Earnings Call: H1 2021

Jul 28, 2021

Good morning, everyone. Thank you for joining us today. Virtual again, we did offer the attendance option, but we didn't get many takers. For anyone new to MANGROUK, I'm Luke Ellis, the CEO and this is Mark Jones, our CFO. The as usual, I'll start with an overview of the first half of twenty twenty one, then Mark will take you through the numbers. And after that, I'll come back, talk about our business development, our room for continued growth and our outlook. And then we'll open it up for the Q and A. As we announced previously, this is Mark's final results presentation as CFO. As part of the freshening up of the management team responsibilities, marks moving to become our Deputy CEO, responsible for our Quant Investment and Technology teams. Antoine Fortier, who is currently Co CEO of AHL, will take over as CFO for Mark in the second half. Before taking on AHL 5 years ago, Antoine spent the previous 5 years in our finance area as Group Treasurer and Head of Corporate Development. So I'm very confidence that he'll continue Mark's great work as CFO. So as a reminder, if you want to ask a question at the end of this, you need to be on the presentation via the WebEx link rather than the dial in option and we'll explain the process for unmuting people when we get there. The with that, let's get going. Pleased to say the first half of the year was an excellent period for the firm with great results for our clients and also for our shareholders. We saw strong absolute performance, again leading to record funds under management, a 51% increase in core management fee earnings per share and then we had 2 50% increase in our overall core earnings per share as that positive performance for clients also resulted in strong performance fees. At the end of the half, our funds under management were SEK 135,300,000,000 largely driven by investment performance and supported by continued net inflows. The driver of that 51% growth in up for management EPS with both ongoing revenue growth and the efficiency of our operating platform. Importantly, that growth in core management fee profits is a reflection of real growth in the business, not a weak comparator in 2020. You'll remember we had a decent 2020. And as a reference, 2021 core management fee EPS is 57% higher than 2019, so strong comparables against 1 or 2 years. As you know, we moved to a progressive dividend policy from 2021 and the Board has declared an interim dividend of $0.056 per share, a 14% increase on last year. We've also announced our intention to buy back a further 100,000,000 dollars worth of shares once we complete the current buyback. My guess is that's probably today or tomorrow. So we are down to the last million. The we're pleased that the continued growth and profitability of our business supports consistent and growing returns to shareholders. The key strengths of the firm is the combination of our talent and our technology. We are a global leader in applying technology to investment management and among listed companies, it's a unique proposition. Our depth of knowledge and experience enables us to follow the path of technology across the whole business from alpha generation to trading and execution and through to our operating platform. That technology doesn't work in isolation obviously. We're still a people business. Our people develop our technology and our technology makes our people more effective in what we do. We have a fantastic strength, experience and depth in our teams and we continue to put a huge amount of energy into the culture and environment that enables them to thrive. That combination of talent and technology gives us a real competitive advantage, a leadership position in alternatives, quant and solutions, which are 3 of the fastest growing sectors in the industry. And this allows us to deliver for our clients, which drives sustainable growth in our business and for our shareholders. The as I mentioned at the start, funds under management increased from SEK 123,600,000,000 start of the year to 135.3 at the end of the half. This increase includes 1,000,000,000 of net inflows. I mentioned in our Q1 release that the client engagement on a number of larger mandates have been positive this year and we expected to see increased inflows in the coming quarters. I stand by what I said. There was a bit of slippage in some of the expected timelines. We see good flow momentum into Q3 and beyond. The absolute investment performance was positive at €9,500,000,000 driven by both our alternative strategies and our long early strategies. Of that performance, dollars 1,400,000,000 was relative outperformance, which was a very good outcome over 6 months for our clients and only half of the return came from Peter. I'll give you some details on the next slide. But asset growth from outperformance is by far the most valuable form of asset growth. It's what drives client satisfaction. It's what maintains margin and it's what drives future flows. Overall investment performance across firm was up 8.6%. Our alternative strategies were up 5.8%, supported by positive performance across the entire AHL product suite. Our long only strategies were up 12.3% with a tailwind from the rotation from growth into value, which started last October. The AHL Evolution up 7.9.5% from 15.5% over the last 12 months, the significant contribution to the performance fee that crystallized at the half year, as did a number of our other institutional solution mandates. AHL target risk is up 6.7 in the first half and again is near the top of its peak growth this year. Almost all our discretionary long only strategies ended the first half with positive performance. DLG JCA Japan Core Alpha was up 26.7 in the half and a remarkable 17.8% of outperformance in the half alone. It delivered very strong returns with its value buyer strategy and was back to net inflows after the period of outflows, which went for a couple of years. The GLG undervalued assets also saw strong performance at 11.2%. All of our systematic domestic global equity strategies delivered double digit investment performance and outperformed by an average of 3.2% during the half. We ended the first half having outperformed our peers on an asset weighted basis across our strategies by 1.3% overall. This is what we look to do, but it is what makes all the difference to the success of the firm. It was driven by the long only strategies, which outperformed by 2.5% and alternatives, which outperformed by 0.5%. The we saw particularly strong relative performance across the breadth of the numeric strategies and as mentioned from GLG's long only Japan long only strategy. It's a great return to form for both these 2, which have really delivered for clients over the long term, the had a tough couple of years in 2019 2020. Net inflows of $1,200,000,000 in the first half of the year were driven by our alternative strategies with net inflows of $1,700,000,000 but partly offset by outflows of $500,000,000 from our long only strategies. The largest inflows were into Edge, our target risk and into demand institutional solutions. Within Long Olie, the team we hired last year to invest in equities in Asia ex Japan has already ramped to almost SEK 1,000,000,000 and I'll come back to that later. In addition, Numeric had flows into their systematic global equity strategy, but these were offset by outflows in their U. S. Strategies. Most of our outflows in the half were driven by pension derisking as they reached fully funded status. The with that, I'll let Marc give you the detail on the numbers. Thank you, Luc, and good morning, everyone. I'll start with our P and L. The revenues were up a very healthy 83 percent to $728,000,000 Within that, management fees were up 16%, Mainly due to strong investment performance and continued net inflows. Performance fees of $284,000,000 were up materially After that strong performance that Luc mentioned from AHL Evolution and also from Institutional Solutions mandates. The fixed costs were higher primarily due to FX. Variable compensation also increased given the excellent revenue earned during the period. Overall, the increase in EPS was primarily driven by those higher performance fee profits, supported by strong growth in management fee profits the And the ongoing reduction in our share count due to our consistent buybacks. Turning to the detail on management fees. We saw growth across both alternatives and long only. Absolute return contributed the most to growth, reflecting that strong performance and inflows over the last year. The Our run rate management fees were up 9% since December, which gives us continued positive momentum into the second half of the year. The And our run rate revenue margin remained stable at 66 basis points as you can see at the bottom of the slide. Just as a reminder, the The sublease income in the half included $7,000,000 of lease surrender income. That won't recur in the second half as we've now realized the full amount following that tenant's departure. The we're still in the process of subletting the remaining space and we'll provide further updates in due course. Turning now to costs. The fixed compensation costs increased by 8%. That increase was largely driven by FX, as I mentioned earlier, With an average rate of 1.39 compared to 1.25 last year. We are investing in a number of growth areas across the firm, And we expect a pickup in those costs in the second half as a result. As you'd expect, given that positive performance, variable compensation costs increased the due to both higher management and performance fee revenues. The fact that revenue growth was so strong means that our compensation ratio declined to 40% Compared to 50% a year ago. As a reminder, 40% is the bottom of our guided range, reflecting an excellent period for performance fees. The Our management fee operating margin improved to 31% compared to 25% a year ago, And that highlights the positive operating leverage within the business during periods of strong growth. In total, the Our fixed cash costs grew by $13,000,000 $11,000,000 of that is FX, and then there's some impact from the higher occupancy costs following tenant leaving our main London offices. One note on asset servicing costs. Following some excellent efficiency efforts from our operations team, We now expect to be at the bottom end of our 6 to 7 basis point range for the year. Moving on to a bit more detail on FUM. The over the period, we saw ongoing engagement with clients on new mandates and continued strong demand for our alternative strategies. The For the half, as Luc said, we had net inflows of €1,200,000,000 which we calculate is 0.8% outperformance relative to peers on the flow side. The We're pleased to have delivered positive absolute performance in all of the 5 product categories despite their different investment styles. The systematic long only delivered particularly strong performance for clients with one of its best 6 months ever and a great return to form. The The net inflows into alternatives of €1,700,000,000 were driven by target risk and institutional solutions, partly offset by outflows from a lower margin multi manager account the and from alternative risk premium. The net outflows in long only of €500,000,000 were driven by Numeric U. S. The we saw inflows elsewhere, most notably into Numeric Global and GLG's new Asia ex Japan strategy. The Turning now to performance fees. I'm delighted to report a strong first half, indeed stronger than some recent full years. The You can see time and again from our results that a quiet period for performance fees tells you nothing about their long term value, the And we've seen that value growing steadily for years now. While this may feel like an exceptional path, We think it actually reflects the growing performance fee capability that we've built. AHL was the main driver in the half And its performance over the last 12 months wasn't actually in top quartile compared to its history. It was actually the 40th percentile. The performance fees and seed gains overall were €301,000,000 These were driven by that €129,000,000 from Evolution the EUR 120,000,000 from other alternative strategies, most notably from Institutional Solutions. That was a good first half, the And we're also well placed for a strong full year with an increase in performance fee eligible FUM and many strategies comfortably above high watermarks the As we'll see on the next slide. At the end of the half, we've accrued a further $209,000,000 in performance fees within the funds or mandates that we manage. That means if the year had ended at June, we would have earned $493,000,000 of performance fees. The If our strategies continue to perform as we would expect, that number will clearly grow over the second half. Equally, if some of the the We often talk to you, for those who've been listening to us the The past year is about the average performance fees we can generate, and that's been growing steadily over time as the business has grown. The one thing we haven't spoken about as much is the scope for very strong performance for the outcomes. As an experiment, we took the performance the We generated back in 2014, which was the last sort of particularly noticeably strong year and applied it to the assets we managed at the start of 2021. The That resulted in performance fees of over $1,000,000,000 We don't know if we'll repeat that particular performance, but nevertheless, we think it's a useful reminder of the the potential earnings power in the business today. Finally, turning to our balance sheet and returns to shareholders. The We had $632,000,000 of net financial assets in the half, and that's before we received the cash from those first half performance fees. The We've increased our seed investments as we've seen a strong pipeline of new strategies coming out of the business. The As Luke noted, this is the first half with our new progressive dividend policy, and we're pleased to start this new period with 14% growth in the dividend. The As we said at the full year, we expect the interim dividend to be under half of the total for the year, in line with normal market practice. The In addition, our ongoing growth means we can continue to return further capital to shareholders and the Board has therefore approved a further $100,000,000 buyback. In summary excellent profit growth, a strong balance sheet and growing shareholder returns. That's the results of everyone's efforts across the firm, the and it's a trio to warm any CFO's heart. With that, I'll hand back to Luc. Thank you, Marc, and a pretty good way to finish your time as CFO. The we think we have a huge competitive advantage as our industry like most others it becomes ever more technology driven. Technology is at the heart of how we see our business and financial markets. For us, technology isn't just about making better investment decisions. Yes, it does that, but it also powers everything we do at MAN. The best technologists and we provide them with an environment where they can thrive. We're a global leader in quantitative investing and we also use that technology to support discretionary investment teams to help improve our client service and to constantly automate more parts of the platform. We have 100 and experienced technologists, decades of experience and a lead that continues to expand as we invest further in our capabilities. We extend our lead through our internal capabilities as well as through partnerships with academic institutions like Oxford the highly active in the open source software community. As you all know, responsible investing is one of the fastest these growing areas within asset management as ever more clients focus on the impact of their investment decisions on wider society and the world around us. The in order to actually invest responsibly rather than just talk about it, you need a huge range of new information and data. To objectively interpret that information, asset managers will need to overcome major data challenges. As data becomes increasingly important to ESG capabilities and propositions, firms that have to rely on 3rd party process data without building in house capabilities will likely struggle to differentiate themselves. As you'd expect, at Mann Group, our ESG process is already technology and data driven. Dollars 46,100,000,000 of our funds under management integrate ESG into the process. Our proprietary quantitative scoring framework is centered around 15 key ESG pillars. Here on the slide, I'm showing an example of 2 well known car manufacturers contrasting Toyota and Tesla. We're taking data from multiple sources, the adjust, clean and normalize it and then present it cleanly and simply out to our investment teams to incorporate into their decisions whether they're discretionary or quantitative. The investment teams can then tailor clients' portfolios to that client specific priorities and desired outcomes. The scientific evidence that human activity is resulting in climate change is near unequivocal today. Honestly, I'd say it's unequivocal, but I was told to put an earring. We can all help to mitigate the impact of climate change. Asset managers have a unique opportunity to shape the global transition to a low carbon economy. Collective the solution can be a powerful tool when facing such an intimidating issue. We recently joined the Net 0 Asset Managers Initiative committing to reducing greenhouse gas emissions to net 0 in investment portfolios by 2,050. And we expect to outline a path to an interim 2,030 target across our corporate issuer specific holdings through both decarbonization an increasing investment in climate solutions. Climate change and modeling its impact is also a key focus research area for us. We're developing and launching climate oriented strategies across the business and we have high climate research capabilities in house so we can build our own models. For instance, in June, we launched a farm that aims to make a decisive contribution to the world's transition away from carbon fossil fuels to lower and 0 emission generating technologies. ESG and particularly impact analysis or obviously at the core of that investment process. Despite the COVID created challenges of the last year and a half, the we've remained focused on growth and innovation, strengthening our client relationships and building a more diversified business. We've been steadily growing our range of products in fixed income and credit in recent years. We see the growing amount of data available on an electronic execution in the fixed income and credit markets as a great opportunity to apply systematic techniques to generate a significant edge in those markets. We've seen in new strategies and seen inflows into both our discretionary and quantitative high yield strategies. Our discretionary high yield team have performed incredibly well since joining us, ranked literally top of their peer group the after delivering excellent results for their clients. Their AUM has been growing nicely and the performance is likely to see that AUM growth continue. Earlier this month, we took the next step in building out this platform when we added another senior rated senior highly rated hire to build a GLG time this time the team, this time focusing on investment grade corporate bonds as well as other income strategies. We see opportunity for further growth in both discretionary and systematic strategies, investing across markets in Asia. Asia as a big growth opportunity for everybody in asset management. We continue to be an early innovator in producing differentiated strategies in China as regulatory changes there allow gradually allow foreign investors more access to the onshore markets. You can see the Chinese have an interesting view of our offshore markets when it comes to Chinese companies. We've seen a lot of that in the last few days. So operating in the onshore market is very important. Interestingly though, the nature of the Chinese onshore markets creates lots of outflow opportunities, especially for systematic strategies, as can be seen by the 2020 return for AHL China here and numeric being nearly 10% above the benchmark in the first half of this year in China. Over the last year though, we've also hired an experienced team to develop discretionary Asian equity strategies. Within its 1st year, the team has grown to manage $1,000,000,000 in FUM. And we've also seen good traction with systematic and absolute return strategies focus onshore and offshore in China, which attract interesting investor interest, both directly and particularly through institutional solutions. The of course, our capabilities are not just about the recent launches. 1 of our most established strategies, JCA, the had an excellent first half, as mentioned, returning to inflows and setting itself up with some exceptional performance for a good future. Fortunately and due to the diversified and tech enabled nature of our business, our results during the onset of the pandemic in the first half of last year, we're very resilient. I'm making this point because when we look at our performance so far this year, I'd like to stress it's real growth, not the result of the depressed comparison. The numbers on this page show what we can deliver. We delivered 16% growth in management fees. We delivered 47% growth in core management fee earnings per share versus the half one of twenty twenty, demonstrating the powerful operating leverage in our model. We've had very strong performance fee outcome, and we've also seen excellent growth in future performance fee expectations with eligible pharma 37%. But it isn't just a 1 year phenomenon. The we've consistently delivered growth in our core business over the 5 years that Mark and I have been in charge, even though it's often obscured by the runoff of the legacy business. Our management fees have grown by 30%. Our management fee EPS has more than doubled, growing by 131%. This reflects our clients' confidence in our ability to manage and grow their assets, but also our ability to run the business efficiently and translate performance and inflows into profitable growth for our shareholders. On top of that management fee growth, as mentioned, we've seen this performance fee optionality grow as well. Performance fees are a very valuable earnings stream for shareholders, as we've just really demonstrated. We've increased our performance fee eligible firm by 54% over the past 5 years. This means the same percentage return creates meaningfully more performance fees and we've seen the benefits of that in the first half. We saw the last of the legacy earnings streams run off in 2019. That run off has hidden our real growth over the previous few years. Last year 2020, we reached an inflection point with a headwind gone and we generated modest growth despite the pandemic. This year, despite more pandemic, but still this year shows what we can deliver from our core business and the history shows that core business has been growing steadily over the last 5 years. This growth and profitability of our business supports consistent and growing returns to shareholders. We've returned more than $1,500,000,000 to the shareholders through dividends and buybacks from 2016. Given our consistent share buyback program over the last 5 years, we've reduced the share count by 15%, meaning shareholders get materially more of our earnings for each share they own. I think you could see we've had a consistent approach to reducing our share count. The and for those of you building models, I think it's pretty fair to look at you can put the same thing in looking into the future. We moved to a progressive dividend policy reflecting our confidence in the business and its growth. And today, we announced a 40% increase in the interim dividend and as we mentioned, a further share buyback. This has been an excellent first half with a good outcome for clients and shareholders alike. We've always been confident the firm will deliver outcomes such as this. Our focus is on the future. The immediate focus, I guess, for most people on the call is the second half of the year. As you've heard, we're very well placed with many strategies well over the high watermarks and a strong client pipeline. Our longer term goal is to keep investing in the talent and technology the underpin the firm to grow that edge that we have over our competitors and to deliver the growth we've seen over the past 5 years over the next 5 years and beyond. As a firm, we're in excellent shape with a durable convexity advantage and excellent momentum. The so with that, let me open it up to questions. So just as a reminder, if you want to ask a question, you needed to join via the WebEx link, which was in the joining instructions. On this screen, it's slightly different by device, but you should see a the raise the hand button to notify us you'd like to ask a question, and then you'll join the queue. I could see a couple in there already. The and then what will happen is Mark will announce your name and send you a link to unlock your unmute your machine and then you can ask your question. So with that, who's first? Haley is first. So Haley, if you can unmute yourself and ask your question. The Yes. Fantastic. Just a couple of quick questions from me, and congratulations on a fantastic the best set of results. So my two questions, please. Firstly, in terms of fund flows, thank you for clarifying that you still expect good flow momentum into second half and beyond, I think that's really important. In terms of some of the areas you've highlighted for us, continued strength in AHL, target risk, institutional solutions And some of the newer areas such as the long only Asian discretionary systematic strategies. I guess because you've already had such strong rental in these areas, the What lies behind your confidence for second half? Is it actually an expectation of reduced redemptions from here? Or is it genuinely sort of top line momentum that's increasing? We would be interested to understand that. And the second question just on performance fees, if I may. The $121,000,000 by other alternatives is now obviously getting to be a bigger and bigger number. Is there any more the is now obviously getting to be a bigger and bigger number. Is there any more color you can help give us to help us think about how to model or think about that for the future? That would be great. Thank you. Cool. I'll let Mark have a go. The second one, I think on the first one, so the predicting the outflow side of the equation is always rather hard because as I mentioned earlier, a number of the outflows that we had in the first half the came from clients where we've done nothing wrong. They were totally happy with our investment, but they've gone from an underfunded corporate pension plan to a fully funded corporate pension plan and they just said, thanks for the performance, but we're going to defease and go into bonds now and basically just take no more risk. But when we look at the performance we've been delivering, I think it's as we saw with JCA, as soon as it started to deliver performance, the flow picture changed around very quickly. I think we're seeing the same thing in New America. So I within the boundaries of what the market allows, the I do feel more confident on the redemption side, but that's always the slightly uncertain one. But really, there's a lot of confidence in the discussions we've been having with clients on significant mandates and we expect those to come through. We've always said our flows are lumpy. I try to avoid putting lumpy into the speech because I realize that's become my pet word in every time I've done the thing, but this is a good example, worrying for us, we never push a client for whether a mandate starts trading in the middle of June or the middle of July. The you just have to do it in the time it takes the client to be ready, but those lumpy flows are real and we do believe will come through over the coming quarters. And on the performance fee side, so the Institutional Solutions is what's describing that 121,000,000 and in particular, that's a blend of different AHL sub strategies, including the Allocations to Evolution as one of the sub components of it. We understand that that is harder for some of you to look at externally. We've been adding disclosure into the data pack to help with some of that modeling around where things are against high watermark. But I would think of the core of that bucket as being a blend of the different AHL strategies. There's a mix of other things in there as well, but high level, that's the right way to think about it. The Perfect. Haley, unless there's any other follow-up on that, we'll go to the next question. The Perfect. Hubert, you are up next. So if you unmute yourself, you should be able to ask a question. The Hi, can you hear me? Very good. We can hear you now. Thank you. Great. Firstly, thank you. First, I'd like to wish Mark all the best in his new role. The Three questions. Firstly, on fee margin, how should we think about fee margin to develop for the rest of the year? It's probably held up a little bit better than what we expect. The Given the mix of flows that you anticipate in the second half, should we expect the fee margin to be stable for the year now the At 66 basis points. Secondly, on costs, I think Mark previously mentioned that he expected a fixed cash cost guidance of 335,000,000 the For the full year, should we expect this to be the same? And if that's changed at all? And lastly, on M and A, can you talk about the potential for M and A? You've been the Obviously, quite quiet on this front for some time. Has anything changed or is the backdrop still pretty difficult just given where valuations are? Thank you. The Sure. So on the fee margin point, I mean, it's you've heard this again and again and again from us, but I'm going to go again. So it is all about mix. It's about where the growth comes from. There's no particular trend that we see through second half that should the change it, but it will bounce up and down sort of around that sort of number depending on whether mandates come in at the higher fee end or the lower fee end And actually importantly about the performance from each of the categories. So we've got positive mix in this period because the absolute return funds did well and they tend to be higher fee. The I would just say on that, everyone always asks about the revenue margin. We have just delivered a big step up in the the management fee profit margin and we quite like people to focus there a little bit more than just the revenue side. We've delivered good revenue growth. We've delivered good operating leverage, and I think that's what really drives outcomes for shareholders. The On the cost side, we're a bit under where we would have expected to be through the first half. We're still looking to invest the through the second half and catch up there. So we're looking to get back up towards that guidance for the full year. We're not changing the target now, But we've got teams where we want them to speed up and get on with the growth side within the business in line with that guidance. The And then lastly, on M and A, I mean, the message and the policy is the same as it always has been. M and A for us is extra value on top of the core value we can deliver organically within the business. If we find something which is an attractive investment for shareholders adjusted for the risk, that's great. The If we can't, then we'll continue to return capital in the way that we have for the past 5 years and we've just announced we're going to continue the to do today. The environment is not any more benign than it has been in the past. It's still pretty pricey. The So finding that risk reward has been harder, but that doesn't mean that we won't find something at some point. Yes. But I think importantly, look, we've demonstrated over the last 5 years, we can deliver real shareholder value through organic growth. The we're confident in our ability to do that over the next 5 years. And so M and A is just a sort of nice to have cherry if it becomes available on top. It's not a core bit of what we need to do to succeed. Perfect. Thanks, Richard. Thank you. The And now on to Paul. If you unmute yourself, you should be able to ask your question. The Can't hear you at the moment. The most of these things might be because people who both have to unmute themselves on the system and on their phone. The yes, we got you now. There we go. Two questions, please. Just the Firstly, on the numeric flows, obviously, negative in the first half. Given, as you say, a couple of years of the relatively weak performance, but very, very strong in this 6 months. Are you able to say whether any of the pipeline you've got visibility over for the next the quarter or half is specifically from within that area? Or will the lag between improved performance and flows likely take a bit longer the In that area, was question 1. And then secondly, just with respect to the buyback, obviously, it's taken thus part of 12 months the It's a complete €100,000,000 I know you've got market share issues in terms of the daily flow. If the performance fees do turn out to be as strong as the They currently look like they'll be. Obviously, under the old policy of the year, it was to buy back or use excess profits some performance fees to buy back shares, but it is not possible to buy back the sort of quantity that would potentially be enough to satisfy that. Is there other mechanisms that you would look to potentially a special dividend? Or do you regard that as contradictory from a value signal in terms of both buying back and the So on the numeric question, I think that the the Yes, we're definitely seeing a noticeable change in the dynamic of conversations with clients the around conversations with Numeric. Existing clients were pretty patient during the tricky period, the Having delivered a very strong, very broad performance over the last 6 months and now 9 months really, I think we are definitely finding the client dialogue has changed quite noticeably. And then, I mean, on the point around buybacks, I mean, you're right and this. It's a frustration of ours that the U. K. Rules slow us down in terms of the ability to buy back the shares. The We've obviously just announced this buyback. We'll work our way through it. I wouldn't want to comment on what we get to at the full year now, but that the potential issue of capital growing faster than the buyback. It's true. It's on our mind, but that's an issue for the future rather than today. It's a problem we really hope to have. Yes, problem is the wrong word. Yes, exactly. In a very wonderful position to be in. Okay, understood. The Perfect. At the moment, that is the last of the questions. If anyone else does have a question, then do stick their hand up. Okay. A couple coming in. Arnaud, let me if you unmute, you should be able to ask your questions. The But in general, let's remember to unmute both on WebEx and whatever system or your own phone, I think. Still can't hear you, Arnaud. Do you want to have another go on it? That is a good question. Afraid we can't hear you. Trying the Yes. So let us just move on. Arnaud will have another go at getting back to you if you can sort the technical piece. So Samarth, the Can you hear me? Yes. Okay. The So congratulations on your great one, H. Three questions from my side. First on ESG, the I mean, I did see that you launched some sustainability themed funds in first half. Can you comment on the interest in these the ESG themed funds and what is the growth pipeline for the remainder of the year from ESG funds. The The second one is mostly on your Asia focus. So I did see that you are launching strategies focused on Asia, the But growth from Asia domiciled clients have been relatively muted. So means I mean, I just want to understand how do you plan to grow that share? The And the third is just on your market share in quant alternatives. I mean, how much has this share increased versus end of December or end March, given outperformance in both flows and performance. Thank you. The let me have a go at those. So in terms of ESG, it's very clear that the vast majority of clients are very focused on the ESG question. What they mean by that is quite different between different clients. Certainly in Europe ever since we had the new regulation, a lot of clients are immediately saying, look, I really only want Article 8 funds the and what have you got in Article 9 funds. And so we've done a lot of work both in launching new strategies, but also making sure that existing strategies comply with Article 8, if they have a significant European client base, the so that we're able to do good things with those clients. It gets more complicated when you move away from issuer specific things. So the once you start talking about trading FX and futures and whatever, it's a more complicated conversation. But it is definitely where the demand is. I tend not to think of ESG the as a sort of growing segment of asset management. I tend to think of it as something that is going to be required everywhere in asset management. The And so it's a necessary condition of a product rather than it's sufficient on its own to generate new flows. The we've tried within ESG to look at where can you make a substantive difference. And we found climate to be one of those areas where actually there's some real science you can apply and we can do some really interesting work and we think climate related products, it's also something clients can get their head around. The everybody's heard the question of trying to keep the world to less than 2 degrees of warming. Well, if you talk about a portfolio, which is designed to help the world be less than 2 degrees of warming. That rings a bell for a client. Whereas if you say it's got good ESG scores, the sort of a sit go, hey, but what is it, what do I get? So we've definitely majored on the climate end and we have some sort of really interesting conversations going on there. From an Asia point of view, I think you've got two sides to this. What we were talking about earlier was content using Asian securities. So whether that's broad Asia or China as well. We think that bringing Asia to the rest of the world is something where there's a lot of demand the and a lot of opportunity to do that well. On top of that, there's the question around Asian clients, where in 3 or 4 of the markets in Asia and broad definition of Asia, they've become more and more interesting client bases. The we're not particularly likely to grow in a hurry in, I don't know, pick the Thai onshore business because that's really a retail distribution thing. And as you know, retail distribution isn't our game. But in the institutional markets in Asia, so that's China, it's Hong Kong, it's Korea, it's obviously Australia and Japan. Those are significant client segments for us and have been growing client segments and we would expect that to continue. The in terms of market share in Quant Alternatives, I guess, if you look at the public data, it always slightly depends who you do and don't include in these things. The sort of one of the big questions is, is Bridgewater a quant alternative or not a quant alternative? The Is it discretionary or quantum exactly how that works? The what we've seen is we've definitely been gaining market share, both in the CTA systematic directional world and in the quant alternative equity and the sort of quant multi strategy things. But equally, what we see is there's lots of room for the growing those areas. The client demand is very significant as long as you can deliver decent returns. The and so we don't feel in any way constrained by our market share. The And then, Arnaud has just sent his questions through separately, so let me read them out and then we'll answer them. The first is, can you give an indication of what the comp ratio on the performance fees across AHL, GLG and Numerics. The second is, can you discuss investment capacity in AHL fund ranges? The And finally, are you seeing more interest from new prospective clients given recent strong performance at AHL? The On the comp ratio point, I mean, I think we just point you back to our overall guidance, which is the 40% to 50% range and we'll be at the bottom end when revenues are strong. The We don't really break it out to more detail than that. And you can see a very strong relationship between overall revenue if you look at the past. So we think that's a very good stay for where we ended up in aggregate. And what was the second question? Capacity on AHL Funds. Capacity on AHL Funds. Look, I think the we work continuously to create extra capacity. The great thing of both the flows we've had in AHL and the performance in AHL. Performance really, really matters in alternatives. If you generate performance, your AUM goes up, your fees are at the historic fee rates. Those are very, very good ways of generating extra future management fees. The so we've been growing the assets very significantly over the previous years. We put a lot of effort into seeing what we can do to grow capacity in the future while maintaining the quality. Whether that lets us have net inflows or just copes with the capacity as a slightly moot point. We sort of thought that we had created extra capacity for evolution the for this year, but with a 15% performance since the last time we took client money in, funnily enough that sort of used up the extra capacity we created, but we haven't had to give any money back. So but we are the AHL team has demonstrated an ability to generate alpha and high quality returns at scale. The and we put lots of time and effort into whether it's expanding markets that we trade in, checking whether we're missing any liquidity somewhere in markets, the whether it's adding new models that trade different things, whether it's improving our execution, these are all ways you can create extra capacity and it is absolutely where we're focused within the research effort in AHL and beyond. And then the last question on whether recent performance the helps on sort of future inflows. I mean, at some level, clearly, performance always helps with client demand. I do think we would say within that, though, the A lot of the clients who are institutional people ask us the flip side question, if you're down a couple of percent in a quarter, are you worried about outflows? These are the strategies with strong long term performance. Pickups in the short term definitely help, but people understand the quality regardless of where the last 3 or the 6 months have been. So we have a good pipeline. That's really about the long term strength of the products. The fact that it's a good 6 months definitely helps, But that isn't the core driver. It's the long term quality of what we do. And I think with that, firstly, the Michael, I've just thank you if you want to come off mute and ask a question. The what are the troubles of these systems, WebEx and Zoom and whatever, they update them so frequently to try to make them better, but make them a bit clunkier. Sounds like the Yes, I can hear you, Mark. Just one question. Talking about the redemptions that you saw related to pension funds that were that There's a bit of a trend. Is this something that you track closely with your pension clients, so you can kind of gauge the potential appetite or lack of full year products going forward? Thanks. Yes, it's something we keep a very close eye on. The and of course, our whole job is to help pensions get fully funded. But when they get fully funded, the danger is that they say thank you very much and that will do. It's much more of an issue in the corporate pension plan than it is the public pension plan world. So we're looking at this is a defined benefit corporate pension plan issue, where companies having sat looking at some quite big deficits in the last 10 years. And thinking about the impact on earnings at the point where they don't have a deficit, the temptation to lock it in is quite high. The and particularly in the U. S, you've seen people with very high equity allocations in a corporate pension plan the and with the performance of the U. S. Equity market that sort of given them a chance to get to fully funded. The we don't ignore clients who've got shrinking flows, the who are going to be redeeming naturally. You can still do interesting things with them, but it's definitely more fun when you get a mandate from a client with a glowing sorry, with a growing inflows, whether that's our public pension plan who continues to offer defined benefit pensions or it's Sovereign Wealth Fund with net inflows or even one of the sort of wealth managers with growing asset flows. Delivering products to them is it definitely makes future inflows easier to get than the ones where they have shrinking risk appetites. But the it's important to keep delivering returns to clients and I could think of a couple of Japanese pension plans where the we started working with them 20 something years ago and they're still invested with us. And I'm pretty sure they'll be invested with us all the way until the pension plan is entirely matured. So those are pretty good clients to have in the long run. The Perfect. Thank you. I think that is all of our questions. Great. Thank you, everybody. Hopefully, we gave you a decent update on the firm and a sense that the we had a fantastic first half of the year, but actually we think this is just part of the ongoing growth. The. And with that, have a good day and good luck out there. Thank you.