Earnings Call: H2 2019

Feb 28, 2020

Good. The sets up of them does seem to have a good pretty long way back. I think that's not reflective of the current health concerns. Thanks. Welcome, everybody. Thank you for joining us. And for coming out in the rain and with everything going on health wise, there's lots of hand sanitizer on the side of the room for anybody who'd like it. And for those who are finding the week a bit stressful, they're flat packets outside as well. So as usual, I'm going to start with overview of 2019, Mark will take you through the numbers and then I'll come back and spend some time on business momentum as much as anything else. Obviously markets are moving rather quickly this week. The presentations are last year's results. And honestly, forward looking comments are increasingly difficult to make with any confidence, but we'll try to help where we can. And then we'll open it up for questions and we'll try to duck all of the ones about what's going on in market tonight. 2019 from a market point of view, it was obviously much more supportive for most asset classes complete contrast at the end of 2018 in the last few days. Together with our clients, we benefited from the bullish environment. We were able to deliver 1,000,000,000 of investment gains, particularly from the long only. Obviously, but from the trend following and from the total return strategies. Performance across the technical strategies, which in the end drive most of the performance regeneration were particularly strong. However, it was a period where the valuation focused strategy intended to underperform didn't change from the first half of the year, which led to the negative asset weighted performance of 1.1% across the whole thing, given the proportion of our assets that are in a generally high fracking error valuation pattern strategies. Funds after management increased 8 percent to $117,700,000,000, but mainly from investment gains, obviously, We saw inflows into our alternative strategies, but an overall small outflow driven by the long early side. Adjusted PBT increased by 54 percent to $586,000,000, driven by the strong performance fees Adjusted management fee PBT reduced by 21% as a result of both the non operating headwinds mark outlined at the half time before listening and lot management feature in the course of the year. We continue to manage the capital actively to the benefit of shareholders In May, we completed the what we think of a rather important corporate reorganization providing us with more flexibility in financing the business. Mean in October, we completed our buyback or the last buyback and we started a new $100,000,001. Consistent with the policy of the last few years, The board recommended a final dividend of $0.051 per share, which when taken together with the interim dividend amounts to a full year dividend of $0.098 per share. That's the main piece you could have read. So I've had the privilege of leaving Man for more than 3 years now or Mark and I and I wanted to highlight some of the progress we've made over that time. Today, Man is a really diversified active investment management firm empowered by deploying the latest technology across all of our business. It's a demonstration of the quality of the solutions, that we can deliver and our deep client relationships that we've generated more than $22,000,000,000 of net inflows over the past 3 years and funds under management have increased by 45%. For our shareholders, we've completed the transition away from Man's legacy earning stream, delivering in 2019 our highest core PBT since the crisis. We've returned $900,000,000 to shareholders over the last 3 years, and we continue to reinvest in the business in particular into the innovations that will drive growth from here with material success coming through in the alternate risk premium space and the target risk strategy in particular. We put a huge amount of effort and energy into creating a strong and diverse culture across the firm We want our staff to enjoy commuter work and to be proud of the firm they represent. This is a people business And if we achieve that, that's what will allow us to continue to succeed and outperform in the future. So looking at the funding movements in 2019 in more detail, you could see we made good progress in the alternative strategies but we were impacted as obviously most of the street was by clients reducing their active loan earning equity exposure. At an industry level, clients increased significantly their allocation to bonds. That's an area where we are currently underrepresented that we weren't fully able to benefit from the industry flows. But over recent years, we've been building out our credit offering and we've built strongly performing strategies now covering the strategic bond sector, the high yield sector, and real estate debt. Had these strategies had longer track records with us, mostly they've been with us for not much more than either. I think the overall for man in 2019 would have looked quite different. Now let me tell you the performance of the strategy is in a bit more detail. 2019 was characterized by a rebound in equity markets and most other asset classes, so Central Banks grew more accommodative. It was a strong period for momentum and growth strategies, but a more difficult period, as I mentioned, for valuation focused strategies. Against this backdrop, absolute performance across our product categories was positive. The absolute return strategies were up 7% on average, driven by strong performance from our major quantitative alternative strategies. Within the total return strategies, Man AHL target risk delivered a very strong performance, up 28.4%, meaning it delivered 25% of outperformance of its sixty-forty benchmark over the last 4 years. Emerging market debt took or turns valuation focus meant it couldn't or wouldn't buy the frothy EM bonds that were around. And it wanted to short overvalued EM currencies, so it lost 2.8%. The systematic loan only strategies were up on average 19.1% benefiting obviously from the beta and equity markets. Returns in the discretionary long only tranches were 14.2%. Within that, Japan core Alta was up 9.2%. But the UK and European focus strategy has delivered strong returns with a concentrated European strategy that's Rory Powell, up 30.7% and the UK and the valued asset strategy that's Henry, up 19.3% in the year. Relative performance across the firm was slightly negative. Relative outperformance in the entry return category was driven by the quant strategies up 2.3% versus peers. Again, AHL continuing to deliver strong recent performances as we've done for the last few years. Across our total return strategies, target risk not just outperformed its benchmark but outperformed peers, But that was more than offset by the underperformance from emerging market debt due to that bearish positioning. I have to say that bearish positioning feels slightly more appropriate today. Relative performance of the systematic and discretionary learning strategies were soft with underperformance of 2.2% and 2.6% respectively. As you can see on this slide, It was our largest evaluation focused strategies that led to underperformance during the year, and that picture is basically the same as the one we showed in the midyear. It's worth noting, for example, despite the relative underperformance of discretionary loan earning strategies, it's of Japan core alpha out, which is obviously very large for us, and relative performance is actually positive. I'm not going to predict when valuation strategies will start outperforming again, but I do believe having a diverse set of high quality strategies across the firm results and outperformance for our clients and for the firm over time. So with that as a background, let me pass over to Mark. Thank you, Luke, and good morning, everyone. I'll start with an overview of our P and L and then take you through some revenue cost and capital. Net management fees were 1,000,000, a decrease of 5% from the prior year, That reflects both the market due to mix during the year. Net performance fees were 1,000,000 and came from a range of strategy AHL's evolution dimension at Alpha were the largest contributors, and we made a gain of $20,000,000 on our seed book mainly from some credit strategies. Total cost was 710,000,000, up 8% and with that largely as a result of higher performance fee compensation, and some from higher fixed compensation due to increases in headcount, including the FX headwinds I mentioned this time last year. Overall, we saw a very healthy 56 percent increase in earnings per share driven by those performance fees. As Luke mentioned, Farm increased to $117,700,000,000 during the year. We saw a return to net inflows in Q4 with $900,000,000 for the quarter. Over the whole year, we saw inflows into our alternative strategy for the net outflow of 1,300,000,000 given the outflows from our long run. Absolute return from increased by 6%, largely due to positive investment performance. With outflows from GLG's alternative products partially offset by inflows into various AHL strategies. Total return increased by 20% primarily due to inflows of 1,000,000,000 that included 2,800,000,000 into alternative risk premia and 1.5% into target risk, with both of those strategies also generating positive absolute performance during the year. Multi Managed Solutions increased by 500,000,000 driven by positive investment performance, partially offset by small net outflows. Systematic long only was up by 11% to 1,000,000,000, again, driven by a positive P and L, with net outflows of 1,000,000,000 from various institutional clients reflecting some of that short term performance that Luke discussed. Discretionary long only from end of the year basically flat Net outflows of 1,000,000,000 were primarily from our Japan core out for U. S. Equity strategies and then equity market moves with the main driver for absolute performance of 1,000,000,000. It's also worth highlighting we saw net inflows from North American clients during the year, and we're pleased to see ongoing process in growing those relationships. Well, just to briefly discuss here, the impact we've seen from the coronavirus, given it's obviously a real concern by far employees, as well as markets and governments around the world today. And as you would expect, our first responsibilities to our people, and we've taken the appropriate steps to protect them, including office closures, reduced business travel, more working from home and then various monitoring exercises. From a client perspective, we haven't seen clients change their allocations to date, but as Luke said, things are clearly moving very quickly. And our day to day focus has been upon managing their assets and the market moves that everybody's seeing. And turning now to revenue margins, and here you can see many of the same trends that you'll have heard us discuss previously. So discretionary long and Indian total return margins are basically flat, bouncing up and down slightly at the end with mixtures. The absolute return margin decreased as the continued growth in our institutional business. Some of the outflows from the historical retail business continued to DSO diversified. And as we've said before, we expect some of that mix shift to continue going forward. The multi manager solutions margin decreased to 31 basis points. And as we've described many times previously, we expect that to continue as well as the business completes a shift towards large infrastructure and managed account mandates. As we mentioned in our Q3 press release, the systematic loan only margin has declined following a longer period of stability. That reflects 2 things: 1, some redemptions from higher margin mandates, but also one large client where they've moved some parts of the investment process in house So they're using less of our alpha capacity, but they're paying less in fees as a result. The overall growth in farming meant we had run rate net management fees of 7 1000000000 at the start of the year. Turning now to some more details on management fees from last year. Overall, core net management fees decreased by 3%, driven by that lower starting run rate in some of those margin trends I just discussed. We had minimal legacy revenue in 2019 as we've completed the transition away from guaranteed products to our core business of today. And on the cost side, our compensation ratio was 43%, down from 48% last year, driven by those higher performance fees. As a reminder, our compensation ratio is generally between 40% 50%, depending on the mix and the level of revenues. We expect to be at the higher end of the range in years like 2018 and performance fees are lower, and we expect to be conversely at the lower end of the range. To the years when like this when absolute performance fees are higher. Fixed cash costs for the year were 1,000,000, slightly lower than 2018 and a bit below our guidance of 3.30. Other cash costs decreased largely as a result of the new lease accounting rules, it would have been basically flat otherwise. D and A increased by 1,000,000, mainly as we brought in the new lease accounting rules as well as some continued capital investment in technology across the business. For 2020, the guidance on fixed costs is around 1,000,000, using a FX rate of 1.32 for cable. That includes incremental investment into technology, private markets, and our U. S. Distribution capabilities. It also includes some project costs in relation to providing our presence in this office here in London This follows one of our largest subtenants indicating they'll move out shortly. We expect some further impact in 2021, and we'll update you as that process progresses. And then lastly, on the cost side, asset servicing costs were 1,000,000 or 1,000,000 higher than 2018 Going forward, guidance remains the same at around 7 basis points of funds, excluding the American GPN assets. As a reminder, as we told people previously, we're no longer hedging our sterling costs going forward and you can see just an illustration of the impact of that on this slide. Turning now to the profit bridge, you can see the profit bridge here just to illustrate the key movements for the year. Adjusted EBT is $386 compared to $251,000,000 in 20 18. The increase in performance fees is obviously the largest single driver with some offset from increases in the variable compensation. And you can also see the non operating headwinds we mentioned this time a year ago, and then the reduction in the core net management fees that we just discussed. I'm looking now in a bit more detail at performance fees and seed gains. You can see these were GBP 345,000,000 this year compared to GBP 122,000,000 last year. This includes 1,000,000 from AHL and 1,000,000 from GLG. Evolution and dimension were the 2 largest contributors, but out for an institutional solutions from AHL were also significant. As we always remind you, we can't predict the level of performance fees in any given yet. But they remain an important and valuable earnings stream over time. The 5 year average for performance fees here, excluding the seed gains, is 1,000,000 we've been growing that performance fee optionality over time. And if you look at the next slide you can see we had about 1,000,000,000 of performance fee eligible fund, which was either in the money at or within 5% of high water market year end. Compared to about 1,000,000,000 a year before. The last week obviously had a short run impact on that, but if I can persuade you to zoom out a little and I say that more in hope than in our expectations. You can see we've grown normalized performance fees over time with performance fee earning from up by about 60% 2013. Finally, on our balance sheet, it remains strong and liquid net financial assets of 1,000,000, and we continue to be strongly cash generative. We've reduced our liabilities during the year following the repayment of our Tier 2 notes of $160,000,000 as well as the final numerical and out payment. As we discussed at the half year, we're now using some more efficient financing techniques for our Seaprook. So we're using repos and total return of swaps, as you can see on this slide. We've also entered into new RCF for $500,000,000. That is an ESG RCF, which commits us to a number of targets in areas that are important to us. Including women in senior management, volunteering across the firm and maintaining our UNPRI rating. As you will know from hearing from us previously, one of the strengths of our business is its strong capital generation, and we continue to actively manage shareholders' capital as described, we're approaching 40% through the buyback we announced last October, and you've seen us both pay a healthy dividend and return capital to shareholders steadily when we've not found back to reinvestment opportunities. That approach to capital management remains unchanged today. With that, I will hand back to Luke. It sometimes feels like the outside world finds it a little hard to see the underlying process we've made in the firm in recent years. The run off of Man's legacy business and the volatility of performance fees that needs viewed from a very short term perspective seems to confuse the picture. What you can see here is our core profitability. We're focused on growing our core management fee profitability and the normalized across cycle performance fee profitability. And we would encourage all of you to focus on that. As a firm, We continue to enhance our strategic differentiators by investing in technology and talent enriching our culture diversifying our capabilities and developing deep client relationships. The cumulative results of these actions can be seen on the slide. Core profitability has been on an upward trend and I'm delighted to say it reached a new post crisis peak in 2019. For Man, it really is onwards and upwards. You've seen the details on short term flows, but I thought it was important to reiterate the change in our approach to clients over time. If you look back to the 2011 2013 period, we had an intermediary focus distribution model and a legacy focused product set. We saw large net outflows, low gross inflows and a high churn rate. Not very pretty picture. As we build out the direct institutional sales capability through 2014 to 2016, you saw net flows turn positive and gross inflows start to pick up and the churn rate reduced. And in the last three years, where we put a huge focus on relationships and understanding what our clients actually need, you've seen a further material improvement in our sales productivity with 8% net annual inflows over 1,000,000,000 a year in growth inflows, and the redemption rate reducing further. Our focus on deep client relationships have driven these improvement, and that's going to remain our focus from here. We're investing this year in increasing our client relationship footprint as we see many extra clients where we could work with them and where we haven't had the time to develop a relationship. Bandwidth has been our constraint, not productivity or receptivity from clients. Still people aren't bumping to them regularly. A new man group a decade ago and associates us with a single strategy of AHL diversified. You've seen on the previous page how much broader land is to date than any one strategy, but the same is true even within AHL. Today, only GBP 1,700,000,000 of AHL sum comes from diversified. You could see the strong growth into other large A10 alternative strategies, evolution dimension and alpha, and more recently, the development of total return strategies, including the ARP and target risk. That growth is driven by our investment into our research our technology and our execution capabilities to preserve and yes expand a lead in this space. Not only can we adapt and grow our business organically, we've also been able to invest capital profitably in acquisitions when a clear opportunity presents itself. Creating value through acquisitions requires disciplined sourcing and structuring a potential investment and we have a team constantly assessing future opportunities, saying no to overpriced acquisitions is key. However, when you find a sensibly priced opportunity, much of the value creation is really about successful integration. And that is a challenge people seek not to get right in our industry. We acquired numeric in 2014, At that time, its funds under management were CHF 15,200,000,000. That's more than doubled over the past 5 years, reaching CHF 35,800,000,000 today. Obviously, some of that reflects strong equity markets since the acquisition, but we've been able to deliver very significant growth from inflows. 4.7 of inflows were into numeric traditional or only products, thereby reflecting our ability to retain both existing clients and deliver the strategies across Man's broader client base. What I think is even more interesting is that GBP 5,000,000,000 of inflows into our mute and total return strategy, which reflects new strategies to the results of collaboration across Man, We've been able to develop these strategies because there has been real integration and a real collective innovation. This is what resulted in the launch of the ARP strategy, which now manages over $8,000,000,000 across now. Next area is to talk about technology. Technology is in the DNA of this firm. We've been using data science for over 30 years to evaluate in trade markets and investments. Python is NAND's second language. Now more than 600 people with Python usage within the firm. Everyone in the firm wants to integrate technology into their process. We don't need to even encourage adoption it comes naturally across the firm. Our challenge is the overwhelming number of ideas across the firm and how to prioritize within those. Yesterday, I was up by a former colleague, why isn't man group valued as a FinTech business rather than a diversified financial? Well, maybe because we make a profit. But also within our industry, look, we're not going to launch a software as a service business line just to try and boost the multiple. Right? We believe that our technology delivers huge value to our clients and by focusing on that client value add the gap to traditional players grows and our shareholder benefit whenever our clients are happy. When we look at our quantum tech expertise, experience and resources, we think we have a huge competitive advantage as our industry becomes ever more technology focused. If you look across the listed asset management firms around the world, I would challenge you to find anyone with our capabilities and our leadership position in QuantumTech. Our experience is unparalleled in Quantum Investing. More than 30 years both in AHL and numeric, and we continue to invest in quantum research and technology in particular to protect and grow that lead. We benefit our clients benefit and our shareholders benefit from our technology leadership. Take another chance to remind you of the other great strength of the business. We are very cash generative. We pay out 100 percent of the management fee profits as dividends every year, but we also generate significant amounts of extra capital from our performance fee profits over time. We've reinvested capital profitably into the business in the past, Newmark acquisition being a great illustration of that. But if we don't define attractive reinvestment opportunities we have and will continue to return capital to shareholders with $1,500,000,000 return through dividends and buyback over the last 5 years. Overall, you could see the progress we've made in reengineering the firm to deliver what clients actually want and need today. Back in 2013, the firm only made a management fee profit because of its legacy earning streams, particularly from the structured products. And excluding those, the core business was actually loss making. We've built our core management fee profitability materially over time. And it will drive our growth from here. We have also grown our performance fee earning potential and hence our expected average performance fees during a cycle. In particular, as AHL has diversified the strategies it offers to clients, but also through the acquisition of New Mountain and the development of a number of new cross man alternative solutions. We'll never see we keep adapting the business as market change, but our technology leadership and the strength of our client relationships give us an excellent competitive advantage. Before turning to our outlook or what little I'm going to say about our outlook, I'd like to set what we do in its wider context. Man exists to help our clients meet their investment goals. We serve the biggest institutions around the world, but it's easy to forget that those institutions represent real people the other side somewhere between 50,001,000,000 people. These people are saving for their retirement or their health care or their children's education. Our purpose is to help them achieve their goals. We do that in conjunction with a range of partners who we rely on every day to do our job. We're also very conscious of the wider community we work and live in. We're proud of our charitable activities and we're focused on improving the environmental in the say that again, environmental impact, both directly with a 19% reduction in our carbon footprint this year and even more importantly in how we manage our clients' capital with an appointment of the CIO for ESG in responsible investing this year. As you may have seen this morning, we announced some board changes that means at the time of the AGM, our board will be fully diverse. Finally, we can only do what we do because of our people. We put a huge focus into building a firm where everyone is happy and presently part of that team, as Mark mentioned in an environment like this, looking after our people come first. 2019 was a year of solid growth and continued strategic progress at Mann. We delivered strong absolute investment performance, making $10,000,000,000 of investment gains for our clients and closed the period with record funds under management. That performance drove a 54% increase in the adjusted PBT. We saw a return to net inflows at the end of last year. As we mentioned, debt momentum has continued into 2020. I wrote that bit at the end of the week, but at the end of last week, not sure what the momentum is this week, but it's the clients are looking for us to help them understand what's going on in the market. And we're focused on looking after their capital. And we're very confident in the breadth and the attractiveness of the solutions we can provide to clients as they decide what they want to do in this new or potentially new environment. Our strong performance fees last year, as Mark mentioned, means we have good performance fee optionality in 2020. We set 3 key priorities for our further investments all within the cost numbers. Mark talked about 1st and foremost, we'll invest in our quantum technology areas to maintain and grow our lead position there. This obviously drives what we do in AHL and numeric, but it's also crucial to staying ahead with a differentiated offering in our discretionary GLG and private market areas. We want to keep pushing our quantum technology into areas of the market and investing where others don't realize it's possible to use quantum skills. Secondly, I've mentioned our relationship focused sales effort has lots of room for growth by covering a greater number of significantly sized institutions. It's particularly true in the U. S, whether it's so many large potential clients. And so we're growing our sales relationship footprint there. And thirdly, we're always looking to diversify the product set. As I mentioned before, We have very clear rules around this. We want to do something that A, we can deliver a repeatable source of value add for our clients. V, we can do it while maintaining the quality of the people in the firm and the cultural standards of the firm. I have a short hand for that, which I won't use here. Follow-up and see, we don't want to do something twice. We don't believe in having 2 of anything. Overall, when we look at our capability set today, there are lots of new things that we could add in. But we're focused somewhat on areas which benefit from growth in economies and markets That's always particularly the long running equity world. And things that benefit from significant change in the market, that's particularly in the quant technical stuff. Were on average somewhat light on strategies that generate reasonable returns either to income or when not much happens. As we're working hard to develop, grow and integrate those factories whenever we can find things that need criteria A and B. I would now use my lovely concluding sentence apart from that's the bit of paper, which I must have left downstairs. So Okay. We don't have the final paragraph. It's a big deal. We continue to enhance our strategic differentiators by investing in the talent we have here, innovative new technologies, enriching our culture because that makes people want to work here. Diversifying our capabilities and developing these clients' deep relationships. In doing so, we're very convinced we're well positioned to meet our client's needs and if we do that to deliver sustainable value for our shareholders. With that, we will take some questions. Good morning. It's Ana Giga from Exane. I've got 3 questions for you. Firstly, on on flows, Q1 flows. And so in the Specialist Press, it seems as though you might have won an HL mandate in a U. S. Pension fund. Could you they're talking about 650,000,000 for Oregon. Could you confirm whether that funds with the timing of the funding. Also, I think you disclosed that Mr. Raster has got a $500,000,000 mandate. It's going to be in the numbers for Q1. And target risk seems to be doing extremely well, and flows into the list of product. Can I continue? Is it capacity for that product. That will do that together and I will try not to it goes beyond what the client has already said publicly about that thing. So the Arvin and the whales process may public announcement, which got picked up in the press, that strategy basically you can think of as being target risk in a the spoke format and I think that will depend on the client. A way of doing it, but I mean, they made the announcement. It wasn't up. So, and I think generally in target risk, The performance has been remarkably strong for 5 or 6 years since we don't We were somewhat amazed how long it took before people noticed in part because it is quite differentiated in part because its performance has been frankly so good. People couldn't quite see what was going on. In the last 18 months, you could see the momentum of flows into that has picked up significantly and we have 20 more headroom to go in terms of capacity. We have to be very careful about the other question just from not restricting us from a U. S. Marketing point of view. But there was a Bloomberg announcement about sorry, there was a Bloomberg story. It was nothing to do with us announcing it. They would have got it from somewhere in the street. About the launch of Renewal Multi Strategy Fund on Mann where Sandy is the particular fund managers keep looking at the compliance team on the front row to make sure I don't say the wrong thing. Look, as you all know, if you say too much specifically about the product, you then go and market it in the U. S. For 3 months. And if we had that product, it would be very attractive to U. S. Institutional clients. Reflecting our ability to go market for 3 months would be a bad idea. But I think we're very confident of our ability to build Crossland solutions, which are differentiating and attractive to clients. Yes, it's good morning. It's Christian from Berenberg. Just two questions from me. And the first is really taking that last question and taking it more broadly. You've had very strong performance from your absolute return products, haven't yet related into flows. Is that a lagging issue? Is it just a time lag there? Is it a capacity issue? And then if it is last issued. In regards to your seed portfolio, all the things that, that was the kind of phasing in building the correct records that that would help, And then a fairly short question, I'm afraid, secondly, in comparison, it's taking you, I think, 4 months to do about 35% of the share buyback. So would it be right to think that would take pretty much the rest of the year to do that? With that, what's the current service capital position and then taking those 2 together, what's your or how do you think about returning that capital if the liquidity in your shares is a binding constraint on doing more buybacks? Yes. I mean, on the latter, you're right. It's been going relatively slowly. That's primarily just a function of liquidity in the market. And so we are trying to buy at an appropriate pace and not move the share price around as you'd expect for business that trades for a living. So it, we get constrained primarily by the market side of that. Surplus capital is the right way to think about the balance sheet anymore. So the red cap position is not how we describe it and it's not how you should think about it. So you can see whatever it was, slide 16, which is the, what are the number it is, which is the net financial assets and the balance sheet is strong liquid low on gross liabilities and has a chunk of flexibility there. But there isn't a sort of one number that says here's surplus capital. We've got plenty of capital that we can choose to either return or reinvest. And the approach to that is completely unchanged. So we are trying to maximize returns to shareholders. If we have a, reinvestment opportunity that is more attractive than returning capital, we would do that. Otherwise, we will continue to return capital steadily over time. And you can obviously see we've done that in significant size over the past 5 years. In terms of absolute return, capacity and flows. So I think that the we have a very strong view that everything that is about after this capacity constraint. And that if you take too much money into something, it's not that the alpha decay is a little bit, you take too much money, the answer falls off a cliff and it's almost impossible to climb back up that cliff. So we are and will continue to be prudent about shutting things, because we think that's the right way to maintain returns for clients and that's the right way to contain those relationships and it's the right way over time to maximize the rewards you get for doing it. All of our assets in the investment won't go into kind of create extra capacity in some form or other either by finding new things to do, new signals to trade, new markets to trade, new ways to trade things. Or invest in things as well as improving our execution because the easiest way to increase capacity is to reduce your footage that gives you more ability to do things out particularly to avoid letting anybody see your footprint within our active in terms of the target of the firm. And what you don't want is box and fissures. Maybe that's the right thing. The market is clearly full of lots of people trying to find a firm I'm getting positive. And so we spend a lot of time and energy on Peensure our execution is both outstanding and continuously getting better I think we're confident in our ability to keep creating So almost everything would want to do. We're not comfortable with our ability to keep creating evolution capacity ahead of evolution's ability to generate returns. That's a nice problem to have given its historic returns have been double digit. It's quite a lot of work to create the capacity to just stop us having to give money back to clients. I just have one question on M and A. You haven't done deals for a while. I think your standards you spoke of pretty high Obviously spoke about valuations also being unattractive. Just wondering if you can give us a few thoughts on M and A to the M and A outlook And look, we continue to look at things actively, but we do it in a fully dispassionate way. Again, so criteria, the way I would characterize it is we have a view about valuation that makes sense. And a view about structure, which ensures that the deals work well for our shareholders. What we saw for a couple of years is that there were people in the market willing to pay materially more than we thought was a sensible price to pay for things. And we see absolutely no reason to chase those things. Does it feel like the average price somebody will pay for businesses coming towards us, yes, but it's coming down to us, not us chasing up to that, but it's got to be something where we actually see output. Buying a business that's got some AUM, but doesn't have any alpha doesn't move the firm forward. It's got to have Alfred got to deliver value for clients and they've got to be culturally believe in the things we believe in and not just doubling up something we have already. Anytime we can find that combination, and we can make the structure work. Well, that'll be brilliant. And as Mark talked about, we have plenty of flexibility to do that, but we're not going to chase price just to Hey, Henry, we did something. More than 2, I'm quite proud. Paul McGinnis from Question around distribution policy, obviously, in what's been a very strong year because the policy was implemented in terms of paying out exactly the level of the management fee EPS rather than at least that level. It meant that dividend was quite a substantially down year on year. Just wondering given the buyback was announced before the ultimate performance fee outcome was known and therefore even in an even better position, whether any consideration might be given to sort of tweaking that policy from I mean, it seems that the word unleashed don't seem to ever actually come to this equation as to whether it could actually be made more progressive and therefore, open man up with part of the reason why I say income investors might not consider them out is because of the lack of predictability in that dividend by introducing it in a different way. It might open it up to another class And so we obviously consider the appropriate dividend policies, currently, we consider that regularly. We've always concluded that the existing policy is appropriate for this business at this points in time. And that the significant majority of shareholders agree, although clearly there's that people have different opinions dividend policy and buyback returns have strong minority opinions at both ends of the spectrum. The underlying idea of are we committed to returning capital through either buybacks or dividends? And if we don't have a better form to reinvest it, I think And I think the numbers demonstrate we are at the unusually committed end of those businesses, both in terms of what you generate and what we've returned. But we've always concluded that the existing form is the right one for us as a business and the plurality of shareholders But it is a regular conversation, and we understand that there's a particular group in the UK that might have a preference for a different form. And I think just to reiterate what we've always said, we're not going to sit on capital just for the hell of it. Forever, right? It's if we don't have a good use for the financial flexibility, then we will return capital shareholders. It was like quite a good week to have some financial flexibility, but near week. Hi, it's Heidi Turham. Got it for Two questions. First one, please forgive me. Given the current market conditions, I hope I'm okay to offer this, I wouldn't normally ask that performance of your funds over the last week, but could you maybe give us some idea of how perhaps your absolute return in total return strategy they've done in the current environment be good to know. And then the second question, and I completely forgot what that was because I got And let me finalize the first one. Do you think about it while in taggers from the team on the front row? On the left, So the good thing for looking at us as a firm is that there are lots of strategies which have daily reporting funds, in the absolute return and total return space. So you can see quite a lot of information with the blueprints screen. What that will broadly tell you when you do your own research, not because I'm telling you the number. Is that coming into or through the Friday evening of last week, there was a remarkable amount of green across everything. There were some very positive numbers across basically everything and would tell you that this week has been tough in almost anything you want to do in markets. And so the different top of my banking questions, the reality and looking level published information is that on a year to date basis, If you don't have the time looking at daily returns or weekly returns and you just looked at the year to date returns, it's a little bit okay. No harm. That makes sense. Alright. Sorry. And the second question, I'll just go ahead. I think I heard you've said that I think you're looking at the 3rd possible route for excess capital for MAU And you mentioned you're looking at things in growth in economies and markets, for example, in the moment, I just want to make sure I didn't mishear that. I would say if you look at So we will look at anything, which is made the clear of being, and is whether it's helping something new internally, whether it's hiring a team, whether it's looking or buying a business. First is we have to believe there's a repeatable source of value add for the clients. 2nd unit has to be a cultural fit. Third is we don't want 2 of the same thing. When I look at our overall product offering. We have today, you could see we have a bunch of our assets are in essentially long only equities, both discretionary and corn, that benefit from growth markets in some form or another, not necessarily growth stocks, but growing economies growing market, we obviously have a big market neutral and technical Secure business, both of which do well when things change and go somewhere. We don't have a particularly big footprint in income type of things. So you could think of it as credit related things, income related things, things that make money as markets don't really go anywhere. And so it would be nice to hear that part of the it will be nice if we would have been better for our flows last year if we'd had more credit products that were high quality performing and have been around for long enough that you can get the big flows into them. So what I would tell you about is the natural thing of focus over time is to increase the number of things we have in that I'll call it income e space, but it's a sort of going when worlds go sideways as opposed to R4 down a lot. But that is not about acquisitions. That's about it could be through developing new things. It can be internal, it can be discretionary or bonds. It can be through hiring teams and it can be through, yes, we saw the right opportunity through acquisition. If that makes sense. But it was not specific about acquisitions at all. Just a quick follow-up since you disclosed our core management fee, Benang, which is if you call roughly to your management team, could you indicate what proportion of your revenues come from non core management fee revenues? And the fact that it's equal in terms of PBT, does that mean when those revenues eventually, paid, there are costs that paid with us? So they basically have all gone now. So if you look in the past, there was a big gap between the adjusted PPP and the core. This year is essentially the completion of that transition. So the jaws are basically gone. There's $40,000,000 of guaranteed product at year end. So it's rounding to 0 on all these. Yes, it's rounding to 0 here. And then in less that of what was peek something like $40,000,000,000. So it's Yes. And then the other key pit was the associated income was obviously sold, the filler. That it is now about 18 months ago. And so that's that also has gone. So the 2 are essentially converged today. So it's more about the looking backwards question because today we are today core is the firm. Looking graph in the past. It really wasn't. And so associated with what's left. Actually, there were never very many costs associated with those income makers or a lot of nice income. Thank you very much everybody. Good luck out there.