Okay. All right. Well, to keep us on time, let's get going. All right. Good afternoon, everybody. Thank you for joining our next session. I'd love to welcome Invesco's President and CEO, Andrew Schlossberg, and CFO, Allison Dukes. Invesco is a $2.1 trillion asset management business with broad capabilities across equities, fixed income, ETFs, private markets, and multi-asset solutions. Over the course of 2025, the firm has made material progress on several important fronts, including further accelerating organic growth, improving operating leverage, and strengthening the balance sheet position as we obviously learned more about earlier this morning. Lots of momentum in the business, lots to talk about. So thank you both for being here.
Thank you.
Always great to see you. So why don't we jump in?
Thanks.
Excellent.
So, first, I would love to start by talking a little more on organic growth and really the nice momentum you guys have seen over recent years is really driven by, obviously, flows into your ETF franchise. That's been powerful. Active equities continue to be a little bit of a drag, but hopefully that's starting to normalize a bit as well. So, looking across sort of the breadth of products that you guys have out there, where are you focusing your resources in terms of driving organic growth further as you're looking to 2026 and beyond?
Yeah. First of all, thanks for having us. We announced asset flows for the month this morning, and that takes us up to about $75 billion of net long-term flows in the first 11 months of 2025. So the flow number's been quite strong. I think what's also been gratifying about it is it's quite broad. So whether that's across geographies, active, passive, and many of the asset classes, we're in positive flows. So the size and the depth and breadth. In terms of where we've been focusing our resources and where we'll continue to focus them is obviously where some of these big demand trends have been and where we anticipate they're going. T o name a few, I'd say one is around personalization in the wealth space, and that's not just a U.S. thing. That's an around-the-world opportunity.
So that's ETFs, in the passive format, but increasingly in the active format as well. So we'll continue to grow out our active ETF business, which is around $30 billion of the $1 trillion of ETF assets we have today. But it's also this personalization theme playing out in SMAs. And so we're continuing to invest behind our SMA franchise, which is now around $35 billion in assets, and it was about half that size, just three, four years ago. The second area or theme I'd say is around income, continues to be a major focus of our clients around the world. So, our fixed income franchise is about $680 billion in assets, and it's been growing, quite rapidly. So $30 billion of positive net flows this year, and that's from institutions and wealth. So we're gonna continue to focus on income and scaling that business.
The move forward into private markets and wealth, we announced the second of our partnerships that we've done this year, earlier this week, and that's building from our organic base of $130 billion in assets. So private markets into wealth and defined contribution. And then lastly, I'd say, is the international profile of Invesco. So, a bout 40% of Invesco's long-term assets are held by, with clients outside of North America, and it's been about 70% of this year's flow. So we're gonna continue to try to take advantage of our local position in Asia and in Europe.
Great. All right. Well, lots to cover there.
Lots to cover.
Lots to cover. So why don't we start to kind of unpack some of this? First, let's talk about the Qs. Obviously, very important development for you guys announced several months ago. Maybe give us a mark-to-market on where you are in the process with the fee change. Obviously, we saw some headlines, a few days ago or earlier.
Yeah.
Or, you know, last week, I guess, at this point, the deadline has been, I guess, extended. So where are you now? How close you are to kind of finalizing this process? And I guess, more importantly, aside from the financial impact that that's gonna have just on the P&L of the business, any other knock-on effects we could think about, from this transition, for the franchise?
Sure. So, we had a meeting scheduled for last Friday. We did not have the 51% of the votes that we needed by last Friday. So we adjourned that meeting, and we announced that we'll be reconvening the meeting next Friday, on December 19th. We also announced with that adjournment that, over 50% of the fundholders have voted, and over 92% of those that have voted are voting in favor of the proposal. So you can do the math. We are on our way. We are making progress. It is cumulative. So every time we adjourn the meeting, set a new date, the votes just continue to come in. The proxy solicitation effort is a pretty strong undertaking. Many of you have been on the receiving end, I know, of the phone calls, and the solicitation.
We do hope that we get to the 51% next Friday. If we do reach that 51%, we will then convert the structure over the weekend from a UIT to an ETF. On Monday, December 22nd, we will open trading as an ETF. At that point, the new revenue economics, and I can walk through those, w ould convert. If for any reason we still don't have 51% by next Friday, we will adjourn the meeting again. We will announce a new meeting date. You've got to set them at least two weeks, and we need at least two weeks to get all the mailings out again. So that would take us into January, and we will keep going, but we are making good progress. In terms of the economics, yes, just to maybe touch on that very quickly again, 18 basis points management fee. The fee on the fund will be 18 basis points. That will be a revenue, excuse me, a management fee, 12 basis points of third-party expenses against that for about a 6 basis point net revenue yield. Marketing is discretionary.
At the proxy we disclosed, we anticipate spending between $60 million and $100 million. That nets out to roughly four basis points to operating income. Where do we see it going from here? Look, I think the fund is well-known, well-marketed, and one that's of high interest to our investors. We are very optimistic about the opportunity to continue to grow that fund. I think the marketing budget that we will have to support it, which is an operating expense combined with our existing marketing budget, it's a pretty significant marketing budget to continue to invest behind that fund and all of our capabilities.
Great. The easiest way to stop the phone calls and stop the mailing.
Just to vote.
Is just to vote.
Yes. That is right. The phone calls do stop once you've voted.
Yeah. Public service announcement. Okay. All right. Let's talk a little bit about private markets. Sir, you mentioned that is obviously one of the key pillars you guys have focused on a s far as the firm's organic growth goes, over the next several years. Obviously, a big focus, not just for you, but really for the whole industry. Talk to us a little bit about the plans to expand your footprint here. You have a number of different solutions here, real estate being one of them. It feels like, you know, the momentum in private real estate is starting to show some green shoots. Starting to get a little bit better. Talk to us about how you envision growth in the illiquid parts of your old private market solution expanding over the next few years.
Yeah. So, our private markets solutions that we have today are around $130 billion in assets. It's about $85 billion in private real estate, made up of equity and debt, and $45 billion in alternative or private credit. Historically, those strategies have been owned for decades, and marketed to institutional investors around the world. Over the last several years, we've been taking those capabilities to wealth management platforms, in particular here in the United States. And so our real estate equity and our real estate debt strategies are now well-placed on most major wealth platforms here in the US, and we're continuing and starting to see momentum build. Alex, as you mentioned, in particular in real estate debt, we're seeing those strategies in the wealth platforms, really starting to spin. What we've been doing over the course of the past year is adding to that.
Starting in April, we announced a partnership with Barings, where we would co-manage private credit strategies together, launched by Invesco and distributed by Invesco's wealth platform. We've brought that first product to market now, in the fourth quarter, and we'll have a second product with Barings that we'll bring sometime in the beginning of next year to kind of build out that income offering inside our private market suite to sit next to real estate. Additionally, we announced yesterday a second partnership that sort of mirrors a bit the structure of Barings with LGT Capital. LGT is a $125 billion private markets asset manager, a very strong institutional investment reputation, and focused on private market solutions, secondaries, private equity credit.
And we're gonna be working with them, also in 2026 to launch at least two new strategies focused on that part of the private markets disciplines, both for wealth managers and for the defined contribution market in the U.S. So this is starting to build out the suite of products that we have in real estate, in income and in capital appreciation, same Invesco distribution, with specialists, same product chassis that we've built, and same reputation we're starting to develop in the wealth channels. Ultimately, we see that as an opportunity not just in the U.S., but to continue to grow in wealth in DC and Europe and in Asia as well. So we think it's all very early.
Yeah. Let's maybe dig into that a little bit more. You know, both with respect to the partnership and the product you guys are designing with Barings, there's also and as well as the new announcement with LGT and the two new strategies that you mentioned you guys will be launching in 2026. Just help us understand, I guess, what capabilities Invesco brings to these relationships.
Yeah.
Obviously, you have a very broad distribution footprint, and you know, we've seen other alternative managers wanting to partner with traditional firms. Really to tap into that sales force. But help me understand a little more, like, how the economics and the commercial m odel looks like with these products for you guys.
First and foremost, when we decide to partner with somebody, you know, we have some very careful criteria, and both Barings and LGT fit this criteria. I mean, the first is we really wanna partner with people that are long-term minded, have a real client focus, partnership ethos, not transactional. We want these to go on for decades. We wanna have partners that have complementary capabilities to Invesco, so we're not utilizing just our distribution. It's our capabilities with their capabilities and our distribution. Both of these firms complement what we do in real estate and alternative and private credit, and then lastly, and I didn't mention it before, we want partners that can show up with capital too.
And in both cases, you know, there's gonna be, you know, above $1 billion of capital, not just behind the products that we launch, but continuing to allow those products to be, impactful in the marketplace. So it's all of those things in combination, you know, that we're looking for when we set up these partnerships. We didn't disclose the economics, but the way that it works is that, as mutual investors in bringing these capabilities to market, we want best ideas to end up in those portfolios. And so we share economics equally in terms of the part of the, revenue stream that we apply to investments. And then as the distributor and as the product creator, and the operator, you know, we get part of the revenue for that as well but we really wanna make these presentable to clients where they're really connected to their best interest.
Got it. Okay. Makes sense, and that will be a combination of both Invesco's liquid capabilities as well as private capabilities underneath that.
Thanks for clarifying. It's gonna be Invesco's private capabilities. There could be opportunities for our public capabilities, but these are gonna be largely, you know, private market strategies.
Okay. So these are not, like, hybrid funds?
These are not hybrid funds.
Okay. Thanks for clarifying that. Okay. Cool. Let's talk about some of the other products segments. So talk about fundamental equities for a couple of minutes. Obviously, that's been a challenging area for the space from a growth perspective for quite some time. You guys recently announced a number of realignments in that business. Maybe give us an update on how you position this business on a go-forward basis. Any flow implications from some of the changes you've made? And ultimately, are there any savings we should be thinking about related to that business, on the back of the changes announced?
So earlier this year, you know, we took the decision to bring together our international, global, and emerging market fundamental equity strategies to a single complex, a single platform. Heretofore or thereafter had been separate platforms. We also took the opportunity to bring the talent together and consolidate around the top talent that we had. And all of that happened in June. We've, you know, taken that forward to clients. We've seen some pull forward of flows, in particular in emerging markets where we were, you know, seeking to make some changes, and we can talk a little bit about the stabilization of that picture. The reason we did it was to drive investment quality up.
And this was not about expenses. I mean, there is an expense impact, but this was about improving investment quality. We fundamentally believe in those categories in order to punch above our weight in terms of a flow rate in any environment. You've got to be in the top quartile at least. And we've seen improvement over the last few years. We have about half our assets in fundamental equity over a three-year basis now in that top quartile. We've seen positive flows in Europe and in the Asian regions in fundamental equities. And we'll see how we develop here over the next few years with the U.S.-based strategies. But this was really about creating a rock-solid investment platform in these highly competitive spaces so we can win in the future.
I would say on the expense side, I mean, there were some modest expense savings, but those are in the run rate. Those teams were combined in the second quarter, and so in the third quarter, you could see any savings that were there really fully phased into the run rate just continues to create that streamlining opportunity for us.
And all the flows that we've been producing since then as an overall business, despite some of the challenges, have obviously been overwhelming that in a positive way. We continue to grow through some of these challenges.
Yeah. And it sounds like the good news is that global equities as a category, particularly outside the U.S., from outside the U.S. investors, are starting to get a little bit more attention. I mean, it kind of resonates again with your comments around Europe and Asia as well.
Yeah. I mean, the flows in particular in places like Japan where we have a global equity strategy there. It's the top flowing global equity strategy or equity strategy in the Japanese market. And that's been, you know, continuing for the last few years. And we are seeing more demand come from European and Asian clients in general, not just in global equity.
Yeah. Great. Let's, let's talk about non-U.S. a little more. Just zoning on China, obviously an important segment for you guys. Over $125 billion in assets. it's been a notable differentiator for Invesco f or quite some time. Al so seeing accelerating growth recently, which has been obviously a welcome move. Maybe help us understand what are the key kind of fundamental trends you're seeing on the ground in that market and your expectations for kind of future organic growth in that part of the business.
It's a domestic-to-domestic business. I n our release this morning, you could see it. It's over $125 billion in assets, high watermark. It's been flowing quite well, about $15 billion in flows through the first nine months, which has been incrementally improving quarter- on- quarter, so we do feel like some momentum back in the domestic Chinese investment market and economy we're seeing. I think we're seeing disproportionate benefits because we've been there for 22 years in this JV that we've had. We're the number one JV in the market. We're cracking the top 10 of retail asset managers, and we believe in the long run in China needing to develop its capital market and its retirement market, and we're well-positioned. From an on-the-ground perspective, it's been a stimulative kind of environment. The market's been strong this year in that equity market.
I'd say Chinese retail investor confidence is improving, but not, you know, nearly where it had been, and most of our flows we're seeing is in sort of balanced strategies, so they're coming up from fixed income, you know, tiptoeing into equities, but not fully there but the business has continued to grow, pretty well.
I'd say notably too, there, historically, if you rewind several years ago, a lot of the flows were coming from fund launches, and that's not the case today. Less than 20% of the flows would be coming from new fund launches in any given quarter. So, you know, it is really a well-built platform at this point, in terms of the breadth of funds and capabilities that we have. When we do launch new funds, more and more so they're ETFs, as ETFs are still in the earliest stages in China.
And I'd also say it's a very digital-oriented client base. And so, you know, about a third of the client engagement is through digital, you know, digital platforms.
Got it. Great. Okay. Andrew, one of the other growth initiatives you talked about earlier on is fixed income, just leaning into, again, the kind of income-oriented part of the structure. You guys made a lot of progress there. I mean, if I can think about your fixed income offering over the last couple of years, and I know it's been an initiative, it's great to see the kind of flows that you've been delivering over the last 12 months or so. Talk to us a little bit about how you guys are positioned for maybe some of the eventual rotation into fixed income assets. It's starting to happen finally.
But presumably with lower interest rates, you know, there's more to go. How are you positioned? Which strategies have the right track record in place correctly, and really have enough capacity to pick up, you know, a more sizable chunk of those flows?
Yeah. So there's plenty of capacity. Like I said, it's about close to a $700 billion platform that ranges from, you know, money market funds, short duration, all the way out to loans and eventually into private credit. So there's plenty of opportunity. I think one of the things we've been seeing is it coming in all different chassis or product vehicles. So places where we've seen beyond just moving from shorter duration to longer duration is seeing it in different formats than we've seen in the past. So I mentioned SMAs before. That's almost all been fixed income growth.
Again, some short duration, but mostly moving out the duration curve. Institutional investors in particular in Europe and the UK, you know, bringing more investment-grade strategies and more at mass and in bulk, and we're really starting to bring together the consolidation of their fixed income mandates, you know, towards us because of the breadth of that platform. ETFs, you know, we're seeing it get delivered not just through active, but through passive, and then I mentioned China before. You know, we're seeing it flow through China. Anything else you'd add? Yeah, so it's pretty broad-based.
We are seeing money start to come off the sidelines, but you know, cash balances, especially in wealth and retail, as you all know, are still you know, close to 20%. So there's room to grow there.
Yeah. And there's still obviously a lot of cash on the sidelines for sure. Okay. Why don't we pivot to a couple of P&L dynamics to talk about expenses and margin for a couple of minutes. Allison, I think this one's probably for you. So when we kind of zoom out, expenses have been really well-managed in the last several years now. You know, despite the fact that revenues have obviously been improving, both from beta and organic growth, that's been really encouraging to see. What, in your view, is kind of longer-term philosophy around expense growth, maybe perhaps the breakdown between fixed versus variable and how that might evolve over time? And then I guess looking a bit closer into 2026, you also have a couple of divestitures that are gonna impact both the margins and the expense growth.
I know there's a lot packed in there, and we can probably double-click on a few of these things. However you wanna take it, but that's the general direction of the question.
Let's talk maybe a little more zoomed out. So, one, I just I'll start with our focus is on continuing to improve our operating margin. We've been on a journey to get back into the mid-30s with a real goal of getting back into the high 30s. So I'll start with our objective is to really continue to create this positive operating leverage. You've seen us demonstrate that the last couple of years. We're pleased with the progress, but we're not where we wanna be yet. So still a lot of opportunity before us. With that in mind, the expense discipline that we've created in the firm with that remixing of the expense base, that's going to continue to be important.
As we continue to drive this organic revenue growth, we're gonna be very thoughtful about that expense base. We have been able to make real progress as we continue just to simplify the structure, really streamline our operating platform, look at places where we can unlock expenses. You noted some of the fundamental equity changes earlier this year. We remix that into some other place. You can't really see the expenses go up or down because we're being very thoughtful about unlocking expenses and driving investment in other places where we think we can get faster revenue growth. We'll stay on that path. Maybe double-clicking into a few of the drivers. One, Alpha, we are on a journey to complete our implementation of, both our hybrid approach next year of Alpha and Aladdin with a goal of finishing that implementation by the end of 2026.
We've been disclosing our implementation costs every quarter. We've been running in that $10 million-$15 million range. I anticipate that continues at least for the first half of next year. As we get closer and closer to fully migrating all of our AUM over, I think we'll have the opportunity to continue to look at that expense base. Where might there be some opportunity to take some expense out and/or reinvest those expenses against other future opportunities we have as we think about other future tech investments and the never-ending need to modernize our tech stack as we all have, so I think, you know, that at a highest level is how we're gonna continue to think about really maintaining a well-managed expense growth, expense base. There's going to be some modest inflationary growth in there. Our variable component is around 25% right now.
It's largely compensation. There is some AUM-driven growth there. That's on an unmanaged basis. If we had to go really take cost out, we'd go further than that. Then let's talk about maybe a couple of the divestitures. Yes, both the sale of intelliflo that closed November 1st, and we sold 60% of our Indian asset manager that closed on October 31st. So inside of the fourth quarter, we've got a lot of changes. We'll have an opportunity in January to probably disclose even more, going forward. intelliflo, that was about a break-even business, if not losing $1 million-$2 million a quarter. So a little bit of a margin improvement there. The geography change really as India now becomes a minority interest for us. So. You'll still see 40% below the line there.
Yep. Yep. If you think about that fixed expense base, because that's where you were really kinda trying to, you know, both reinvest but also re-engineer and kinda f inding efficiencies, what inning do you think we're in there, right? I mean, it feels like and it sounds like it's a continuing journey for you guys, and is the goal to get this to say, hey, look, this is gonna be like a 2%, 3%, 4% kinda? What is the sweet spot for that fixed expense base to grow over time for Invesco?
Look, I think with just general inflation, and we all deal with it, whatever your fixed expense base is, and that looks like everything from your properties around the globe where you've got 2%-3% sort of inflationary pressure, all your third-party expenses. I mean, you tell me what inflation's gonna be, and I'll tell you probably about where that expense growth's gonna be, but let's call it 2%, 3%, 4%.
I don't think that's an unreasonable range over the kind of medium term. Underneath that though, it really is a journey as we continue to scale our capabilities of holding some of those fixed expenses constant. I mean, I'll, I'll point to our passive AUM, including the Qs. That's over $1 billion, excuse me, over $1 trillion, now. The fixed cost against that, there's very little we need to continue to increase in the fixed cost against that. So it's really driving scale over those installed platforms, and we think that's where we've got the opportunity to continue to create this positive operating leverage.
Yeah. I mean, the simplification efforts that we've been on over the last couple of years, as Allison was saying, we've been reinvesting for growth, and a lot of the growth we're seeing right now is a function of, you know, things that we replotted while keeping expenses pretty moderated, and I think that's become habit in the culture of the company, and I think your point about we're gonna continue to just keep recycling towards growth areas, while being thoughtful about the expense base, like that's gonna be every year
I'll say this, and we'll move on. You know, if you look at our AUM relative to our headcount, we've almost doubled our AUM on the same headcount as to where it was five years ago. That's before you're gonna see headcount come down with a couple of divestitures we just talked about. But like- for- like, we've been able to do that. Now, could we double AUM again on the same headcount? I don't think so.
But that's where we've been really thoughtful around what are the productivity enhancements that are out there? How do we take things that were done three different ways around the globe and do it one way, one time? Where are we on that journey? I do think it's continuous improvement. I don't know that there's a destination. I think it's an instilled way of working now.
Yeah. That's great. Awesome. All right. Let's move on to capital and balance sheet for the next couple of minutes. That's been also really another great part of the story for the last few years with a little bit more from this morning on the announcements of the preferred redemptions. So why don't we spend a couple of minutes on that? A, maybe discuss what you guys have announced this morning. Timing around that would be helpful as well. And then secondly, as you look forward, maybe help us kind of outline capital priorities now that the preferred has been, you know, redeemed to a substantial amount, plus you guys have reintroduced the buyback. Where does kinda the capital return priority sit from here?
Sure. So this morning, we announced that we've entered into an agreement with MassMutual to repurchase another $500 million of the preferred. That is on the back of the $1 billion that we repurchased in May of this year. So we anticipate closing that next week. We will repurchase this one with a combination of cash and a draw under our revolver. Today, we have a $2.5 billion revolver that is unfunded. The $1 billion that we repurchased in May, we financed that with two term loans, one of which we've already repaid. So that $500 million three-year term loan, we fully repaid that at the end of October, leaving $500 million remaining. This next $500 million will be a combination of cash and revolver. And then in January, we actually have a $500 million note that comes due, and we'll be redeeming that note in January.
We will have eliminated over $1 billion of debt by the time we get to the end of January in about a six-month timeframe, s even-month timeframe, so we are making meaningful progress. That will leave $2.5 billion on the preferred, puts us on a path next year to start to get closer and closer to one-times leverage. And that starts to feel like a more comfortable place to be.
Maybe not the final destination, but as I think about next year, certainly gives us plenty of breathing room while making sure we still have ample opportunity to reinvest in the business. So I think it's important even with the leverage profile we were carrying, we never stopped investing in the business. So we were really balancing our capital priorities of investing against our products, investing against CapEx, making steady progress on the balance sheet, returning capital to shareholders. As we move into 2027, we certainly have made progress on the balance sheet. I think you'll see us continue to invest in our own capabilities. We've got, in addition to the product, capital that's coming with these partnerships, we've got our own opportunities to continue to invest against some of our product launches.
And on the capital to shareholders, we did restart buybacks on a pretty steady basis about six quarters ago. We've been buying back $25 million a quarter, about a 60% payout ratio in 2025. We would anticipate targeting about a 60% payout ratio going into next year. So again, giving us the opportunity through modest increases in the common dividend, you know, continuing on this buyback path, I think we'll make some good progress there too.
That's great. No, it was definitely great, great to see. Why don't we talk about M&A a little bit? Obviously, you stabilizing the balance sheet or improving really the balance sheet capacity there has been important as we've seen for the last couple of years. You guys really weren't involved in really much M&A for the last several years for, for the right reasons, I would argue. Given where you are today, given some of the momentum you're seeing in the business, particularly within the old franchise, how do we think about M&A? How important it is, how critical is it to grow over the next few years? Or should we be thinking about more of these similar type of partnerships as opposed to full-out acquisitions as kinda the way to kinda branch out into newer things?
Yeah. I would say, look, we've got a pretty well-built-out suite of capabilities at this point. And in addition to the capabilities, we're really in all of the markets and the regions we wanna be in. So we're starting from a place of real strength. And we didn't participate in a lot of M&A the last few years. We didn't really need to do a whole lot. So as we look at our strategy from here, we're not opposed to it, but we also think we've got a lot of opportunities to continue to enhance our capabilities with some of these product partnerships that we've announced with Barings and LGT, namely, and the opportunities that are out there. I think we can do that in a very capital-efficient way, in a shareholder-friendly way.
We also, I think, have demonstrated really the opportunity we have with our platform, just the organic revenue growth, the flows that we've been able to demonstrate with the capabilities we have. We feel pretty good about the comprehensive suite of solutions we have. So, you know, from here, I think, look, it's great to have our balance sheet in a better place. It gives us a leverage profile where we could be more opportunistic. Our currency is improving at the same time. That was part of the objective. I'm not sure that there's anything, you know, high on our list, but we've got ourselves in a much more offensive position now.
We really view these partnerships as strategic, both the two product ones that we announced and, not to mention, the new JV we have in India. And the existing JV we have in China. So, you know, this route of partnership for us is not transactional. It's strategic.
Yeah. That's great. Look, with a couple of minutes left on the clock, maybe zooming out a little bit, we've talked about a lot of things. Andrew, we'd love to get your thoughts on 2026 priorities. Again y ou guys have accomplished a lot. 2025 in particular, I feel like, has been a really phenomenal year for the firm.
It's been a long year.
On multiple fronts, so if you deliver in 2026, what you did in 2025. I'm not sure too many people will complain, but what's up, what's top of mind for you for next year?
So, we put a multi-year strategy in place, you know, a year or so ago, a year or two ago. In 2026, you know, we need to continue to carry out that strategy. It's gonna be a focus on a lot of the news we just talked about over the last half hour and that you've seen us do this year, pointed into those key areas. It's also taking advantage of the work we've done the last few years, simplifying the company so we can pull through a lot of what Allison was talking about, prove the operating leverage, continue to improve the operating leverage for the company, use the balance sheet flexibility that's now been created to generate returns and return capital to shareholders.
In terms of the key initiatives I kinda clicked out on at the risk of being redundant, we really see an opportunity to continue to improve investment quality in the fundamental equities and continue to improve the retention rate, and in some areas, the growth rate. Those are key capabilities in fundamental equities, and that's something we wanna pull through. Continue to get scale in the capabilities that are where there is sort of secular change that's going on and where we have enormous strength: ETFs, SMAs, models, fixed income, just to name a few. We've done a lot of the work to set ourselves up for success in the private markets platform into wealth in the U.S. We wanna pull that through. We wanna start to find those opportunities internationally as well, not to mention defined contribution. And then we wanna complete the Alpha work in 2026 that w e've stated that we're intending to complete, partially because we wanna get that work done and mostly because we wanna start to get the benefits out of it, not the least of which is continuing to advance in our innovation work and in our technology benefits, not so much just for efficiency, but for effectiveness too. And so, you know, we hope we expect to have the kind of momentum that we built in 2025 into 2026. And, you know, we have a lot to execute, and I'm super thankful for all of your interest in the company. But all the work that our employee base did this year has been pretty phenomenal.
Yeah. Well, lots to do on that list though, but we're excited to watch you guys continue to execute. So thank you for doing it.
Thank you.
Thank you for sharing your thoughts with us. Appreciate it.
Thank you.