Good afternoon. This is the Chorus Call Conference operator. Welcome, and thank you for joining the Azimut Holding First Quarter 2018 Results Conference Call. After the presentation, there will be an opportunity to ask questions. At this time, I would like to turn the conference over to Mr. Sergio Albarelli, Managing Director and CEO of Azimut Holding. Please go ahead, sir.
Good afternoon to everybody. Apologies for the slight delay. We had a longer preliminary meeting of this conference call, but let me stick immediately to our agenda today. We're going to analyze, as usual, our quarterly results, give you idea about asset management and distribution, some news about financials. At the end, summary and outlook. Let us go straight to inflows and assets under management. We have an increase of 9% versus March 2017 in our assets. End of March this year, EUR 50.6 billion. End of April, we will be above EUR 51 billion. Pretty good. Still the same ratio between domestic and international, Italy representing roughly 75% and international representing the balance.
As much as net inflows, we are below EUR 900 million end of March, very close to EUR 1 billion end of April. Still validation of our policy since long time ago, strategic investment outside Italy, strong contribution, organic contribution for our foreign operations. On financial results, total revenues EUR 182, below first quarter 2017. Recurrences are higher. Unfortunately, variable fees are lower due to market condition, significantly lower, EUR 9.6 million versus EUR 49.5 million. Our net profits, as a consequence, are EUR 26.4 million versus EUR 72.9 million one year ago. Almost entirely due to the limited variable fees in the quarter. Good numbers and good news, approved dividend per share €2, €1 cash, as you know, €1 to be paid through existing treasury shares. Basically, we doubled the amount of money that we paid in 2017. Our assets, as I mentioned you before, going up. Still good numbers on international.
As I mentioned, 25%. Our performance year-to-date is roughly flat, although recovering is slightly better than the Italian industry. Breakdown of our asset under management, more or less in line with the past. Our average performance, still good. Not too much to say here. In front of you, the usual chart we are presenting you any time in our presentation. If we move forward, we go for our funds breakdown, we have a slight increase in bonds. More or less flexible, staying on the same level, as well as balanced. Equity is slightly up 0.6%. As much as the underlying assets, 42% in equity. On bonds, we are roughly speaking, 36.3%. If we go for a geographical breakdown, you see the usual picture. North America, Europe, still stronger as usual, U.K., Asia Pacific.
If you go on fixed income, we have most of our assets in hybrid and investment grade, with high yield and sovereign representing a significant portion of it as well. On the distribution side, we are still growing above the average of the industry, talking roughly speaking about the average for Azimut, 9%, versus the average of the industry, minus 1.3%. Decelerating, as you can see, but still we are positive on it because we see a significant increase in the quality of the people we hire. Our financial network in Italy has seen 41 additional hires in the first quarter. Average age is younger than the age in the market and as well as the age in our industry. The percentage of the assets invested in managed assets, managed funds, i.e.
Unit-linked, mutual funds, and so on and so on, is above the figure we presented you three months ago. It was 78%. It is now 82%. Average portfolio 16, slightly lower than the previous one, but confirmation of our strategy, 51% of these people are coming from banks. No big changes as much as the geographical allocation of our sales network. To note, 1,656,000 agents Italy-wide. On the financials, I would like to introduce you Alessandro, our CFO, who will be giving you some highlights about the numbers.
Thank you, Sergio. Let's start from the bottom of the income statement. We have a consolidated net profit of EUR 26 million, compared to the EUR 73 million of the first quarter 2017, with a net profit of EUR 30 million compared to the EUR 74 million of 2017. Therefore, with a variation close to EUR 45 million. This is mainly explained, as already mentioned, by the decrease of EUR 40 million on variable fees. At the same time, it is also explained by the recurring fees that increased compared to last year by EUR 8 million, and an increase of the operating cost to about EUR 12 million, where we have EUR 6 million on distribution cost, EUR 6 million more, and EUR 6 million more on the administrative cost. To me, both of them link to the evolution of the group in terms of asset under management, but also on the evolution that we have abroad.
Going through the other element of the income statement, we can see the interest income increase by almost 10% at EUR 3.9 million. This is mainly explained by the introduction of the new accounting standard, the IFRS 9, where the effect of the variation of the fair value of our assets, linked to our investment on available for sale, is directly impacting now the P&L. Therefore, before the unrealized impact was on equity. Now we have these changes, so we have to keep this on the P&L. Going to the next slide. We have the net of financial position, where we can see that it is almost in line with last year, the end of December. We have a negative variation of EUR 4 million. If we split the variation on cash and cash equivalents, it is around EUR 10 million, and we have a total debt that decreases to EUR 6 million.
The variation is therefore explained by two, three elements. If we consider the result of the quarter, EUR 26 million, and we take out the buyback that we finalized in January of EUR 30 million, plus the contribution of EUR 6 million abroad for the acquisition, we got the variation of EUR 10 million on cash and cash equivalents. I think that's fine.
Thank you, Alessandro. Thank you so much. Moving to summary and outlook. Very simply, we don't think this very challenging quarter is putting at any risk our strategy and our ability to go forward with good targets versus our five-year plan. Obviously, they had an impact. They had an impact, no need to say. It was mostly on variable fees. Some of our funds were not performing as expected. That said, we are confident that our ability generating revenues will stay intact throughout 2018. Net inflows, anyway, to be seen as very robust. The Italian business is more focused than before on quality versus on quantity. The numbers I mentioned you before about the quality of FAs are just giving awards to the strategy that our company set out now back 18 months ago.
Additional plans are. We already implemented some strategies in order to hire even more professional agents going forward. If we talk about international expansion, our growth is now mostly organic. The pace of acquisition is still valid, but the numbers we have seen in the first quarter are generated by the existing business, which is pretty good at operating level profit impact. As you probably remember, we've been spending a significant amount of our time in the last year in restructuring our product offering. Efforts are always into that direction. Have been filed with local authorities in Luxembourg, and Italy as well, a restructure on the existing range. Additional filing will follow up in 2018. The aim is to reduce non-performing funds, both in term of performance versus the client, and performance versus the group, eliminating smaller funds or funds which are not contributing significantly to our margins.
The same will go for our insurance business and wrapped account business. You remember we set up a new organization for wrapped accounts in 2018. The numbers are proving to be good into that direction. We're consolidating our ability, reducing the number of wrappers. The same will go for Unit-linked. Everybody is aware of the fact that October 1, 2018, IDD will come into effect. Not just because it's a new directive, but we will take the opportunity in offering our network first, and our clients second, the opportunity to have an even more valid range of products in order to offset any potential negative effect coming from markets. The area we're going to focus going forward, once again, growth overseas as well as in Italy. Let me repeat, as well as in Italy.
When people are skeptical about our willingness to keep the business in Italy growing as it is growing internationally, that's not the case. Italy is and will stay the main market for the group, accompanied with strong growth internationally, where we have seen significant step going forward. No need to say, as already highlighted in some conference call in the past, we want to diversify away from traditional long only type of products. We are developing our alternative business into private equity, private debt, and advisory. Thanks to good people we have in-house, hiring of new people, and the ability of our portfolio managers to generate new ideas. We are still opportunistic on M&A. We're not making any statement regarding we're going to buy this, or we're going to buy that.
We like to see how the market situations are evolving, which are the opportunities to be presented in front of us, either domestic or international. You probably remember we made some statements about what's going on in Italy, and what it could be good for Azimut going forward in international markets. No need to say, all the efforts we are putting in place for portfolio management and range of products are all in line with the target of providing our clients a superior performance, like we have always been able in the last 10 years, 20 years, 25 years. Last point, more efficient operational platform. You remember we started months ago, a project in order to change our operating model, our architecture. Things are progressing well.
We expect to be in line with the delivery in 2019, this will be generating a significant savings on margins and operation setups. Last point as usual, the update on our five years business plan. Not much to say because we are presenting exactly the same trend we were presenting three months ago. The annualized net profit obviously is still intact, is EUR 300 million as a target. Nowadays, we're running in EUR 106. We expect market condition to be not as trendline as they were in 2017 and 2016. Nonetheless, all the activities we're performing on cost control reorganization and focus on quality should be helping us in order to achieve the number. Annualized net inflows running fine, despite slightly lower than one year ago.
Dividend policy, I think that just a few days ahead of the ex-dividend date, everybody should be happy about receiving two EUR in dividend. I'm not taking too much of your time now. I will be more than happy to take any question arising from the conference. You can open up the microphone.
Excuse me. This is the Chorus Call Conference operator. We will now begin the question and answer session. The first question is from Hubert Lam of Bank of America. Please go ahead.
Hi, good afternoon. I've got three questions. Firstly, on flows. If you look at the net management flows over the last couple of months, they've been negative. I'm just wondering, how do you explain that? Is it due to markets, MiFID, the lack of hiring, or just slower domestic market? Maybe just give some color as to why there have been outflows the last couple of months. Second question is on G&A costs. G&A costs picked up a bit in Q1 versus the last quarter. Just wondering if there's any one-off in that quarter, or should we expect this to be the new run rate going forward? Third question is on hiring. Seems like you picked up the hiring in Q1, which led to higher commission expense.
Has the recruitment environment changed that led to the increased hiring, or just wondering why it picked up this quarter, should we expect this to be, again, the new run rate going forward? Thank you.
Thank you, Hubert. Very simply, on net flows, you probably remember we already declare that we've been hit by a couple of institutional clients in the last few weeks. On the other side, there were some numbers coming from a reduction of our proprietary funds, investment from proprietary Azimut into our own funds in order to allow capital to be deployed to other opportunities. On G&A, very simply, I give you an example. A significant portion of the increase is made by all the personnel that was onboarded in the last few months in international operation, in Italian as well. I give you a flavor. I visited our Dubai office after one year. It was a very tiny operation of two people. Now we're talking about compliance manager, internal auditing. We're talking about operation, one portfolio manager, three salespeople, the country manager, the legal counsel.
If you go for expansion and you plan it seriously, obviously the first cost you're going to incur are the costs generated by personnel. I expect this trend to be obviously well managed. We're not going to allocate people randomly, but where the opportunities will be arising. Nonetheless, no surprise, if you remember, when we talk about product range, i.e., restructuring what we are offering to our clients, we are not just talking about investment vehicles. We're also talking about potentially hiring portfolio manager or analyst, making sure our operations are up and running well, and at the same time restructuring and making sure they will be more profitable.
In essence, obviously, some impact coming from investments, but not as a surprise because this is the trend line we started now one year ago about the change in our architecture and revising our operating model in the hiring of people. No surprise on that side. If we stick to hiring, and we're talking specifically about FAs, it is true, 41 in a quarter may look surprising because last year was less exciting as much as a number. You probably remember that I always mention the fact that the hiring numbers are on a swing mode. You may happen to have a quarter very significant for people that we started contacting even one year ago, and suddenly the hiring materialize. You might have a quarter which is totally flat because discussion and agreement are not materializing.
What I can stress once again as a major factor is the quality of these people is going higher. We have a campaign, which is called Banking Revolution, in order to hire potential strong bankers from existing banks all around the country. The numbers are good. We are on the process of hiring people. Already within this 41, we have strong people coming from banks, and we might expect to see a bit more exciting numbers going forward. Again, please don't see hiring as a pure trend line, but is a swing process. It may be very up one month, is basically going down to zero, even potentially negative when people are leaving another month.
The next question is from Alberto Villa of Intermonte. Please go ahead.
Hi, good afternoon. I have a few questions from my side. The first one is again on inflows. If you can provide us with an idea of what's the organic delivery in terms of inflows of the Italian operations, excluding the, let's say, effect of institutional mandates and the contribution coming from abroad. I was just wondering if you are expecting, you're focusing on quality, I understand, and not on quantity, if the organic growth is still positive, or you expect some kind of flattish or negative trends in terms of net inflows contribution from the Italian operations. I also noticed that you had 41 new advisors, but the number of financial advisors increased by only 18. You had 23 people leaving. Is that something related to normal churn of the network? You're expecting any increase on that side? Any comment on that could be helpful.
The second question is, you mentioned during the presentation that you are transforming or eliminating some of the non-performing funds and also looking at the Unit-linked products. I was wondering if when you launch a new fund, you do it with the same structure in terms of performance fees and management fees of the previous one, or you are already implementing any new methodology, especially for performance fees? On the Unit-linked, if you are worried at all about what has been discussed in the recent weeks in Italy about the ruling of the Supreme Court about eventually considering these products not eligible for some tax benefit for the client. If you expect this could eventually impact your inflows on that specific product.
The last question is on the fact that one of your competitors, Banca Mediolanum, announced that they received an investigation and a request of taxes because of their international operations. Do you think this is a risk for the entire industry and also for your operations in Luxembourg, or this should be something that you rule out? Thank you very much.
Thank you, Alberto. Let me go straight to your first question regarding net inflows. We might expect to have a run rate of roughly EUR 2.5 billion on an annual basis. This is what we're working on. Once in, once out, institutional client may make a difference, but that's what we're talking about, EUR 2.5 on an annual basis. Normal hiring, you're totally right. 41 new entrants, the net is 18 because 23 left. That's normal. It's a normal turnover in an entity like ours, where some people not really good are set aside, when some people may take the decision to go somewhere else. The balance is positive, and even more important than the balance being positive, these people are bringing in already assets 82% invested in managed funds. As you remember, this is a strategy we set up long time ago.
Our sales proposition and our commercial department has been very good in implementing it. This will be the trend going forward as well. It's seasonal in the sense that it's swinging, but it's not really something which is creating us any problem or keeping anybody of us awake at night. As much as new funds, no. The answer is very simply no. We're not going to change our methodology. Any new fund will be launched exactly with the same structure, the same management fees type of model, the same performance fee model. We're not taking any initiative going into different direction because it will be very difficult to be understood by our clients to see some new funds with new methodology and existing one with old methodologies. Unit-linked, can I quote Shakespeare?
Too much ado for nothing." There has been a plethora of discussion about potentially the impact of what the Milan took as a decision. Obviously, we are investigating into it and trying to figure out if there could be a portion of our business at risk, but I think it's really preliminary to say nothing at all, or a portion of it. As much as the fiscal investigation, you mentioned one of our competitors. Let me stress one point. We've already been through it a long time ago. No need to say tax authorities may run the business the way they like. Obviously, I'm not expecting either yes or no to be showing up at our door, but it's a matter of fact, we already been through this. We gave to the tax authorities all the answers they were looking for.
Just a clarification. On the EUR 2.5 billion of net inflows you are expecting, is that skewed towards international operations also for the future, or are you expecting a balanced 50/50 or anything?
I was just referring to the Italian business.
Okay. 2.5 is the Italian business. We can expect then to add on the international business. Any figure on that?
If you take this as a target run rate, it's acceptable to see this as what has been the behavior in the past, and on top. It's very much in line with our target date five years plan. Obviously, you need to add whatever is going to be the input coming from acquisition on a local basis for FAs, and you should be incorporating as well what is the potential business generated in the foreign operations. On foreign operation, I like to stress once again, the numbers are absolutely positive because we see what we like, i.e., organic. This doesn't mean there will be no acquisition at all. This is in the DNA of Azimut. 2.5 plus whatever it could be coming from either new acquisitions or foreign operations. Obviously, pending market conditions.
All right. Thank you.
The next question is from Gian Luca Ferrari of Mediobanca. Please go ahead.
Yes. Good afternoon. I have four questions. The first one is on the EUR 978 million total inflows at the end of April, if you can break it down between Italy and foreign business. Second is the contribution of the foreign business to the EUR 26.4 million net profit. If the foreign activities contributed positively or are still at breakeven. The third is on the payout to the distribution. I understood that recruitment could be a bit volatile during the next few quarters, but the 53.3% payout I'm calculating for Q1 is pretty higher compared to the 50.7% of full year 2017. What should be a kind of guidance for full year 2018, if you can give us this kind of indication. Last question is, if you can give us the performance fees cashed in April. Thank you.
Thank you. First question, EUR 978 million on revenues. Roughly, we're talking about EUR 700 million coming from foreign operations. That's a big number, a very big one. On EUR 26.4 million net profit, you know that we are not disclosing this figure yet, you should be waiting for a few more quarters before providing this information from us. On payout distribution, no, I think I'm not really on your side. I don't see this as an increase in cost of acquisition at all. Again, this is a sort of swinging type of activity. You cannot assume that just this quarter may be a guidance for 2018. This strategy that we call Banking Revolution, i.e. hiring bankers with good potential and so on, lower age, significant portfolio, is not necessarily giving to an increase in cost of acquisition. It's a case by case.
If someone could try to dictate a strategy by, "I do want to spend this maximum amount of money for hiring people," I think this someone should be on the wrong side of the business, because here, and you know it, this is a people business. You should be looking this a case by case situation. You may happen to be facing a very strong potential candidate, young, 35, 40 years old, EUR 15 million portfolio, and you're then sitting in front of a very established type of consulente finanziario in the region of EUR 50 million, it's a totally different type of member. The average, and especially the average in a quarter, it is very difficult to be seen like a proxy throughout the year. Your question regarding the performance fee cashed in April, we're talking about roughly EUR 2.5 million.
Okay. Thank you very much.
Pleasure.
The next question is from Jonathan Richard of KBW. Please go ahead.
Yes, a couple of questions from me. Firstly, on the EUR 16 million average portfolio size of the new 41 promotori, can you give us an idea of how much of that has already come in the door, and what the shape of that curve will look like over the next months, if it has not all come in? Secondly, on the 23 people who have left Azimut, can you give us an indication of what the average portfolio size was for those leavers? Finally, on the EUR 2.5 billion managed assets inflow target for the Italian business, can you give us an idea of what you're internally splitting between managed assets and assets under custody? Thank you.
Thank you for your question. First of all, we're talking regarding the EUR 16 million average portfolio to be already cashed in the region of roughly 20%. You will see the balance going forward in quarter 2 and quarter 3. The same goes for the leavers. The average portfolio was much lower, and this is a confirmation of our strategy. We're talking about an average portfolio of in the region EUR 10 million. Concentrating on more profitable FAs, and let the less performing FAs go to potentially a new career somewhere else. Out of the EUR 2.5 billion, well, this is a very difficult exercise because according to marking condition, you may happen to have potentially raising assets in funds rather than Unit- linked. In some cases, it might be securities. It's really difficult to give you a proxy right now.
You will apologize if I don't give you any breakdown of it.
Great. Maybe just one more follow-up question on the cost side. Will your new fund transformation/consolidation lead to lower SG&A costs going forward? If so, could you give us a quantum for how much we might expect to see SG&A costs come down as you guys move through that exercise? Thank you.
It's a good question. I totally understand it. Here, the answer is very simple. On the one hand side, there will be some cost just wiping out, because these are some fixed costs that even in a fund, you might have legal costs, some operating costs based on middle and back office. On the one hand side, the cost, on the other hand side, the management fees. Some of our funds will be merged into performing as much as management fees type of funds. The overall effect has to be estimated. Obviously, we have some ideas in our mind, maximum and minimum. It's all about the persistency of our clients into the merged funds.
You will understand we're not providing any information about this because in order to be totally understood, we should be providing you right now the full list of funds that will be merged into other funds. You would be able to make any calculation. Obviously, this is competitive information we are not providing to the market right now.
Okay, great. Thank you.
Pleasure.
The next question is from Elena Perini of Banca IMI. Please go ahead.
Hello, good afternoon. I have some questions. The first one is on your interest income. I couldn't understand, I couldn't hear all your presentation on the P&L from the CFO. I would like to understand whether there was some one-off impact on the interest income. Talking about the run rate of EUR 2.5 billion of net inflows in Italy. If I understood well, it is not a level that you are confident to achieve in the current year. It is more a medium-term target. On the savings that you expect, starting from 2019 from the new operating platform, can you provide us with some quantitative guidance on this? Regarding the new asset management platform, regarding the asset managers, the fund managers that were exiting your group, can you provide us with some update on this side?
If you can elaborate a bit more on the key point of opportunistic M&A that you gave in your outlook for the future. Thank you very much.
My pleasure. Let me go question number 2. I will be passing it to Alessandro, our CFO. EUR 2.5, I didn't say we are not either optimistic or pessimistic. I thought this is a trend we might expect considering what Azimut has been able to achieve in the last few years. EUR 2.5 has to be seen where we're moving forward, obviously pending market condition and looking at what acquisition, both of financial agents and international operations are. EUR 2.5 is the number for Italy, the total obviously will be totally different. On the savings, we are not disclosing what are supposed to be the savings and where they're coming from because the new architecture of the system will be explained going forward end of 2018, first half of 2019, in order to give some disclosure about what has been already some impact.
To give you exactly the numbers of how many euros we're going to save for single trade, how many euros we're going to save for printing, reporting, and so on, it's really not just early and preliminary, but it's not really appropriate because this is an impact that should be valued when the volumes in the business will be at the level we are expecting. On the fourth question, which is the one regarding the operation set up by some of our colleagues, I understand that their operation is going to be finalized in the next few weeks. Things are up and running progressively. There are a strong cooperation between the two entities. We set up a working group in order to facilitate the start of the operation, in order to make sure that any delegation will be up and running smoothly and professionally.
That's the update I can give you on that side, and I'm very happy to provide you this because I see what my working group is doing, and it is very professional. As much as the interest income, I think the most appropriate, as I mentioned you before, is Alessandro, so I'm switching this to him.
As I was referring during the presentation, due to the change in the accounting standard and introduction of the IFRS 9, we are not allowed anymore to keep the valuation of the fair value of our investment, let me say, liquidity investment in fund, not anymore on equity, but on P&L. Even if it's an unrealized impact, we cannot anymore keep it on equity. Therefore, you can see that we have this change, this impact this quarter due to this valuation approach.
Thank you, Alessandro. Is it enough?
Well, there was another question on the opportunistic M&A. If you can elaborate a bit more on this.
Well, I think, please apologies, I'm not going to play with words, opportunistic means that if something is popping up on our table or in front of us, it could be good for us to have a look. We are not, for example, strategically forecasting we're going to buy this because of that, and so on. We look at our markets where we are and if opportunities will be in front of us, we're going to be judging them. I give you an example again with Dubai. We came across this opportunity one year ago. We thought it was great. It was fitting in pretty well in our strategic considering of the region. After one year from an opportunistic vision, it came out to be a strategic decision to set up the offices the way I mentioned you before.
Okay. Thank you very much. If I can come back on the financial results, on the interest income. Going forward, we are going to see a more volatile trend in this P&L line?
Well, the answer would be yes. It depends.
Okay. Thank you very much.
Thank you.
The next question is from Philippe Carraud of Pictet. Please go ahead.
Yes. Good afternoon, sir. I was looking at your P&L and the development of your recent asset under management. I think you touch upon the departure of your former manager last year. It seemed that it's having an impact which is slightly higher than we were expecting. In fact, if I add these coincidental departure of 23 FAs this year that you replace with 14 new FAs, and the fact that your commission expense, if I add the minorities as well, are growing by three points in the first quarter versus the average of last year. It seemed that the entire organization is under pressure from those departure. Could you just comment, and maybe give us some more thinking about it. Maybe I'm completely wrong, but it's what I derive from just looking at the figures here.
Not at all. I totally understand where you're coming from. You're trying to figure out, considering the tenure of our former portfolio managers, and the long-dated relationship with us, what it could have been the impact on us. Let me tell you the following. If you look at the numbers, not just in the last quarter, but you see this with an historical perspective, i.e., since it was made the announcement, and the agreement was made public, and so on. The company made profits, the assets were going up. We increased the number of IFAs, and so on. As at today, what I can tell you is the relationship is working fine. We have no negative input coming from our, let's say, sales network or clients about this, because they know that the agreement is valid, up and running, and will last for a while.
It's all our intention to make sure that the agreement will stay in place. We're talking about colleagues. We're talking about people who are still shareholders of the company, so they have a vested interest in making sure that the agreement will be up and running for a while. I don't see this neither as an excuse for people to leave, and I'm both talking about financial agents and internal colleagues. I don't see this as well as a negative impact on either performance fees or variable fees. We're just talking about market conditions. It is not because some of our funds will be managed now internally, but externally, that we have seen a decrease in performance fee. Not at all. I'm very positive about the relationship, and I don't see this as a negative threat to us.
Obviously, correct me if I'm wrong, Philippe, it's the first time you connect with us. We will be more than happy to have additional conversation with you in order to provide you more color about the history of the company, to give you a strong picture of what we're doing and what we expect to do going forward.
Okay, thank you.
Pleasure.
The next question is from Filippo Prini of Kepler. Please go ahead.
Yes. Good afternoon. Two question from my side. The first one is if you can give us an update on acquisition of, basically the deal on Sofia SGR that was announced some months ago, and maybe we don't see yet the consolidation of the assets. The second point is that if you expect to approach some deadline to buy back minority stakes of operation abroad in the next quarter or next year, so we would expect a reduction of the line of minority interest. Thank you.
Thank you, Filippo. Very simply, we expect to see the conclusion of this very long story about Sofia by the end of May. Please don't see any negative comment in my words. It's just as a matter of fact, it was a long process because making acquisition of a portion of an existing SGR is not as simple as some people could think. Nonetheless, the process is going to go very finely to its termination. It's been very good for us as an acquisition. We are getting not just assets, but we're getting in also strong portfolio managers and financial managers. All in, despite being very long, an excellent acquisition. As much as the minorities, well, we already had something in the last few weeks, i.e., Dubai as an example, or Chile. Going forward might be something ahead, but not necessarily short term.
Okay, thank you.
Pleasure.
For any further questions, please press star and one on your telephone. The next question is from Matteo Ghilotti of Equita. Please go ahead.
Good afternoon. A couple of questions. Shall we say that the acceleration of hiring of advisors that we have seen in the first quarter will accelerate a little bit also the distribution cost in the next quarters, or it is too simplistic? The second question is regarding the funds that you have, your own funds that you have in your balance sheet as an investment of liquidity. Can you quantify just to, let's say, help a little bit model the interest income or the swings? Thank you.
Hi, Matteo. Straightforward answer to your first question, no. No acceleration in hiring, that does not mean at all any acceleration in cost of acquisition. Not at all. Again, please, let us make sure we have been very clear about this. Hiring financial agents, hiring strong private bankers, it is not really like working in a post office where every day you do exactly the same and you have a recurring exercise. It is an in and out type of exercise. It will take potentially a while to see the similar number going deployed in quarter two or quarter three. It could down to zero, it could be 60, whatever, but please do not see this as a proxy. We like to hire good people, and this is what we are stressing in the last 18 months.
The numbers are on our side because if you look at the numbers of the last year, 78% portfolios invested in managed funds, average portfolio EUR 20 million, average age significantly below 50s, and so on. We are not at all highlighting that there will be an acceleration because we are very opportunistic in this case as well, and we are not highlighting at all there will be an acceleration in cost. It will be really a very careful exercise because we know that we like to be careful in making sure that the costs are under control. On your second question regarding the cash invested into our funds and so on. Well, I think that any good company should be investing in its own proprietary products, and we have a good portfolio of our funds. Obviously, it is a long-term portfolio. It is managed by our portfolio management team.
It's not just a single portfolio manager exercise, and we use it as a cushion whenever we need some liquidity to go for either opportunistic or special acquisition. That's very simple.
Thank you.
Pleasure.
Mr. Albarelli, there are no more questions registered at this time. Back to you for any closing remarks you may have.
Thank you so much. Really, first of all, let me thank you everybody for participating to our conference call, and let me thank on a special situation cases all the participants who gave us their questions in order to make everybody aware of our numbers and the quality behind them, despite the numbers being lower than the first quarter 2017. Obviously, as I mentioned before to Philippe, if you have additional questions on how the numbers have been produced, feel free to contact Vittorio, and he will be arranging the proper people in the organization to provide more color about the number itself. Thank you very much, and let me wish you a wonderful evening. Thank you. Bye.