple of quarters of the year really outperforming our competitors, something like a quant equity business. So we've seen areas of strong performance and other areas where it's been more challenged. But in the round, we have the right risk managers in place. And that's not something I really lose a lot of sleep about. As it relates to liabilities and the capital-raising environment, I mean, really, you just have to look at what's happened to our flows of 2021. And so far this year, 2021 was a record year, raised $130 billion of [ LTIP merger ] during that period of time, which is a record. We set out some capital-raising targets over a 5-year period that we met within 2.5 years. So yes, you hear about some challenges in fixed income in the first half of the year. Flows were lighter in that asset class overall. That's not a Goldman Sachs issue. That's an industry issue. Clearly, in the near term, with markets -- equity markets down, that has an impact in the near term in terms of management fees because they're based off of market value of assets. The other thing you hear people talk about is the tougher capital-raising environment for alts. There's certainly some impact of the denominator effect as you've seen public funds, either public equity books go down. And therefore there, they have a higher percentage of alts that might -- that's otherwise been planned. And that's -- that has some cooling of the demand from that one segment, capital raising. But interestingly, if you think about how we raise capital, we raise it from institutions. We raise it from third-party distribution and wealth management, and we raise it through insurance companies. These are 3. So U.S. institutional investors that have that kind of denominator effect, and that's where we've seen some of the cooling, and that's actually an area for real growth for us. But somewhere, we're relatively underrepresented compared to some of our peers. Insurance is a real power alley for us. Private wealth is a real power alley for us, and those continue to be good sources of funding. So one of the sources of funding is a little cooler. But notwithstanding that, we're having great success in that channel. And then on the -- as it relates to capital, I would say last year was a tremendous year for both dispositions and monetization. Unfortunately, it didn't appear with capital going down because things went up in value. When things go up in value, it consumes more capital as we continue to sell and monetize those assets. You will see that come back down again. Have really no concerns about our capital reduction targets. We're well on track to achieve that. It was slower in terms of dispositions in Q1. But we have a -- we've monetized hundreds of assets. We have a bottoms-up plan to dispose of hundreds of assets over the coming quarters. Some of this is just regular way refinancing naturally being taken out of credit positions. Much of it is event-driven, IPOs, strategic transactions. So whilst it slowed down in the first quarter or 2 from a disposition, I think you'll start to see an acceleration of those dispositions in the back half of this year and into next year and a real significant -- that will start to show up more significantly in the numbers by next year.

Great. And maybe we can kind of now delve into kind of Goldman Sachs. But maybe just remind us of the size and scale of the Asset Management business. I kind of touched on some numbers in the intro. And just kind of what differentiates you from your competitors? And maybe talk about kind of strengths and kind of areas you're focused on to improve?

Yes. So my numbers were a little different from your numbers. Hopefully, my numbers are right but -- $2.5 trillion. Maybe it's FX, maybe.

I said approaching $3 trillion. Approaching $3 trillion, I did say.

Thank you. It was approaching $3 trillion, and the FX had some impact. The -- so $2.5 trillion of AUS across the business, $445 billion of alternatives that makes us, as you said, the fifth largest active manager globally and the fifth largest alternative manager. I won't go into the extensive complicated history, but part of the reason people don't really appreciate that, I think, is because these businesses were in different places around the firm until a few years ago. Starting in 2019, we started bringing together all of the alternatives businesses under one roof, really recognizing the secular opportunity to provide investment opportunities for our clients, provide them advice. But really, in order to do that, we needed to centralize all of the activities in one place rather than having a bunch of individual team selling products. So I think -- so I don't think people quite understand or recognize the size and scale and significance of that business. And within that $445 billion of alternatives, we are operating at scale in private equity across both buyout, growth, vintage, GP stakes. We're operating at scale in private credit and real estate. And I think each and every category that we would want to be in, we are in. And we see opportunities to continue to scale organically all of those businesses. So there's no gaping hole for us to go and fix. And I would say that we're operating at scale globally in that business as well. 30-year-plus experience of investing in alternatives. This isn't something we just started doing. The merchant bank where we started our private equity business was 30-plus years ago. Many of these alternative businesses, we may -- in some cases, we may be raising funds, third-party capital for the first time, but we've actually been engaged in the investment activity for 20 to 30 years. In terms of strength, I really believe one of our greatest competitive advantages is that we sit inside Goldman Sachs. I think some people think that could be a challenge at times. It really is our greatest competitive advantage. And it's a multifaceted one, from a capital-raising perspective, the relationships that we have with pensions and balance, with private wealth through our banking relationships, our private wealth relationships through our Global Markets business just gives us differentiated access to LPs from a capital-raising perspective. From a sourcing perspective, the ability to tap not only into the investment bank but other divisions within the firm, whether it's engineering, global markets, private wealth, these are just really great sources of referrals and deal opportunities. And the One GS ethos really does operate and exist. We'll see significant opportunities for sourcing. Some recent -- just in the last year or so, we've had a number of private wealth clients or a number of transactions where we have bought a company, and an individual has done very well as a result of that. They naturally become -- not naturally, we ensure we do our best that they become a private wealth client of the firm. And then that money cycles back into other funds that we're raising to invest in other strategies. Similarly, we may have a business that we've invested in with a large cash balance in these Transaction Banking services. So this virtuous ecosystem, and it's not just Asset Management and Investment Banking, it's really all the divisions of the firm is really incredibly powerful. And it -- the other thing that we find is even if we're -- even if there's no substantive help or referral or touch point, the mere fact that we have the Goldman Sachs brand is just incredibly powerful. With entrepreneurs, both in the U.S. and in international markets, they really will love the idea of having us as an investor, as a partner. They know that not only will that create a halo effect or resonate with their partners and clients, it will attract other capital. It will certainly gain more news than might have otherwise been the case. So we still have to be competitive. We still -- nobody is going to give us anything for free. But in a jump-ball situation that the power of the brand is incredibly powerful, both on the origination side or the sourcing side and on the capital-raising side. And I think that will also -- we'll talk about perhaps later, but as we start raising more money from the wealth and the retail channel, again, I think the brand works really well. In terms of things to work on, as I already mentioned, we've made great progress in terms of capital raising. But I think we've been in the third-party capital-raising business for less time than some of our competitors on the alt side. And while we've made significant investment, I think continuing to invest in that over the next coming quarters will not only -- while it's not necessary to meet our existing targets, will be necessary to meet our more aspirational targets and substantially growing from where we are today or above our near-term targets. And then integration, as you know, we've made a couple of acquisitions. And I think we have to -- also, well underway and going well and continuing to make sure that we get the best out of those acquisitions, monetize the value of those.

Helpful. Why don't we put up the next ARS question? There's one before this one, should be the third one. You said that last time we were on. All right. We'll table that. Maybe we talk about your forward strategy for Asset Management. Talk about your growth plans for alternatives and maybe the key opportunities, growth drivers and just kind of what gives you kind of conviction in your ability to succeed.

Yes. Well, as I mentioned earlier, I mean, our forward strategy is really just a continuation of the strategy we articulated back at the Investor Day in early 2020. It's just continuing to build upon and evolve. We laid out at that time 3 primary targets: $250 billion of net traditional flows, $150 billion of gross alternative fundraising and then a capital reduction target. In February of this year, we updated those targets, $350 billion of traditional flows, $225 billion of gross alternative fundraising. We kind of needed to update it, having met the 5-year target after 2.5 years. And then we added a couple of additional numbers, the $10 billion management fee, of which $2 billion will be alternatives. And in terms of those numbers, it really just bottoms up. We look at all of the funds that we're planning to raise over the next couple of years. Within alternative space alone, we have north of $40 billion that we're in market with right now. So you're not exposed to any one of those, but you -- it's really -- the $10 billion and the $2 billion are really an output of our bottoms-up plans around fundraising. In terms of what gives us confidence, I mean, we just see sometimes the -- for example, when you raise the money, it's a pretty long sales cycle. And even after you've got it closed, you're -- for many of the strategies, you're typically only starting to charge once the capital gets invested so there tends to be a lag between when you close the fund and when the fees start rolling in the door. So we have a real sense that the momentum is starting to build through the funds that have already been raised. And we have real confidence that, that momentum will continue to build. And the other thing that just gives us confidence in this is you've seen -- it may not show up in the numbers yet. It's just time. But last in 2020, we raised a strategic solutions fund. This was -- if you divide the alt fundraising between 2 categories, that's where we've had existing funds, and we're simply raising the next vintage of that fund and looking to raise more than we raised in the prior fund. And then in some cases, it's a first-time fund. Strat solutions, first-time fund, long-term strategy, but primarily with a firm balance sheet, $16 billion of capital from a standing start in 6 months during COVID. And it's unprecedented, one of the largest first-time funds ever raised. We charge on invested. So it takes a while for that to ramp up as we invest the capital. We just closed on private equity, the latest version of our private equity fund substantially larger than the last fund that we raised. And we see great momentum in that business wherein -- I have to be careful. I'm not allowed to talk about funds that we're currently in market with. But Petershill will be another great example. We're very active in the GP stakes business. The last fund that we closed earlier this year was substantially bigger than the last one. So it's just really time as these things ramp up. And we also see the forward look on the various funds that we're raising. And then in addition to these flagship funds, there's a multitude of separately managed accounts, single-asset deals and other bespoke arrangements that we have with our clients. So we're just kind of seeing it in action.

Got it. Can you maybe just talk to what do you see as kind of some of the biggest secular trends and just how you're looking to kind of support clients and capitalize on those?

Yes. I mean, we've talked about it a lot already, but alt is -- continues to be at the front of the start of most conversations that we have with clients looking to grow existing exposures where they already have it, diversify it. And in some cases, they're still being introduced to, I'd say, it's more prevalent and advanced than some of the U.S. endowments and foundations. But in other parts of the world and certainly in places like insurance, it's less evolved right now. So that continues. That is really the kind of one of the bigger mega trends, and the asset growth that we see in that space dramatically outstripping the traditional space, hence the focus on alternatives through many of the traditional competitors. But again, one of the benefits we have here, we have an existing suite of alternative assets. And we just need to really scale them and grow them using our existing teams. To double-click on that as a retail ultimate democratization of alternatives, we've seen a couple of our competitors start to launch these products, whether that's generally income replacements or yield alternatives around private credit or private real estate. That's -- there will also be products coming through that are growth replacements, equity-type replacements. So I'd say that -- and I think the reason you've seen many of our alts competitors focusing on that space is they've seen the relative slowing down of growth in the traditional institutional channel, which has been their sweet spot of where they've raised a lot of their capital. And they've been kind of moving to focus more on [ interest ] and wealth management or retail. Now for us, insurance is already a power alley. We manage $450 billion of insurance money. So we just have to migrate that into alternatives. We've had historically a very strong relationship with the private wealth business and raised a lot of money through that channel. And it's now developing more of these accredited investor products that you can roll out to and then to a broader set of individuals. I think customization remains a huge trend. I think this is both on the traditional side as well as on the alternative side, people wanting bespoke solutions. And that could be something like a separately managed account for equities where you have specific tax requirements or specific investment philosophy that you want to embed in your portfolio. And we have a hugely scaled platform operating in that space. I already mentioned on the alternative side, demand from clients to have specific curated solutions, a specific region, a specific sub-asset class wanting to do more directed investments. So that demand for customization is there, which creates some challenges, frankly, because it's a lot easier when you have one large co-mingled fund. But it's a requirement, and I think it plays to our strengths because we're relatively uniquely positioned to provide solutions to approach a client with a multitude of products, both public and private, so we can manage if they need something with public and private credit in it, for example, we can manage that for them. If they want public and private equity, we can manage that. If they -- so I think that's a trend, customization. ESG is still -- I know there's arguments on both sides of the channel for this topic. But it is a real topic of conversation with every client that we have. And that could be, in some cases, a specific product, whether it's -- again, I have to stop myself here because I can't mention funds that we're currently raising. It could be a specific product or simply embedding certain ESG characteristics into a broader portfolio, customizing it and tailoring it. And that's a real topic of conversation. And then the other trend, of course, is just consolidation. I think it's -- I think there's room in the world for great niche players who are focused on what they do, and they do it very well in a focused way. But I think you're going to continue to see power accrue for the larger-scale, multi-asset class platforms who can provide true solutions to their clients because it's just what our clients are asking for. And I also think in order to do that, the investment that's required in technology and distribution, it all points to really operating at a larger scale. So I think you'll continue to see consolidation. If you look at the acquisition we made in Europe of NNIP, that was a $300 billion asset manager, which was really subscale, especially when you're traditional-focused. And I think they realized that it was a very natural bolt-on for us. And I think you'll continue to see more of that.

Got it. We're going to come back to that. But while we're kind of wrapping up the business overview strategy section, something that we've tried to do that's been hard, but maybe you could help us, is just maybe talk to kind of your positioning across strategies and asset classes and just -- I'll take your word for it. How is your performance versus peers because some of this isn't as kind of transparent to us?

Yes. Well, it's interesting. On the traditional side, from a positioning perspective, we're top 2 in fixed income, top 3 in liquidity, top 5 in active equities are the performances -- some of the performance at least is out there in terms of the mutual funds. And you can see on a 3- and a 5-year basis, we're very competitive. And that's supported by the flows that we've seen during the course of '21 and '22, where we -- I think you'll see we significantly outperformed the majority of our peers from an active flow perspective. On the private side, it gets more complicated to summarize and distill performance because people measure and look at it in different ways. Is it NAV accretion over a 3- or a 5-year basis? Is it only the outcome of funds? If you're raising funds every 3 to 5 years, which vintages do you compare it against? And at a macro level, it's actually hard to summarize all of that. The best thing I would point you to is what are our LPs doing because they put us through the ringer appropriately on this stuff and really do granular diligence deal by deal, fund by fund, individual by individual. Before they give us any money, it's a truly forensic process that you go through to raise the capital. And if the results weren't good, we just wouldn't raise the money. So if you look at the outcomes or the output of what's going on with those fund raises, I think that will give you the greatest degree of comfort around what the actual performance has been like. And both on the funds that I can talk about that we've actually closed, either it's strat solutions or our private equity fund or our Petershill fund or some of the other funds that are currently in market right now, I think when you see the outcome of those capital-raising events, it will be supportive and demonstrative of strong underlying performance. At a -- because at the end of the day, what actually matters is, is the performance sufficient for the LPs to want to invest or attractive enough for the LPs to want to invest performance. So -- and so outcomes is a great thing to track.

That's helpful. Maybe go to the next ARS question. In terms of the targets Goldman's laid out for its Asset Management business by 2024, which one are you most skeptical of? [Voting]

The alternative fundraising is number one followed by long-term asset flows. All right. So maybe the next couple of questions, we'll kind of delve into your kind of targets. One of them was kind of $10 billion management fee target, $2 billion coming from AG. You've talked about since you kind of gave us that target, markets have not evolved maybe exactly as anticipated. They never seem to do. Could you maybe talk to maybe some of the building blocks towards that fee target? And just how sensitive are they to kind of market performance and levels?

Yes. Obviously, it differs a little bit from asset class to asset class. And whilst the numbers, those targets, you can reasonably assume that we didn't assume the markets just went in one direction. Like we factored in a variety of different market conditions that may evolve over the time frame before setting out those targets. Clearly, the magnitude of the equity market sell-off in the first half of this year would not have been fully factored in. But we also think that's one asset class. We'll see how that evolves over the next couple of years. Markets have certainly been more positive over the last few weeks. There are other areas right now where fixed income, for example, flows were a little slow in the first part of the year. They're starting to really come back. Our money markets business has really outperformed in this environment. On the traditional -- sorry, on the alternative side, it's less sensitive to some of the market volatility. And frankly, in some cases, the market volatility increases some people's propensity to want to invest in alternatives. When I think about the -- those targets, again, you can just do it bottoms up. We know the funds that we're in market with. There are many of them. So we're not really at risk of any one strategy. It's such a granular fund-by-fund buildup that gets us to the number, and that's really why we have confidence in hitting both of those management fee targets. If markets evolve negatively, it could take a little bit longer to get there than would have otherwise been the case. If markets are more positive, could get there a little bit sooner on the traditional assets. But on the alternatives, I think it's interesting that last slide that came up. I -- that's -- it's hard work. Don't get me wrong. Raising alternative capital is a long, grinding, tough sales cycle, but actions speak louder than words. And you can see what we've done year-to-date. You saw what we did through the first 2 quarters of this year. And it won't always be at quite the same cadence and pace. I wouldn't extrapolate from 1 quarter necessarily. But over the course of the year and subsequent years, I think you'll see us continue to make very good progress and not only meet but in time, exceed those targets.

Yes. Yes, I think the concern, at least on the $225 billion from alternatives, which you kind of increased from $150 billion earlier this year, it just feels like fundraising in the current space is getting more crowded. The environment is more difficult to fund raise. Maybe just talk to kind of what you're seeing in terms of fundraising activity softness or slowdown.

Yes. Again, I'll break it down, institutions endowments, wealth, insurance, in those 3 broad channels, and then U.S., Europe, Asia. So on a 9-box grid, that's -- or a 3-box grid or 9 squares, you would say that U.S. institution is slower. But the insurance demand from clients continues to be very robust. The wealth demand from clients continues to be very robust on the institutional side. There are certain sovereign wealth funds and other clients in Middle East, Far East, Asia. We still have significant amount of allocations to make. So you may lead and see a lot that's isolated purely in on the U.S. institutional investor base dealing with the denominator effect, but that's just one of the many funding channels. And as I mentioned earlier, actually, for us, we are less exposed to that. We want to grow in that space. We are growing in that space. We've added significant clients in that space. Part of the strategy that we laid out at Investor Day was to grow in that space. But it's actually not as big a funding source for us today as some of our competitors. So I think that's why it's not something that is going to really give me -- cause me to lose a lot of sleep just in terms of hitting that target.

Got it. I guess earlier in the conversation, you talked about it's been difficult to kind of reduce the capital in the business, given the appreciation. But clearly, at Investor Day, there's a lot of talk about capital optimization and reducing on-balance sheet investments. Just maybe you talk to your ability to kind of harvest in this environment. You mentioned you had plans, but the environment is more challenging, less IPOs, less M&A. And at the same time, I think you talked about reducing it by $4 billion by 2024. We've gone kind of the opposite direction. Do you still think you can get there? Or when can you get there, so to speak?

We will absolutely get there. We will meet that target in the time frame. And the reason I'm so confident in that is the reason it looks like it has gone up, capital appreciation. I'm sorry, we made money last year. Capital appreciation was a bit of a headwind. Some of the way the capital gets allocated with stress loss becoming meant that we actually just -- we had more capital attached to the business than would otherwise been the case. But that will come out as we sell assets. Some of our assets became more capital dense. But that means as we sell them, it goes out faster than would otherwise have been the case. It's minutiae but have certain real estate assets that actually, as we sell them in the first instance, it actually is not -- it actually can increase capital. But when you ultimately sell them, the capital goes away. There's been some headwinds in there that may not be obvious, but we have a bottoms-up plan asset by asset to meet those capital reduction targets. And I'm very confident that we'll meet those targets.

Okay. Clear. Maybe shift gears in terms of each quarter, we kind of get the earnings statement, the income statement, and we kind of look at equity investments, debt investments and obviously some volatility. The private portfolio has been fairly resilient. We've obviously seen volatility on the kind of the public aspect within the equity book. Maybe just talk to maybe the drivers and the resilience in the [ tag ] of marketing this portfolio. And to the extent that the macro environment remains challenging or kind of what we're seeing in the public markets, is the private market portfolio going to catch up to the public market portfolio?

Yes. So it's a few things. When we look at our portfolio, the balance sheet portfolio, I would say the construction was pretty good coming into COVID and then the subsequent periods of volatility. So within real estate, we were long multifamily and logistics and data centers, not hotels and not retail. Within the credit and the equity portfolios, we tended to be more exposed to resilient recurring revenue-type businesses, software, health care. So the kind of industry and portfolio selection has been good and strong. And that has served us very well. As it relates to marking the box, sometimes I get this, why isn't it down? Well, we didn't mark it up all the way last year when those market conditions were so high. So in the same way it didn't go up, it won't go down one for one. Market valuations are obviously an input to our valuation process, but they're one of the inputs. So we look at fundamental valuations. We look at events. We look at structure and liquidation preferences. So we tend to be more conservative on the way we mark these things up. And subsequently, when you see these downdrafts, we're less exposed the other way because we're not using peak market comps as the only input. We'll look at cross-sector multiples on what we think is a reasonable exit multiple for the position. The other thing on the real estate equity portfolio that not everybody appreciates, a lot of these assets are actually consolidated investment entities. So we buy an asset, and we don't -- we're not able to mark it up to fair value as it accretes in value. We're only able to depreciate it. So we're actually building reserves all the time. So when we come to sell these assets, they -- I mean, it's almost always the case that they're releasing revenues at the point of sale. So you're naturally carrying that real estate portfolio at cost less depreciation expense over the life of the investment. And when you sell it, it therefore typically realizes a gain. So that's why there was perhaps less volatility than people think. I'd love to -- it would make managing the risk a lot easier if it just moved one to one with the public equity markets. There are days when the equity markets are up, and our book is down and vice versa. The other thing I would say is last year, there were a lot of gains from growth equity investments achieving spectacular valuations, many of which we got. We were able to monetize. The number of public positions is quite modest right now and will continue to come down. Sometimes, there's a delay because we have a private company that goes public. It takes a little while to get out of the position due to lockups and what have you. But that monetization is happening rapidly.

Great. And we'll go to the last ARS question. See this is the one supposed to be earlier. Why don't we skip this one and go to the next one? There we go. Do you think Goldman should do another bolt-on acquisition to augment its Asset Management strategy? [Voting]

And while the audience is responding, Julian, why don't we shift gears. I mean, you mentioned NNIP earlier. You also had the NextGen Capital acquisition -- NextGen Capital.

NextCapital.

NextCapital. But maybe just talk to what do they do for you and just how they fit into the strategy.

As it relates to NNIP, we continually look and evaluate situations. When we became aware of this asset, it seems to check a number of boxes for us. One, it gave us an opportunity to double the size of our European business where we were operating at a relatively small scale. And we've seen the benefit of that already because we now -- we were never really -- we weren't really viewed as a European player. We were a U.S. player, a dollar shop selling product into Europe. And we see it in our client conversations now. We're now viewed as more of a European player. We have credibility there. We have over 1,000 people in our European business. It's -- so it's really moved the needle for us and changed the nature of the conversations we're having with our clients. Second, because they were a European business and because of their heritage, they were very focused on ESG. So they had a number of specific products and solutions and really a philosophy around investing that's been very valuable to us in terms of how we're engaging with our clients, for example, their green bond funds. And then finally, I already mentioned this. Insurance is really a power alley for us. We're the largest manager of nonaffiliated insurance assets globally. We don't own one anymore. We just manage assets for other insurance companies. We do a good enough job of it that they keep giving us more to manage. We think we're relatively -- part of the reason I think NN Group selected us as the buyer of their Asset Management business -- for those that are less familiar, NN European insurance company is the old ING business. They sold off their U.S. business to become Voya. They were left as a Europe-only insurance and asset manager. And they were looking for a partner that could take on the Asset Management business, manage their book, their general account for them and also help with the transition to bring in more alternatives. And the combination of our public markets insurance business with our alternatives capability that we're pretty uniquely positioned to be able to do that. So I think scale in Europe, introducing ESG capabilities and products and then scaling our insurance business, so that's really what it did for us. From a NextCapital perspective, whilst we've had a long history of working with defined benefit pensions, we really had a more modest scale defined contribution business. And Next really gives us the opportunity to provide customized bespoke managed account defined contribution plans working through employers. And I think we will be able to leverage our corporate relationships in other parts of the firm that we're already having dialogues with human resource teams, with treasurers at these corporates to get in, embed ourselves and provide insurance solutions for them. So that's what they both do for us. I do think sitting here today, we're in a relatively lucky position that we're already a scale player in all the major asset classes, whether it's liquidity, fixed income, equities, both quant and fundamental and across the alternative spectrum. There really isn't a gap. So we can just scale and grow our existing businesses. There's no burning need to have to do something as some other managers may be facing. That being said, of course, we look at things, but the bar will be relatively high given the relatively strong position that we're in today.

Perfect. With that, please join me in thanking Julian for his time today. Next up in this room is Northern Trust.