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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning, ladies and gentlemen. Thank you for standing by and welcome to the Hamilton Lane Incorporated Second Quarter Fiscal Year 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers' presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]
I would now like to turn the conference over to your speaker today. John Oh, Vice President, Investor Relations. Please go ahead.
Thank you, Julie. Good morning and welcome to the Hamilton Lane Q2 fiscal 2021 earnings call. Today, I will be joined virtually by Mario Giannini, CEO; Eric Hirsch, Vice Chairman; and Atul Varma, CFO.
Before we discuss the quarter's results, we want to remind you that we will be making forward-looking statements based on our current expectations for the business. These statements are subject to risks and uncertainties that may cause the actual results to differ materially. For discussion of these risks, please review the risk factors included in the Hamilton Lane Fiscal 2020 10-K and subsequent reports we filed with the SEC.
We will also be referring to non-GAAP measures that we view as important in assessing the performance of our business. Reconciliation of those non-GAAP measures to GAAP can be found in the earnings presentation materials made available on the Public Investor Relations section of the Hamilton Lane website. How we detail financial results will be made available when our 10-Q is filed. Please note that nothing on this call represents an offer to sell or a solicitation to purchase interest in any of Hamilton Lane products.
Beginning on Slide 3. Year-to-date, our management and advisory fee revenue grew by nearly 12% while our fee related earnings grew by over 14% versus the prior year period. This translated into year-to-date GAAP EPS of $0.79, based on $25.1 million of GAAP net income and non-GAAP EPS of $0.91 based on $48.8 million of adjusted net income. We have also declared a dividend of $31.25 [ph] per share this quarter, which keeps us on track with a 13.6% increase over last fiscal year equating to the targeted $1.25 per share for fiscal year 2021.
With that, I'm going turn the call over to Mario.
Thanks, John, and good morning. We had another strong quarter growth and I continue to be impressed by and proud of our team for their tremendous efforts in meeting and exceeding needs of our clients, all watching [ph] their own daily lives. While we continue to operate virtually across many of our global locations, we are starting to see some return to normal in several of our offices outside the U.S. even in the office and in-person meetings with clients and prospects.
Across the firm, productivity and output remains strong. Employee engagement is high and we continue to lean heavily on our strong technology backbone both to keep us connected and to service our clients. This is always helpful with the continued growth and support from both new and existing clients.
I'll shift gears now and turn to an update on our new headquarters build and highlight our new office which opened in Asia. A quick reminder regarding our new headquarters. We assigned a 17-year lease to occupy approximately 130,000 square feet in a newly constructed building located in the suburb of Philadelphia. Square footage nearly doubled our current footprint and while we envision growing into the space over time, in the near term the additional footprint allows us to provide a safe and socially distanced work environment for our employees. And to the extent we find ourselves in excess space [indiscernible] the building. Construction continues to progress while we anticipate relocating to new space in the first half of 2021.
In Asia, we've opened a new office in Singapore. This further expands our Asian presence and puts us closer to investors and investment opportunities in that region. I'd also like to speak about a few recognitions [indiscernible]. I'll highlight not only because it speaks to the first-class organization we built, but also to demonstrate what is truly important to us and our culture. I'm proud to say that for the ninth consecutive year, Hamilton Lane has been selected as the best place to work in Pennsylvania by the Central Penn Business Journal. It's a statewide program dedicated to identifying and recognizing Pennsylvania's best employers.
In addition, the firm was recently designated by the Private Equity Women Investor Network as an International Limited Partner of the Year for 2020. This award is given annually to an outstanding institutional limited partner who has demonstrated a commitment to encouraging and supporting female investors in the private equity industry. It's a tremendous honor to be selected for this award and reflects the deep commitment that Hamilton Lane has for creating a diverse work environment.
Perhaps few markets caused us like many firms to again reexamine our principles and to ask whether we can do more. My answer to that question is yes, we are extremely proud of the caliber of the organization we have built with women and minorities representing 50% of our workforce globally and 46% of our senior leadership team. And while those figures alone position us as a leader in our industry, we are focused on further improving and enhancing our efforts to build a truly diverse and inclusive [ph] organization. There's not been a time in recent memory when people in organizations cared more about who they're partnering with and we are working hard to ensure we continue to be an organization that brings pride to our clients, partners and shareholders.
Finally, before I move to cover some of the quarter's results in detail, let me now take a minute to talk about what's going on in the private markets. Consumer stores [ph] for the public markets, valuations, fundraising, deal activity across all sectors have rebounded. In some cases to levels higher than what we saw pre-pandemic. The rebound has not been uniform as industries and sectors such as growth and technology doing very well, while other sectors such as energy and some parts of the region market struggle. How did the partners and investors react? At no point did we see any of the panic reaction you saw on the global financial crisis. By enlarge, investors have maintained and more often increased their allocations and have continued investing across all parts of the target markets. There has been a small shift favoring growth-oriented investments in some areas of the credit markets and we haven't seen any significant changes in how investors are approaching the private markets.
Now turn to some results for the quarter. Beginning on Slide 4, here we highlight our total asset footprint, which we define as the sum of our AUM, assets under management and AUAs, assets under advisement. Total asset footprint for the quarter stood at approximately $547 billion U.S. dollars and represents a 14% increase to our footprint year-over-year, continuing our long-term growth trend. Consistently prior quarters, AUM growth year-over-year, which was approximately $7 billion or nearly 11% came from both our specialized funds and customized separate accounts and continues to be diversified across client type, size of client and geographic region. Our focus remains simply growing and winning across both lines of business and we are pleased with the continued success.
As for our AUA, similar with what we're seeing with our AUM, growth year over year, which came in at over $68 billion and approximately 14% from across client type in geographic region. As we have mentioned on prior earnings call, AUA can fluctuate quarter-to-quarter for a variety of reasons. But the revenue associated with AUA does not necessarily move in lockstep [ph] with those changes. While this quarter saw an increase in AUA dollars relative to the previous quarter, we'll continue to emphasize that no direct correlation exists between the scale of AUA dollars and revenue generation.
Let me now turn it over to Eric.
Thank you, Mario and good morning. Moving on to Slide 5, we highlight our fee-earning AUM. As a reminder, fee-earning AUM is the combination of our customized separate accounts and our specialized funds with basis point driven management fees. We will continue to emphasize that this is the most significant driver of our business, as it makes up over 80% of our management and advisory fees.
Relative to the prior year period, total fee earning AUM grew $3.2 billion or nearly 9% stemming from positive fun flows from across both our specialized funds and our customized separate accounts. Taken separately, nearly $1.7 billion of net fee-earning AUM came from our customized separate accounts and over the same time period, $1.5 billion came from our specialized funds. Growth in these two segments continues to be driven by four key components: one, reups from our existing clients; two, winning and adding new clients; three, growing our existing fund platforms; and four, raising new specialized funds. What you also see here is that our fee rates continue to remain steady.
Moving to Slide 6. Fee-earnings AUM from our customized separate accounts stood at $24.6 billion growing approximately 7% over the past 12 months. We continue to see the growth coming across type, size and geographic location of the clients. What you also see here is that over the last 12 months, more than 80% of the gross inflows into customized separate accounts came from existing clients. You've heard us say in the past that reups from our existing client base remains a key component of the growth we've achieved in this segment of the earning AUM. In addition to reups, we continue to expand our client base by winning and adding brand new relationships, which in turn provide a growing base for future reup opportunities.
Moving to our specialized fund, growth here continue to be strong. We are executing well across our existing product suite and are tactically introducing new product lines. Overall demand remains robust and like the rest of our business comes from a diversified set of investors around the globe. Over the past 12 months, we've achieved positive inflows of nearly $1.5 billion, resulting in a nearly 11% increase in fee-earning AUM.
Turning to fund-specific updates. I'll start with our current secondary fund, which continues to be the primary driver of growth in specialized funds fee-earning AUM. During this recent quarter, we closed on approximately $250 million of LP commitments and that brings the total dollars raised for this product to approximately $2.5 billion. In prior calls, we told you that we had until October of 2020 to finish raising this fund. However, given strong demand and a strong pipeline of investment opportunities, our current investors have graciously allowed us to extend the fundraising deadline to January 2021. Lastly, similar to prior closes with this product, this closing degenerate retro fees of $2.9 million in the quarter.
Next, our annual credit fund focused series continued to attract capital. To date, the current series has raised over $290 million of commitments and we have until the end of January 2021 to complete raising capital. For the benefit of those less familiar with this series, it is a relatively unique structure whereby we are continually raising and deploying dollars simultaneously. Therefore, it is less about targeting a set amount of dollars to raise as you traditionally would see across funds with a multiyear deployment period and more about ensuring that we size the product in-line with the current opportunity set. This inevitably will lead to some size variability from series to series. We do however, typically see commitments to this product being more calendar backend weighted and would expect that to continue for this rate.
Next up is our direct equity fund. For those less familiar with this fund and its strategy here, we invest directly into companies alongside leading fund managers. We have successfully raised four prior funds in this vertical with our last fund having raised approximately $1.7 billion. I am pleased to announce that on October 9, we held the first close for our fifth fund at nearly $320 million. The fund has not yet been turned on as we are still finishing up investing our current fund and thus no fees for this period.
Based on pipeline and pacing, we would anticipate that this new fund goes live starting in January 2021. With this new fund, we've made an alteration to the fee model reflecting some changing investor preferences. Our prior four funds have had a traditional 1% management fee on committed capital, which then switch to a 1% on net invested capital post the investment period. Carried interest was charged at a 10% rate over an 8% hurdle following a European waterfall method.
For this new fund, we are providing investors a choice, either the traditional 1% management fee on committed capital with a 10% carry just as we have in the past or they can offer a 1% management fee on net invested capital and that will come with a carry rate of 12.5%. The hurdle rate remains at 8% as does the European waterfall methodology. We are seeing some investors more focused on early IRR management and thus prefer invested capital models and are willing to pay more for performance on the back end. Part of being a good partner to your clients is listening and understanding preferences and being responsive.
For this first close 33% of the capital opted for the traditional model and 67% opted for the invested capital and higher carry options. We are encouraged by the results from this first close, which was started and completed all post-pandemic and we look forward to providing you with updates as we continue to raise this fund.
Finally, we continue to see strength in our white label initiatives where we partner with distribution houses and provide products into those channels. Outside of the United States, we continue to see positive net inflows into our semi-liquid Evergreen product and are encouraged with the success that we've achieved to date.
Before I end here, I want to take this opportunity to discuss our latest technology investment. On September 2, Honcho, a SaaS-oriented company focused on compliance-related solutions announced the closing of a Series A financing round, where Hamilton Lane invested balance sheet capital alongside a blue-chip investor group that included fintop capital and Peter Thiel. Our investment in Honcho was another example of us partnering with leading technology franchises to come together to solve a problem. Not all of these solutions are commercial opportunities for Hamilton Lane. In this case, it would be odd if we announced that Hamilton Lane is now selling compliance software. They are however problems that we think need addressing because in doing so, it makes our firm along with our industry better and stronger and we believe that leads to more growth. So here with Honcho as with other similar situations, Hamilton Lane is proud to be a strategic partner, and investor.
And with that, I'll turn it over to Atul to discuss the financials.
Thank you, Eric, and good morning, everyone.
Slide 8 of the presentation shows the financial highlight for the first half fiscal 2021. We continue to see solid growth in our business with management advisory fee, up nearly 12% for the prior year period. Our specialized funds revenue increased $10 million or 19%, compared to the prior year period driven by almost $1.4 billion in fee-earning AUM, added from our latest secondary fund between periods. We recognize $6.1 million in retro fees from the secondary fund in the current year period compared to $2.8 million from our latest co-investment fund in the prior year period. As many of you are likely aware, investors that come into later closest to fundraise for many of our products paid retroactive fee dating back to the fund first close. Therefore, you typically see a spike in management fee related to that fund for the quarter in which subsequent closings occur.
Revenue from our customers' separate accounts increased approximately $2.9 million compared to the prior year period due to re-up from existing clients and the addition of several new clients. Revenue from our advisory and reporting offerings increased approximately $2.3 million compared to the prior year period. The final component of our revenue is incentive fees. Incentive fees for the year-to-date period were $20.5 million. This fiscal year - this fiscal quarter saw strong realization activity from the second core investment fund that materially contributed to the quarter carry total. That is a 2008 vintage fund that has performed well with 2.5 multiple on real-life deals, contributing over $80 million in real life carry since 2018, and over $20 million in unrealized carry remaining. We remain a very diversified carry story with now over 60 vehicles in a carry position that are ultimately backed by thousands of underlying companies.
Moving to Slide 9, we provide some additional detail on our unrealized carry balance. We saw a strong rebound in the markets this quarter in line with market performance with the balance of 7% from the prior year, even if we'd recognize $40 million of incentive fee during that period. Just to remind everyone, we don't control these positions, and thus don't control the timing of the exit.
Turning to Slide 10, which profiles our earnings. Our fee-related to earnings were up 14% versus the prior year period as a result of revenue growth we discussed earlier. In regards to our expenses, total expenses increased $12 million, compared with the prior year period. G&A decreased $5.6 million due primarily to decreases in travel expense, consulting and professional fee and commissions. Total compensation benefits increased by $17.6 million due to strong operating performance and an increase in headcount. $5.1 million of this increase, however, is attributable to incentive fees-related compensation.
For the compensation growth in our fees-related earnings, our goal has been to maintain a steady to slightly increase in fee-related earnings margin, which we are on pace for this year. Let me take a moment here to remind everyone about the rent expense associated with the headquarters move that Mario spoke about earlier in the call. While the building is likely to be fully completed sometime next year, as we mentioned in a prior call, we will begin expensing the rent starting in the third fiscal quarter. We expect the impact to our G&A expense will be a run rate increase of $ 4 million to $5 million annually stemming from the new lease.
Moving to our balance sheet on Slide 11. Our largest asset on the balance sheet is investment alongside our client in a customized separate account and specialized funds. Similar to our unrealized carry balance, this quarter saw an increase in value relative to the prior quarter - to the previous quarter primarily due to increased valuation changes. In regard to our liabilities, we continue to be modestly levered.
With that, we thank you for joining the call and are happy to pick it up - open it up for questions.
Thank you. [Operator Instructions] And your first question comes from the line of Ken Worthington with JP Morgan. Please go ahead.
Hi, good morning. Thanks for taking my questions. If we look at net sales, commitments, less distributions, September was a slower quarter. Commitments looked like they were in the range of historical levels, but distributions looked elevated. So what is the outlook for distributions? And maybe could you walk through how you're thinking about the different drivers, realizations versus step downs versus others in the fund and separate account businesses? And then if distributions are going to remain at this level? Can you talk about the opportunity to drive better contributions, and maybe like an outlook or a pipeline particularly in separate accounts on the contribution side? Thank you.
Ken. Thanks, its Eric, I'll take that. As we said in prior calls, some of this is really just time related particularly around the separate account side. So on separate accounts side, as you know, we're in that trudging mode. And so we have seen some trenches that expire. And we don't always have exactly perfect matches for the neutrons to come online. But the other driver on the distributions in this time period is that we have had, and secondary would be an example. Some of those funds that are now at that kind of 12-year time period are basically rolling off to be non fee earning. And so it is a combination, as you know there are really three things. Aging of the asset, two, what's happening with actual distributions. And three, the timing mismatches between re ups and trances expiring. So we would continue to point to, growth continues to look strong from our end. And we think some of this just becomes timing noise [ph].
Okay, is there any outlook so on the tranches expiring, you guys have good visibility into that? If we look at over the next couple of quarters, are there enough tranches expiring, where we're likely to remain in this billion dollar plus distribution quarters? Or is that sort of going to burn itself out and look to moderate? Or you're just unclear?
It's a little unclear, again, partly because the liquidity is obviously not under our control. So you can look at the aging of the asset. But what worse, in terms we would expect to see from a pure liquidity standpoint is a bit outside of our control.
Okay, and then maybe a little one, the new fee structure in the co-invest fund, do you think that allows you to make that fund bigger than would otherwise be the case and attract more investors? Or was this sort of something that you needed to do to just sort of, reach your kind of preexisting targets?
I think it's too early to tell. So I think the reason for the change was that, as we said, I think really just being responsive to what investors want. I think what we're finding is that people like choice, and I think what we provided them here was a good creative solution, depending on what you're more focused on. Are you more focused on kind of upfront fees, or, you know, more back end fees? And so I think, fitting that choice, I think, to us innovative, strong and forward thinking. In terms of timing, remember, we've got 18 months from the date of the first close to complete the fundraising. So we would say, coming out of the gate with what felt like a very strong first close, particularly, as noted, since this was all kind of done post pandemic. And we've got a long runway in front of us here from a time perspective. So I think we'll continue to provide update but early innings here.
Great, thank you very much.
And your next question comes from Michael Cyprys with Morgan Stanley. Please go ahead.
Hey, good morning. Thanks for taking the question. If we look at the fee related revenues are up around 12% year on year just for the quarter versus a year ago while the few added expenses up around 8% or so year-on-year. So it looks like you guys have about 400 basis points positive operating leverage there. I'm just curious how you guys would characterize that sort of spread there arguably; you're getting a lift from the travel side? Just trying to think through? Maybe you can provide some color and where do you can see that gap normalizing between the revenue growth versus the expense growth on the fee related side? And any sort of quantification around the benefit or uplift you guys are seeing on the expense side from the environmental end today?
Yeah, Mike, it's Eric. So I think as we noted all the things you pointed to on the G&A side have been true. I think it's really hard to forecast out. So while we're seeing return to normal, or at least more normal, in some parts outside the US, we have offices that are open businesses, again, returning to a little bit more of a normal state. We're also not seeing big events that will take part of our G&A, aside from the travel, conferences, hosting events etcetera. I think it's just too early to tell whether that truly returns to what it was or whether those numbers stay lower. The one thing we've obviously covered, so we think this is - G&A is going to be rising as that rent continues to come online. So there's no surprise there. I think we've been telegraphing that very clearly. But I think on the variability on G&A that's - that's really COVID related, I think too early to tell what a new return to normal looks like.
Okay. And just maybe a follow up question. You guys recently raised the impact fund that maybe was last quarter or the prior quarter. So maybe just on the commingled specialized fund side, just curious, you know, what sort of new funds or strategies could be making sense to bring to market as you look out over the next couple years, as you think about the whitespace that's out there, just in terms of other sectors, or sub asset classes within the private markets? How are you approaching that? How do you think you're prioritizing that versus other initiatives?
Yes, it certainly is a priority for us. I mean, I think we said in the past that we view ourselves as a relatively young and small player in the commingle product side. And we have aspirations to get that - much bigger, you can see that's a big chunk of the current growth is being driven by us just improving and expanding the size of the current platforms that we've had. But as you know, there's a lot of whitespace out there in the product market. I think we've also been careful, as you've seen us to not sort of telegraph where we're going to make sure that we're kind of maintaining competitive advantages. So I think on the new funds, just like on impact, you all are going to hear about them once we've actually had a closing under our belt and the product has already launched as opposed to us proactively telling the market what we're about to go think about raising. But we think a lot of whitespace, a lot of room to grow there.
Thank you.
And the next question comes from the line of Alexander Blostein with Goldman Sachs. Please go ahead.
Hey, good morning, everybody. Thanks for the question. I wanted to follow up on the pricing structure change that you discussed a little bit earlier. So I guess, I guess the question is why now? You know, the J-curve mitigation efforts, kind of well understood. And I feel like, you know, that was always part of the picture, so curious to see sort of why is this happening now? And you see more explicit - explicit pressure from LPs on making those changes to help them mitigate J curve dynamics. Do you see that more of a delaying dynamic or is that more of an industry phenomenon that's starting to unfold? And I guess lastly, do you think we could see a similar structure spill over into other vehicles outside of the curve? So could we see, kind of direct private equity or something like that or some of the other funds follow the similar pattern from here? Thanks.
Alex, it's Mario. It's not, I wouldn't call it too much pressure question, as it is a question of - you have structures [ph] that have different goals in the market. And so you try to reach as many investors as you can, as Eric mentioned, you have a number of investors that, as you mentioned, are very J curve sensitive. And so they much prefer the lower upfront fees, but are fine paying the same relative fees, if you will, over the life of it just more back ended. And you have others that are indifferent to that and just want to look at what works for them. It's like a question of feeling pressure and saying you have to do this as a vapor pressure and saying, what is the market asking? What does it want? And that's why we've done it and why now? I think because as the asset class has matured, investors have said, I have choices in how I invest, and I want to have choices in the price I'm paying for those investments. So I think it's just a question of the maturity of the asset class.
As the other products or other services that may have that kind of choice, I don't know that you can say that - this one is clearly - if you take a look at the column adjustment, so I think it is a pressure issue for industrials around that. But I don't know that I can look at it and say, oh, which means that all these other products are now going to go to that. I wouldn't draw that conclusion.
Got it. Thanks. And a quick modeling follow-up. And it looks like the incentive comp rate in the quarter or the comp related to increased incentive fees rather that came in a little bit better than expected. So I'm just curious to get an update of how you guys are thinking about compensation on carry related from here if we were to see maybe a bit of a pickup on realization? Thanks
Yes. Alex, it's Atul. I'll take that. So, as you saw in the quarter, the carry came in pretty strong and that drove the compensation up for the quarter. So as you - if you think about there's - from quarter to quarter, it may bounce around a little bit based on business performance. Erik mentioned earlier in the call that we continue to hire, we're still in growth mode. So I think quarter to quarter may bounce around a little bit, but when we get to the end of the year, and you look back, I think it'll look - you'll see that slowly, it's going to be very consistent, which is that our margins are stable and moving up into the right over a period of time.
Okay, thanks.
And your next question comes from the line of Robert Lee with KBW. Please go ahead.
Thanks. Good morning, and most of my questions were asked, but just maybe real quick one and I apologize if you mentioned it, but what were the retro fees in the quarter? I think I heard $2.9 million there; I don't know if that referred to just the secondary fund or maybe other retro fees too.
Yes, the $2.9 million, Robert, it's Erik, was result of the secondary fund. And that was really the primary driver of any retro fees.
Okay. And - sorry, thanks. And then on the - maybe back to the direct equity fund, just want to make sure I've got the detail. So we had the first close of basically of 18 months from the first close finished fundraising. But current expectation is, that's not a turn on, where we're at - some time in the first calendar quarter. The announcements are going to be amazing after that. Just want to make sure I'm picking that correctly.
Sure, Robert. It's Erik again, I'll take that. So what we said here is, we had the first close on over $300 million. We don't turn it live until we actually finish investing the prior, which is the current fund. Based on pipeline opportunities, our expectation is that the new fund will go live in January of 2021. Assuming that, again, the pipeline, everything else holds. The fundraising is 18 months from the date of the first close and the first close took place in October of this year.
Okay, great. And maybe just one kind of bigger picture, environment; I think you kind of touched on this upfront, but it seems during earnings from some of the - I guess, primary funds and whatnot, kind of got the sense that maybe the realization on uplift was some input towards there [ph] or was there some more M&A or whatnot? I mean, are you seeing that same thing, more based across the teams or where you're kind of touch on - little haphazard, but kind of your general sense on that?
Robert, it's Mario. I think part of it is given out. But I think what you're asking is whether - we're seeing M&A increasing, whether we're seeing deal activity increasing, is that what you're asking?
It was mainly on the realization side. It seems like some of the primary firms were more optimistic, perhaps that they're seeing more potential for selling assets, IPOs. It's more or less kind of the point [ph].
Yes, I would say there are two things to that. I think, as of last week, we expected more realization activity because of a belief that taxes in the United States would increase. And so people wanted to get deals done before year end. With the election results unclear whether there will be as big a push for higher taxes. So depending on how that shakes out, you will see other activity increases solely for that reason. I suspect deals that are in process will continue, that may have been caused by that. I think just in general, I think what you're hearing from them and from us is, markets are strong and exit activity is good. And so it's certainly relative to early in the year, we've seen real activity increasing across all geographies and across more sectors. So I don't - unless you tell me that markets are going to correct significantly, I would expect that deal activity will remain active.
Great. Thanks for taking my questions.
Your next question comes from the line of Chris Shutler with William Blair.
Hi, everyone, good morning. How much of Hamilton Lane's fee-paying AUM would you classify today as direct investing or co investments? And do you expect that percentage to grow over time as a percentage of the total mix? And does that have any impact on how we think comp expense trending over time?
Sure, it's Erik, I'll take that. We actually haven't broken out the portion of that, but in the total AUMs, it's a relatively small amount. You sort of saw what the prior fund was for our last co-investment fund, which was sub $2 billion. And so while we include separate accounts with that activity, again, in context to total AUM, it makes up a smaller portion. That said, it's also a very fast-growing portion of the market, as more investors want access to that kind of direct equity opportunities. And so to the extent that that will certainly bring in more carry components, and with that, the incentive compensation will rise alongside of that.
Got it, okay. And some of your competitors, newly publicly traded competitors have disclosed a committed, not yet fee-paying a UM [ph] number. Is that something that you can provide or plan to provide going forward?
Good question. It's Erik again. At this point, we really don't plan on providing that. I think for a few perspectives there. I think, while we have seen those numbers put out as a notion of a growth already built in. The reality is, that's just normal in our industry. So we all have that, to some extent. I think the reason for us is not wanting to overly focus on that, again, it's not new, it's not novel to the industry, it's just part of the way that a number of contracts are structured. I think, from the clients perspective, it sort of sounds more like - - hey, we can't wait to spend this and we'll spend this as fast as possible so we start getting paid on that.
That's just never been our mindset. It's not our orientation. And so, I think from our perspective, we have it, we have a lot of it, but it's not something we plan on breaking out at this point.
Okay, and then lastly, just geographically, can you remind us how much of your assets today are US versus non-US clients? And any updates on the flows that are coming from, or a trend that you see?
Sure, I'll stick with that. We said in the past that the business is essentially kind of a 60-40 business, 60% North America, 40% not, it certainly moves around. But in general, that's a pretty good estimation of where things stand at any point in time. And that ratio has been steady since we went public. So despite, I think, a lot of talk about the emerging markets being growth areas, and they certainly are, what this also tells you is that we're still seeing an awful lot of growth coming out of the United States, as well as coming out of Europe. So our ratio has been fairly static. And we've been experiencing growth across both developed and non-developed markets.
Okay, thanks very much.
And your next question comes on Michael Cyprys at Morgan Stanley, go ahead.
Thanks for taking a follow-up question. But just wanted to circle back on the credit fund strategy that you have, I was hoping to talk a little bit about your approach to investing that capital, how you approach building a diversified portfolio there? Maybe you can give us a flavor to the types of investments that you're making?
Sure, Mike, it's Eric, I'll stick with that. So the nice thing about that product is that it's opportunistic credit, we've raised that as an opportunistic vehicle, which allows us to be tactical and to toggle depending on market conditions. So today, we're focusing on performing credit, because the markets are very healthy. To the extent that you saw dislocation in the market, the advantage of that vehicle is that we could immediately move the strategy to focus on non-performing credit. So investors there have really entrusted us with getting them what we think are the best credit opportunities in the market, whatever that is presently serving up.
Great. And maybe just last question for me. And you mentioned at the start of the call that you opened an office in Singapore. I was just hoping you could talk through your thought process around why opening an office there? Why now, any thoughts on staffing, how many folks you have over there, or expect to have over time, and what other geographic regions could make sense and how you approach that?
Sure, in terms of Singapore, again, it's recognition of an expanding Asian presence. If you look at our offices, we opened where we have clients, that's where their investments are, as you probably know, Singapore, certainly on the Asian venture capital side is one of the locations where a lot of channel partners are there. And on the fundraising side, obviously low-cost private markets environments. So that's really the core reason. In terms of the number of people there, it'll start very small investment and client-oriented people. In terms of other locations, again, it really depends on where's the client and the investment activity base. And you think it makes sense to put people there, you can imagine opening an office, both from a people perspective, and just logistics, is something you want to be careful doing. We don't have anything planned today that we know on opening an office next location, and it's again, a question of client and investment opportunities, if they create a critical mass.
Great, thank you.
And there are no further questions at this time. I will turn the call back over to the presenters for closing remarks.
Thank you very much. Just wanted to, again, thank everyone for taking the time to join us and hope everyone stays well. Take care.
This concludes today's conference call. You may now disconnect.