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Thank you for standing-by and welcome to the AllianceBernstein's Second Quarter 2018 earnings review. At this time, all participants are in a listen-only mode. After the remarks, there will be a question-and-answer session and I will give you instructions on how to ask questions at that time. As a reminder, this conference is being recorded and will be available for replay for one week.
I would now like to turn the conference over to the host for this call, the Director of Investor Relations for AllianceBernstein, Ms. Andrea Prochniak. Please go ahead.
Thank you, Holly. Good morning everyone and welcome to our second quarter 2018 earnings review. This conference call is being webcast and accompanied by a slide presentation that's posted in the investor relations section of our website, www.alliancebernstein.com. Seth Bernstein, our President and CEO, John Weisenseel, our CFO and Jim Gingrich, our COO, will present our results and take questions after our prepared remarks.
Some of the information we present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. So I would like to point out the Safe Harbor language on slide one of our presentation. You can also find our Safe Harbor language in the MD&A of our second quarter 10-Q, which we filed this morning.
Under Regulation FD, management may only address questions of a material nature from the investment community in a public forum. So please ask all such questions during this call. We are also live tweeting today's earnings call. You can follow us on Twitter using our handle @AB_insights.
Now I’ll turn it over to Seth.
Thanks, Andrea good morning. I am pleased with how we managed to maintain strong client momentum in many areas of our business this quarter, despite the volatility in global equity and fixed income markets.
Our net flows were negative due to one large termination and the slowdown in Asia ex Japan retail fixed income or organic phase B [ph] growth was essentially flat in the quarter, as we saw significant net inflows, the higher feed strategies including 3.4 billion into active equities. As a result, our average fee rate continued to improve by 1% sequentially and 2% year-to-date.
Let’s turn to the results, starting with a firmwide overview on slide three. Gross sales of $19 billion in the second quarter were down modestly year-over-year as weakness in Asia ex Japan retail fixed income more than offset gains in other retail markets and in private wealth.
As expected, gross sales came down sharply from the first quarter when we had a $10 billion in institutional CRS fundings. Net outflows spiked to $7.7 billion almost entirely due to the April CRS redemption we mentioned on our last earnings call.
Both quarter end and average assets under management were down sequentially in the second quarter due to the combination of net outflows and market performance and up significantly year-on-year.
Slide four is our channel view of flows. You could see the CRS fundings and redemptions I just described on the firmwide and institutional charts on the left. The topright chart shows the year-over-year and sequential decline and retail growth sales caused by the slowdown in Asia ex Japan.
Retail net flows were negative, as Asia ex Japan outflows more than offset net inflows in our other regions. Private Wealth growth sales were up year-over-year but down sequentially. Sales of our Option Advantage product which were 1.3 billion in the first quarter declined as expected in the second.
It’s worth noting that private client retention is at a 20-year high, and net flows have been positive for six straight quarters.
Let’s look at our outperforming assets on slide five. Our percentage of outperforming fixed income assets for one period fell shortly in the second quarter. Some of our larger institutional core and investment grade strategies fell below benchmark, and retail funds had significant exposure to emerging markets in U.S. treasuries dropped out of the top half of the MorningStar category.
Extreme volatility and various idiosyncratic events have made emerging markets extremely difficult to navigate and Muni funds typically suffer when treasury is sold off. Importantly, our longer term fixed income track records remain quite strong with our percentage of outperforming fixed income assets above 90% for both the three and five year periods. Equities performance for the one year period was down slightly but held steady for the three and five year periods.
Slide six and seven highlights the performance of our retail fixed income and equity funds. The fixed-income performance table on slide six reflects the impact of our emerging market exposure in various funds, most notably global high-yield and high income. At the same time, every qualifying fund on this slide ranks in the top two quartiles for the three, and five year periods.
As you can see on slide seven, our overall equity performance is excellent, across time periods for a large majority of our funds, that’s obviously a major driver of our broad-based year-to-date flow momentum.
11 of the 13 funds in this table that are eligible across all time periods ranked in the top quartile for atleast one of them, and six rank top quartile for all three. Top decile standouts include, European equity for one, three and five year and U.S. thematic and global Low Vol for three and five years.
Let’s move onto our client channels beginning with retail on slide eight. 80% of our 3 billion in sequential gross sales decline came from taxable fixed income, notably in Asia ex Japan, our largest retail business by left [ph] revenue.
We’ve seen this dynamic many times over the years, but today we have retail product reps to temper these dramatic swings. Our first half 2018 combined equity, multi-asset and alternative gross sales are up 62% for 2017 on a run rate basis, and a remarkable 240% from 2016.
At the same time, fixed-income gross sales were pacing to be down 27% from last year, and 16% from 2016. The top left chart shows how these diverging trends affect our business mix. Fixed income has declined to just 45% of total gross sales year-to-date versus 64% for all of 2017 and 74% for 2016.
Meanwhile, the share of combined sales of our equity, multi-asset and alternatives funds has going to 55% from 36% and 26%. The trends are similar in Asia ex-Japan, where the 55% share of equity, multi-asset and alternatives growth sales today is five times what it was just two years ago, and that is on the same total sales runrate.
The bottom left table lists all of our funds that have attracted $100 million or more in net flows so far this year. Active equity funds account for six out of the 14, and we’ve attracted 3.2 billion in active equity net flows year-to-date.
I am very happy with our momentum in U.S. retail. Net flows been positive for six straight quarters and nine of the past 10, and AUM is at a 10-year high. We’re also on schedule with our FlexFee Funds rollout. We now have partnership agreements in place of nine distributors and we are in intense [ph] discussions with others, and with just Blue Sky FlexFee versions of our emerging markets growth in international strategic core equity funds.
We aim to get them on platforms in the next few months. As I’ve said, while it will take years to get to scale, we see significant long-term growth potential in these innovative, new offerings.
Now I’ll talk about institutional on slide nine. Here the headline is ongoing momentum in active equities. The top left chart shows just where we are today versus just one year. Second quarter active equity gross sales of 1.6 billion were up 130% year-on-year, and accounted for 40% of our institutional total.
It was our fourth straight $1 billion plus active equity gross sales quarter, and year-to-date active equity gross sales of 4.9 billion were our highest for the first half since 2008. Active equity net inflows also exceeded $1 billion for the second straight quarter.
As with our retail business, the steps we’ve taken to restore equity investment track records and broaden our offering across asset classes have increased our relevance in the marketplace. And so advocacy continues to rise and we are connecting with potential, current and even former clients that we haven’t in years.
That’s helping our sales, revenue and pipeline mix. Our second quarter gross sales revenue was 46% higher than our 2017 quarterly average. And our fee realization made up growth sales for the quarter was up of higher sales active equity and real estate debt.
The growth and diversity of our pipeline suggest that this trend is likely to continue. Our 6.3 billion active pipelines at quarter end was 15% higher than our long-term average. We did have some lower fee pipeline additions in the second quarter, which as you can see from the chart at the bottom left caused the total pipeline estimated fee base to decline. These include an $800 million government short duration mandate and another 800 million plus in asset fixed-income and equities.
Yet the mix remains skewed toward active equities and alternatives, which comprise 62% of total pipeline assets. And our pipeline feed remains well above our five year average, and is 2.5 times the rate of our current institutional business.
Moving to private wealth management on slide 10, these volatile markets create major challenges for short-term investors and huge opportunities for long-term disciplined wealth managers like Bernstein.
As you can see from the top left chart, first-half total private wealth growth sales were up 38% year-on-year and our highest since the financial crisis. And as I mentioned earlier, they are up 5% excluding the sales of option advantage overlay strategy.
Client retention is at our highest for the first half in 20 years, and net flows have been positive for six consecutive quarters. Our efforts to appeal to a broader, more affluent client base of innovative and relevant new offerings continues to pay off.
Today, we have a robust lineup of alternatives and focused equity offerings designed for more sophisticated and hands-on investors. You can see these offerings in the chart at the bottom left.
We used to call them targeted services to distinguish them from our traditional integrated portfolios, but now they have become so embedded in our advised framework that we want to be more precise in how we describe them.
Client take up of these alt and focused equity strategies has been strong from day one. Deployed and committed assets now total 7.9 billion, across 15 offerings including net inflows of $1 billion year-to-date. Relationships with clients that own alternatives were focused equity strategies that have grown over 37% compound annual rate since 2016, and client retention is highest among this cohort.
With innovative new offerings, sound advice, and a constant focus on enhancing the overall client experience, we completely reshape this important business for our firm and we are in our strongest position in years.
I’ll finish our business overview with the sales side on slide 11. Bernstein research second-quarter revenues of $106 million declined 4% year-on-year and 7% sequentially. As you can see from the bottom left chart, U.S. market volatility declined sharply in the second quarter, which reduced trading buying’s.
However, year-to-date revenues of $220 million are down less than 1%, these are resilient results in challenging times. The investments we’ve made to grow our differentiated research and trading platform and global footprint continue to pay off.
In a recent annual independent U.S. survey, we ranked number one in quality of analyst service for 15th straight year, and number one in equity electronic trading quality for the third straight year.
The strong showing reinforces what we already know, in both research and trading, we simply have a better mousetrap, and we’re not letting up in our global expansion efforts. In Asia, where first half revenues were up 33%, we’ve just bought some transfer analyst [ph] and hired a healthcare analyst.
I’ll finish up with a brief message to update. While we estimate that the shift to clients paying for research revenues [ph] reduced overall revenue growth by 3% to 5% in the first half, on an adjusted basis, revenues from European unbundle client has in fact improved and their year-to-date consideration traded is up double-digits.
First half research payments have been rolling in so far in July, so we are comfortable with the year-to-date trend. The bottom line, we feel we are well-positioned relative to peers in a host knitted to world.
Finally, slide 12 highlights what we’ve accomplished in the quarter. Even with some near-term investment performed its challenges, we continue to demonstrate clients that we can deliver long-term idiosyncratic stock specific returns streams they can’t replicate themselves.
We’re scaling our business in the most promising asset classes and the parts of the world, including alternatives in active equities and U.S. and European retail. And we again expanded our fee rate and margin in the second quarter.
Now John, will review our financial results.
Thank you Seth. Let's start with the GAAP income statement on slide 14. Second quarter GAAP net revenues of $845 million increased 5% from the prior-year period. Operating income of $190 million increased 17% and the 22.4% operating margin increased by 430 basis points.
GAAP EPU of $0.59 compared to $0.43 in the second quarter of 2017. As always, I will focus our remarks from here on our adjusted results which remove the effect of certain items that are not considered part of our core operating business. We’ve based our distribution to unit holders upon our adjusted results, which we provide in addition to and not as substitutes for our GAAP results.
Our standard GAAP reporting and a reconciliation of GAAP to adjusted results are in our presentation's appendix, press release and 10-Q. Our adjusted financial highlights are included on slide 15.
Second quarter revenues of $720 million, operating income of $197 million and our margin of 27.3%, all increased year-on-year. We earned and will distribute to our unitholders $0.62 per unit compared to $0.49 for last year's second quarter. Higher base and performance fees combined with nearly flat non compensation expenses primarily drove the improvement.
Revenues operating income and margin all decreased from the first quarter primarily due to the $78 million of performance fees for the real estate equity fund we recorded in the first quarter. We delved into these items in more detail on our adjusted income statement on slide 16.
Beginning with revenues. Second quarter net revenues of $720 million increased 10% year-on-year. Second quarter base fees increased 9% from the same prior period due to higher average AUM across all three distribution channels and a higher fee rate realization reflecting a mix shift from lower to higher fee products
Compared to the second quarter of 2017, total average AUM increased 6.8% and the portfolio fee rate increased by 1.7%. This follows a 3.4% fee rate increase for 2Q 2017 versus 2Q 2016 comparable period. The 41.5 basis point portfolio fee rate for the second quarter of 2018 was our highest quarterly rate in more than five years and up 0.4 basis points from the first quarter.
Approximately $9 million or 20% of the $45 million total increase in second quarter 2018 base fees came from higher fee rate realization. Second quarter performance fees of $35 million compared to $15 million in the same prior-year period and includes $14 million earned on our financial services opportunity Fund 1 [ph] $13 million for our select, absolute alpha equity long-short fund and $5 million earned on our middle market lending investment strategies.
We are currently in the process of liquidating financial services opportunity Fund 1 and expect to recognize additional performance fees for this fund during the second half of this year as we complete its liquidation. As a reminder, first quarter performance fees included $70 million from our real estate equity fund.
Second quarter revenues for Bernstein Research services decreased 4% year-on-year on lower revenues in the U.S. and Europe offsetting higher Asia revenues and the impact of a weaker U.S. dollar.
Global revenues were adversely affected by lower fee realization due to a delay in revenue recognition resulting from the unbundling of research payments for trading commissions and a shift to lower fee electronic trading.
Second quarter net distribution expenses decreased $2 million as a result of lower Asia retail fund sales. Other revenues increased $8 million compared to the same prior period because of higher dividends and interest earned on our broker-dealer investments and higher administrative fees earned on our middle market lending strategies.
Interest expense increased $6 million for the second quarter year-on-year from higher interest paid on broker-dealer customer balances due to interest rate increases.
Moving to adjusted expenses. All-in, our total second quarter operating expenses of $523 million increased 7% year-on-year. Total compensation and benefits expense increased 10% year-on-year on higher, incentive compensation and commissions’ accruals.
We accrued compensation at 48.5% of adjusted net revenues for the second quarter this year, the same as the first quarter and versus 49% for the second quarter of last year. If the current revenue growth continues, we may accrue compensation at a 48% ratio for the second half of the year with the option to adjust accordingly throughout the remainder of the year if market conditions change and as we gained further clarity regarding the compensation requirements for our business and a transition cost related to our corporate headquarters relocation.
Second quarter promotion and servicing increased 6% versus the same prior year period due to higher Bernstein Research services trade execution expenses on higher global client trading activity and increased marketing spend for international advertising programs.
The 11% sequential increase came from the higher expected seasonal T&E and marketing spend for the annual Bernstein Research strategic decisions conference. Second quarter G&A decreased 2% year-on-year due to lower occupancy expense and foreign exchange translation gains which offset higher professional fees.
Second quarter operating income of $197 million, increased 22% from the prior year as revenue growth outpaced expense growth. The second quarter incremental margin was 51% demonstrating the operating leverage of our business and our continued diligent expense management.
Second quarter operating margin of 27.3% increase 240 basis points year-on-year, this sequential decline was primarily due to lower performance fees. You may have noticed that our second quarter adjusted EPU was $0.03 higher than our GAAP EPU and our adjusted operating income was $7 million higher than our GAAP operating income.
This amount represents a real estate charge recorded for our second quarter GAAP reporting relating to a change in estimate of previous office space write-offs due to changing market conditions. This charge is excluded from our adjusted results since it is not part of our core recurring business operations. All the non-GAAP adjustments are outlined in the appendix of this presentation.
The second quarter effective tax rate for AllianceBernstein L.P. was 4% and we currently expect an effective tax rate for the full year 2018 of approximately 5%. This is lower than previously anticipated due to a more favorable estimated mix of earnings generated in our U.S. partnership versus foreign entities.
Finally, I will conclude my remarks today with the discussion of our planned corporate headquarters relocation to Nashville and our estimates for the related transitional costs and ongoing annual expense savings.
During the second quarter, we announce our intention to transition more than a 1000 positions from our New York Metro offices to Nashville over the next several years. We believe this will afford us the opportunity to provide a favorable quality of life alternative for our employees and enable us to attract new talented employees to highly desirable location while improving the long-term cost structure of the firm.
We will maintain a significant employee presence in New York City which will remain a principal location. We have secured temporary space in Nashville to accommodate approximately 400 employees until the construction of our new corporate headquarters is completed which is currently targeted for the fourth quarter of 2020. Therefore most of the positions to be relocated would occur after the state.
We plan to maintain space in both our White Plains in York City buildings through their lease expirations in 2021 and 2024 respectively. After our current New York City lease expires we intend to move the remaining employees to a smaller office footprint in a new building located elsewhere in New York City.
We've already relocated several employees to our Nashville temporary space thereby beginning the transition period which will end in 2024 with the lease expiration of our current New York City building.
During this period from 2018 through 2024, we currently estimate that we will incur total transition costs of approximately $125 million to $135 million. These costs include employee relocation, severance, recruitment and overlapping compensation and occupancy costs.
Over the same period we expect to realize total expense savings of about $150 million to $160 million, an amount greater than the total transition costs. However, we will incur transition cost prior to the realization of expense savings.
We currently anticipate that the largest reduction in EPU during the transition period will be approximately $0.04 in 2018. We expect to achieve breakeven or possibly a slight increase in EPU in 2021 and then EPU accretion for each year thereafter.
Beginning in 2025 once the transition period has been completed we estimate ongoing annual expense savings of approximately $70 million, the result of a combination of occupancy, compensation, fringe benefit and consulting related savings.
Our estimates for both the transition costs and the corresponding expense savings are based on our best current assumptions of employee relocation costs, severance, overlapping compensation occupancy costs.
Our estimates for both the timing of incurring transition costs and realizing the related expense savings are based on our current relocation implementation plan and the timing for execution of each phase.
The actual total charge is eventually recorded and the related expense savings realized and the timing of the EPU impact are likely to differ from our current estimates as we implement each phase of our headquarters relocation.
Having a larger office footprint in Nashville and it's a new smaller footprint in New York City will enable us to provide a desirable, exciting, state-of-the-art office facilities for our employees in both locations while meaningfully improving our cost structure and positioning our firm for stronger future.
And with that Seth, Jim and I are pleased to answer your questions.
Please limit your initial questions to two in order to provide all callers an opportunity to ask questions. You are welcome to return to the queue to ask follow-up questions. Our first question will come from the line of Craig Siegenthaler, Credit Suisse.
Thanks. Good morning, Seth.
Good morning.
So, first one just a follow-up for John on the headquarter relocation, Nashville. It sounded like all those savings target you just laid out were really coming comp and occupancy? I'm just wondering did that include the job grants and also tax credits too or is that additional?
It's all included. So those would be the net numbers.
Okay. And is there a benefit to the tax rate there to which was included?
Tax rate from what perspective?
Okay. Just from the headquarter movement and I also thought there could be some tax credits that will reduce your tax rate down the road?
We don't expect the tax rate for us to change materially from where it is today.
Okay. Got it. And can you just give us a quick update on the new real estate private equity fund group as we will be forming a joint venture there. I know you have a pretty developed business there on that debt side, but on the equity side what is your plan in terms of fund raising?
Craig, we're in the process of as you just pointed out setting up the joint venture with the current team. I don't really think in terms of operationally much is going to change. They're going to continue to be involved with both the equity and the debt business. Without going into a lot of detail we just think with this structure we have the opportunity to accelerate our overall fund raising effort in terms of accessing new starts with the capital.
Got it. Thanks for taking my questions.
Our next question will come from the line of Michael Carrier, Bank of America Merrill Lynch.
Hi. Thanks guys. John, just on the national move, I think you mentioned the $0.04 impact, I don't know if you can just provide us little color on if its all on occupancy, if there's some in comp, because – you said, the revenue backdrop is kind of maintain in the comp ratio, you may be heading to the slightly low in the second half, so any color on kind of nuances there?
Sure. Mike, its John. So over the course of the transition period the cost will fall between both occupancy and compensation, so G&A and compensation would be affected those line items. In the short term that was going to be more comp-related particularly in the first year. And so I did talk about that we may lower the comp ratio in the second half of the year down to 48. And I think that probably would've been lower if it had not been for these transitional costs.
Okay. That's helpful. And then I know these are hard to predict, but on the performance fees on the financial services fund given that you're monetizing that funds. I'm just trying to understand maybe like how much that contributed this quarter and may be what's left in that fund that could potentially kick-off additional fees in the second half?
Sure. It was $14 million of the $35 million in performance fees we had for the quarter. Under the old revenue recognition that was in place prior to this year, we wouldn't have been able to recognize these fees until the fund was completely liquidated. But what's happened now with the new revenue recognition that went in place at the beginning of this year. As long as this probable that those fees will not be caught back you can recognize them.
So what's happened here is it just accelerated the recognition and that's 14 million actually is cash sitting in the fund that represents performance fees earned on the liquidation or the realization -- realized gains in the portfolio. We're still liquidating the portfolio and it will continue through the balance of the year. And so I would expect that we will be able to realize or recognize additional performance fees if markets hold up where they are now through the balance of the year.
Mike, I would just also add, I mean, look, we've talked about the fact that we've building the alternatives business. It is becoming a bigger piece of our overall assets, things like Arya Partners raised. I think it's over $700 million year to-date. As we see us continue to move in that direction performance fees are likely to become a bigger piece of the overall revenue mix, obviously dependent on the capital market's backdrop though as well.
Okay. Thanks a lot.
Our next question will come from the line of Alex Blostein, Goldman Sachs.
Hey, good morning everyone. Just hoping to touch on the institutional business for a second, so the active pipeline continues to grow really nicely on year-over-year basis and obviously the consistency of it is gutsy. Can you guys help us with timing on when you think some of these will fund? And I guess more broadly what you guys see on institutional front in the middle there, kind of trade concerns and geopolitical concerns. Are you starting to see any slowdown potentially on the funding on some of those pipelines?
We haven't seen – I've read about it. We haven't seen slowdown in the funding yet, but we do know that activity levels more broadly in the industry seem to have been declining. In our own case, our pipeline has in fact been pretty stable and indeed we've seen some fixed income come back into the pipeline which is encouraging to us because our outflows really have been concentrated in investment rate fixed income where we loss a couple of lumpy mandates in the second quarter.
But in terms of utilization of the pipeline it's typically sort of over six to 18 months periods where we see most of that come to pass, but its very hard as you know, Alex, to predict it.
Great. And since you mentioned fixed income that was actually my second question, I guess as you look at the near-term performance on slip to bid, obviously there's been concerns around higher interest rates for little while now. Given your guidance just presence in the market and particularly with respect to kind of global retail within fixed income, how should we think about the activity rates there and potential risks to flows within fixed income on the back of slightly choppy or one year numbers?
In our own case because we have such a large business in Asia, that has been what has been driving the larger portion of our flows both ways; and we've seen volatility there before. What I can tell you is we don't think it's performance-related there and we continue to see gross sales albeit smaller and the level of redemptions have slowed a bit actually in the second quarter versus the first. But I think generally concerned about rates rising, concern about volatility in emerging markets which impacted us from a performance perspective and I think others. And finally the level of spreads which remain fairly tight by historic standards probably we would anticipate that will continue to see lower levels of activity there than we have in prior years.
Got it. Thank you.
[Operator Instructions] Our next question will come from the line of Bill Katz, Citigroup.
Okay. Good morning. Thank you very much for taking the question. Just I want to come back and I apologize for staying on with them and still on the opportunity for the cost savings. Can you sort of walk through; I thought you heard 125 million to 135 million of sort of aggregate; I'm sorry, 150 million to 160 million of total savings. But then I sort of heard you saying the exit savings could be 70 million per year into 2025 is it something sort of reconcile those numbers, please?
Sure. So, Bill, its John. The 70 million is the ongoing annual savings starting in 2025 going forward from that point. The savings during the transition period, so as we talked about the transition period is from now to 2024, so that transition period we talked about transition costs of 125 to 135, but over that same having transition savings of – I think we said 155 to 165.
So what happens there is that we're going to start to generate savings rate will build. And then there is a step up in 2025 once the double rents here in New York rolls off.
Okay. That's right. So I just want to just confirm. Okay. Just coming back to performance fees more generally, and A, can you sort of quantify in terms of the financial services liquidation, what we might expect with those performance fees. And then stepping away from that and sort of appreciate the color sort of building more alternative, is there way think about the water flow impact our performance fees as we look down into the second half of this year maybe more important into 2019?
Sure. Bill, it's John, I'll just say on the financial services opportunity fund, one, that we're in the process of liquidating. Very hard to predict because obviously it depends on what happens during the market as we continue to liquidate. I do think though that the liquidation proceeds as the way I think it will. We'll have heavier liquidations in the third quarter. So the performance fees relating to that could potentially be higher in the third quarter than the fourth quarter, but we just have to wait and see.
And just, I think just in terms of general, now, when you think about the performance fees with the new revenue recognition, just as we saw this quarter, there is a potential for things to be accelerated vis-à-vis over how they were recognized in the past, particular with the fund like this and I don't see another one out there like this right now, but this funds been out there for five years I think. But all of the other types of strategies that we have on annual base fees we do look at them now each quarter to see whether or not some of those performance should be recognize earlier.
And we could end up in a situation where things that – we're on a calendar year basis before, if we get into the third quarter there could be potentially a piece of that that may get recognized depending upon if it's --- if we deem that its probably that it cannot be called back. So I think when you look at performance fees and the new revenue recognition standard what you'll see as the performance fees going forward will continue to be lumpy, but I think I don't think there'll be as lumpy as what they've been in the past.
Okay. If I can just take maybe one more question on asking three. Just coming back into some pipeline, it does seem like your momentum is a bit there than some of your peers those reported. I sort of appreciate the macro there. It's been a little bit of a pregnant pause on industry dynamics. But it is your sense that you're gaining share versus other active managers. Is it shift from different buckets, I'm so curious of where your momentum maybe coming from or what the incremental drivers beyond just performance?
Bill, its Seth, and I just want to thank everybody, because I know it’s a hectic day in a busy earnings week. But it's very hard for us to know for taking share from other people because we really don't know what the denominator is in terms of the total amount of search activity out there. That being said what's interesting and I think inspiring for us is the mix is really changing in the favorable manner for us as we get more recognition from consultants. And so I would say we probably -- I can't say definitively but we probably have more most balanced set of mandates in our backlog than I think we probably ever had before across multi assets, all fixed income and equity. So I think consultants advocacy has certainly helped us there.
I would add as Seth just said, Bill, this is an some sense a reflection of what we've been talking about with respect to consultants support for our equity strategies. There are not a lot of our peers that are seeing positive flows into their equity businesses in both institutional and retail for that matter. And then the other piece of it is that I think is change is what we're seeing in terms of flows into our newer alternative services albeit as I mentioned earlier Arya Partners, our commercial real estate debt fund, we've just raised $3.1 billion fund. There was 500 million that's funded over the first half. So, I think its a combination of those two as well as the ongoing strength of the fixed-income franchise that has helped fuel some of what you're saying.
Okay. Thank you very much.
And at this time, we have no further questions.
Thank you, Holly, and thanks everyone for joining the call today. Investor Relations is available for any follow-up questions you may have. Thanks and have a great day.
Ladies and gentlemen, this concludes today's conference call. You may now disconnect.