Welcome to the Franklin Resources conference call for the quarter ended June 30th, 2022. Hello, my name is Danielle, and I will be your call operator today. As a reminder, this conference is being recorded, and at this time, all participants are in listening only mode. I would now like to turn the conference over to your host, Selene Oh, Head of Investor Relations for Franklin Resources. You may begin. Good morning, and thank you for joining us today to discuss our quarterly results. Statements made on this conference call regarding Franklin Resources, Inc, which are not historical facts or forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of known and unknown risks, uncertainties, and other important factors that could cause actual results to differ materially from any future results expressed or implied by such forward-looking statements. These and other risks, uncertainties and other important factors are just described in more detail in Franklin's recent filings with the Securities and Exchange Commission, including in the Risk Factors and the MD&A sections of Franklin's most recent Form 10-K and 10-Q filings. Now I'd like to turn the call over to Jenny Johnson, our President and Chief Executive Officer. Thank you, Selene. Hello, everyone, and thank you for joining us today to discuss Franklin Templeton's third fiscal quarter results. Matthew Nicholls, our CFO and COO, and Adam Spector, our Head of Global Distribution, are on the call with me. Since January, macroeconomic and geopolitical factors have contributed to global financial markets experiencing a period of volatility not witnessed in decades, with substantial drawdowns in both equities and fixed income markets. These declines have challenged investor sentiment and industry flows, particularly in fixed income. While our assets under management and flows were impacted by these industry-wide pressures, we continue to benefit from a diversified mix of assets. As investors look to reposition their portfolios, we've seen interest in our alternative and multi-asset strategies, which both experienced strong net inflows during the quarter. In addition, notwithstanding flow pressures in fixed income, investor interest remains robust across the asset class. Over the past few years, we've been very deliberate in transforming our company by expanding our investment capabilities and deepening our presence in key markets and channels. This diversification, combined with our financial flexibility, serves us well across market cycles and is creating broader sources of revenue, positioning our company for future success. This quarter, we continued to make progress building our alternative asset business, which is less correlated to public markets and a source of increasing client demand. We now have specialist investment managers that represent a meaningful portion of the key alternative categories. On April first, we closed the acquisition of Lexington Partners, a leader in secondary private equity, where current markets create further interesting opportunities. At the end of May, we announced the acquisition of Alcentra, and we are pleased to welcome the Alcentra team to Franklin Templeton. This acquisition was an opportunity for us to enter the European alternative credit sector at meaningful scale and globalize our current U.S. alternative credit business, Benefit Street Partners. As one of the largest European credit and private debt managers, Alcentra has approximately $38 billion in AUM, with global expertise across a broad array of credit strategies. Given the current challenging market conditions, we are pleased to have carefully structured the transaction to help mitigate risks. Alcentra has a strong team that will benefit from the scale, stability and cultural alignment of being part of a combined alternative credit specialist investment manager led by Benefit Street Partners' long-tenured and experienced senior management team. Pro forma for Alcentra's AUM, our alternative credit AUM doubles to approximately $77 billion and our aggregate alternative AUM increases to over $260 billion, representing 19% of our AUM and an even higher percentage of our adjusted revenues. As mentioned, this quarter's market environment challenged industry flows, and while we continue to benefit from a diversified mix of assets, we had third quarter long-term net outflows of $19.8 billion. Fiscal year- to- date, long-term net outflows were $7.4 billion. This quarter's continued market dislocation, rising rate environment and the need for inflation hedging has heightened investor interest in alternatives. Our net inflows increased to $2.1 billion this quarter and included outflows in certain liquid alternative strategies. Our three largest alternative managers, Benefit Street Partners, Clarion Partners and Lexington Partners, each had net inflows with a combined total of $4 billion. Fundraising momentum in this area continues. Our multi-asset net inflows were $1.6 billion, which represented the fourth consecutive positive quarter for the asset class. In this broad market sell-off environment where investors are focused on income generating strategies, we benefited from having strong income funds managed for yield with notable investment track records and customization strategies. The first half of 2022 saw the worst fixed income net outflows for the U.S. mutual fund industry since 2000, with six consecutive months of net outflows. While client interest in the asset class continued to be strong and our fixed income inflows increased by 6% from the prior quarter, net outflows were $14.3 billion, primarily due to certain U.S. taxable and muni strategies. We benefited from having a broad range of fixed income strategies with non-correlated investment philosophies, including net flows into taxable U.S. income, multi-sector bond, corporate, and enhanced liquidity strategies. Equity net outflows were $9.2 billion. This quarter, the risk-off environment impacted investor sentiment on certain growth strategies, which were partially offset by positive net flows into infrastructure, emerging markets, and sector-specific equity strategies. Consistent with what we've learned throughout our 75-year history, we've been front and center with our clients to help them navigate this period of high market volatility, rising rates and inflation, and fears of recession. In this period of uncertainty, the importance of thought leadership and active engagement have increased. Clients are looking to us to provide them with investment solutions focused on income, inflation-hedged, alternative, and customization strategies as they look to rebalance their portfolios and reallocate risk across a variety of asset classes. Last year, we shifted to a regionally focused sales model to meet the varying demands of our global business, shifting decision-making and resources closer to our clients. This quarter, we saw the benefits of geographical diversification outside the U.S. with improving net sales trends in EMEA and positive net flows in the Americas. Net flows for non-U.S. regions improved by 79% fiscal year- to- date from the year ago period. Touching briefly on our financial results, which reflect the acquisition of Lexington Partners, adjusted revenues were $1.6 billion, relatively flat from the prior quarter, and a decrease of 3% from the prior year quarter. Our adjusted effective fee rate increased to 39.5 basis points compared to 38.5 basis points the prior quarter. Expenses were flat quarter-over-quarter and a 1% improvement from the prior year quarter. Adjusted operating income was $567 million for the quarter, a decrease of 2% from the prior quarter and a decline of 6% from the prior year quarter. Our balance sheet position remains strong with total cash and investments in excess of $6 billion after upfront cash consideration of almost $1 billion was paid for the acquisition of Lexington Partners. Let me wrap up by saying that over the past several years, we've significantly diversified the firm to serve more clients across a broader range of investment strategies with deep expertise and specialization in both public and private markets through more vehicles across geographies. Although the current market landscape presents challenges for the investment industry and our firm within it, we are proud of the progress that we have made to date to help our clients in both good and challenging market conditions. Finally, I'd like to thank our dedicated employees whose hard work and commitment help people all over the world achieve the most important financial milestones of their lives. Now let's turn it over to your questions. Operator. Thank you. If you would like to ask a question, please press star one on your telephone keypad. The confirmation tone will indicate your line is in the question queue. If for any reason you should require operator assistance during the conference, please press star zero on your telephone keypad. We request that you limit to one initial question and one follow-up. Our first question is from the line of Glenn Schorr from Evercore. You may proceed. Thank you very much. Jenny, I enjoyed the prepared remarks on wealth management alternatives and everything that you're doing on the education front. I'm curious from a product standpoint, how you're thinking about just making drawdown funds available or putting retail-specific products in motion, specifically semi-liquid products that give quarterly liquidity. Because, you know, we've seen some hiccups lately as markets pull back and seeing gross sales free up. I'm just curious how you're thinking about the products that you're bringing into that channel. Thanks. Yeah. No, thanks. I mean, Glenn, you know this well, like the opportunity obviously in the wealth channel is tremendous, but it's really complicated, right? We're learning that through the process of it, you know, the first battle is to be able to get to the gatekeepers, and you're finding that there's a massive amount of education that you have to do. It's complicated to sign up clients. You know, we've made investments in companies like CAIS. We now have several of our products on both iCapital and CAIS. The education piece is a big deal, and so we're actually working with CAIS through our FP Academy to actually do education in the alternatives. You know, we have things like the BSP BDC, CP REIT is actually getting interesting traction in the RIA channel. You have to get some size before the wirehouses will put you on their platform, even if you pass their due diligence. It's really important that you have the relationships in the RIA channel. You may recall a small acquisition that we did in the private credit space that Benefit Street Partners actually purchased it, but it was they had experience in REIT with the RIAs. You know, there's a lot of fronts where you have to get it right to actually get the traction. We feel like, you know, our opportunity zone fund, which is on quite a few of the big wirehouses, CP REIT, the BDCs, we even have on our venture fund have managed to get that on some of the private banks. So, you know, those are the types of products that it's really more of kind of the interval fund, '40 Act fund. Adam, do you have anything you wanna add on? Yeah, Glenn, I just might add that when we talk about the distribution of alternatives to the wealth platform, yes, that's a broad strategic effort, but each platform is a little bit different. I think one of the things we've been able to do well over the last few quarters is to engage with kind of the head gatekeepers of each platform to say, "What type of a strategy is really best for you?" Some want perpetual, some want other things. Some want a product where there's gonna be a broad consortium of banks participating in the deal. Others want something that's more bespoke for their platform. We've really been able to be a little more specific about what we're offering on each platform, and I think that'll pay significant benefits. I appreciate all that. Maybe just one quick follow-up on. You noted there were fixed income flows since 2000. That's what it is, the market was a bit nuts. Now that we've gotten some reprieve in terms of the rate move, the spread move, as they've settled in, could we hope, and should we expect that fixed income, particularly U.S. taxable, settle in with those conditions? I'll start, and then Adam, you can fill in. I mean, interesting, some of our biggest growth flows are still into fixed income. While, you know, I think there's been redemptions and obviously much heavier redemptions on the retail channel than on the institutional channel, we still see strong flows into the asset class. That I would just say one thing that I'm not sure is fully appreciated, you know, we cover the spectrum on views in the fixed income market. When you look at Brandywine, the Franklin fixed income and Western, we actually. Their alpha generation only correlates 0.15 times, right? There's always something performing in that category. What you see is whether it's insurance companies or others, there is a need for fixed income types of investments and returns and income generating. Frankly, that may be in the private markets as well as the public markets. There's definitely demand there. Adam, you have anything to add? I would add, Jenny, a few things. One, the asset class is just more attractive flat out with higher yields, and it's less risky with lower duration. I think there's just a better beta to be had in fixed income. The other thing we've seen that is on the pension side, as we see folks a little better funded at this point, looking to LDI type strategies, which we're now offering, is another area where you might see some growth in fixed income allocation. That definitely makes sense. Thank you. Thank you. The next question comes from Ken Worthington with JP Morgan. Please proceed. Thanks. Hi, good morning. This is Michael Cho. I'm in for Ken today. I wanted to shift gears a little bit and ask a little bit about the recent launch of the blockchain-based money market fund. I realize it's been in the press for a little while now, but some time has passed. So I'm just curious, kind of a few things. One, I mean, what are kind of your just objectives of launching a fund on the blockchain? And then two, I think I saw it's on the Stellar chain, but you know, kind of what were your considerations when you picked that one versus Ethereum or versus a private chain? And then three, like, again, some time has passed. Are there any lessons learned you'd like to share so far? Thank you. Sure. One, we picked Stellar at the time, because Ethereum was something called Proof of Work, and Stellar was Proof of Stake. You know, the difference is you hear on the criticism of Bitcoin is all about what an energy drain it is, and that's 'cause this concept is you have to solve algorithms to be able to, you know, post on the chain. That's a big energy drain. Whereas we knew that that was gonna become more of an issue. Ethereum is trying to shift to Proof of Stake. Stellar was designed as Proof of Stake, and so we selected that. You know, we decided to build this money market fund, honestly, because we think there will be a convergence over time. These types of tokenized assets, I think they'll become securities, and they'll be regulated. Now, there's other countries that are further ahead probably than the U.S. in this. I think that there's gonna be a convergence, and we wanted to make sure that we understood it, and we were able to get in front of the wave. We think ultimately it'll drive down costs in this environment, so we'll be able to deliver the same kind of quality investment products at a lower cost when you build these types of things on the chain. Starting out with a money market fund just made a lot of sense. Honestly, we looked at it, and we still think it. Now you're starting to see it that some of the products that were deemed "stablecoins" that were yielding 7% and 8%, anybody who has an investment background knew that there was no way they could be a stablecoin. We just felt like it made sense for us to, you know, to come out with a money market fund. We worked with the SEC, I mean, literally throughout it as we both became educated on it. It took a while. You know, we are an approved '40 Act money market fund. Where it goes, well, you know, the market's gonna evolve as people get more comfortable with this asset class, or it's not even an asset class, with the technology where they can hold their tokens in a secure wallet, which is complicated in itself. You know, right now it's a lot of people kind of playing around in that space, but it will become more institutionalized. We can take all of these learnings. What we built on the Stellar system can launch other '40 Act funds. Again, it was just really a way to make sure that we're understanding disruption as it comes to our industry, and that we're riding the wave forward. Okay, great. That's wonderful. Thanks, Jenny. Mm-hmm. Thank you. The next question comes from Dan Fannon of Jefferies. Please proceed. Yeah, hi. Good morning, everyone. This is actually Rick on for Dan. I wanted to tack on to the fixed income discussion from earlier. Just looking at the data that we have available to us, and you guys have looked at this as well, clear that, you know, a sizable chunk of the deterioration you guys are seeing in outflows are coming from retail. But just like thinking about the large institutional base and nature of the Western franchise, could you maybe speak on trends and conversations you're having with that client base and platform more specifically? Thanks. Yeah. I mean, a couple of things. First of all, you know, in the past 10 years, Western has absolutely outperformed in nine of the 10 years. In the one year they underperformed, 2018, they crushed it in 2019 and made up for any underperformance. I always like to say be careful betting against Western. As a matter of fact, while it's a little early to tell, my CFO constantly reminds me that quarter- to- date, Western is in their top decile. You know, they're proving out that maybe their positioning could be right. As I said, from here managing the business, we're happy that we have really diversified perspectives on and products in the fixed income space with low correlation. Now, institutional investors have... Western has a lot of conversations with them. They understand Western. As a matter of fact, Morningstar just maintained their gold rating and talked about how they have, you know, high conviction on the investment team and that they're an excellent investment team. You know, I think we'll continue to be very optimistic. I think people slowed down for now, but I wouldn't be surprised. Yet, I believe the core plus is our top-selling from a growth sales fund. There's obviously still a lot of money going in there. Yeah. If you look at I appreciate the answer. -sales, we're up. Yeah. We're up quarter-over-quarter. Remember that core and core plus are about a third of Western's total AUM. They have a lot of other things that are doing exceedingly well. On top of that, even within the core and core plus land, we've got a very significant institutional pipeline. Understood. Thank you. That's helpful. Thank you. The next question comes from Alex Blostein of Goldman Sachs. Please proceed. Hi, Jenny. Hi, Matt. Thanks for taking the question. Maybe we could start with some of the dynamics and some of the numbers around the alts products for you guys. Obviously, with Lexington coming in, there's a couple of moving pieces. I was hoping maybe just to get a reset on what the fee-paying AUM is for the alts bucket. I think you guys give us total AUM, but I was hoping to get the fee-paying AUM, the management fees that are being generated by Lexington now that it's fully in the run rate, as well as the kind of the total alts bucket. Then on Lexington specifically, any updates you could provide us with from a fundraising perspective. I think they're in the market with Fund Ten, how that's going, what the expectations are when that fund, AUM will start coming into the run rate. Yeah. Sure. I'll take that one. Okay, perfect. You want to start, Jenny, and I'll go? No, no. You go ahead, Matt. Okay. On the management fee income from or the management fee revenue from the alternative asset managers that we have will likely aggregate something like on an annualized basis $1.2 billion-$1.3 billion. I think we've communicated that in the past, and that's consistent with what we said. That's about 50% up from the previous year. That excludes performance fees, of course, as we've explained. That's where we're at on the management fee revenues. I would say on the Lexington Partners that they are on schedule, despite the environment on their fundraising. If you're looking for an idea of what the overall alternative asset business is relative to the size of our franchise, you know, if we pro forma the business for Alcentra, for instance, you know, we're about 19% of our assets under management would be in the alternative asset space, 21% of revenue roughly, and probably up to something like a quarter of our operating income will be from alternative assets as a whole. Got it. All right, I'll hop back in the queue. Thanks. Thank you. The next question comes from Patrick Davitt from Autonomous Research. Please proceed. Hey. Hey, good morning, guys. Morning. There have been a lot of questions out there about you know the quality of the Alcentra business, given what looks like fairly stagnant AUM over the last few years, obviously some high-profile employee losses. I understand it looks like you got a very good price relative to what they were hoping to get and obviously put a lot of protections into that price. Could you flesh out a bit how you see you know the process of righting the ship there and getting back up to the level of growth we'd expect from a private credit manager? Yeah. Well, first, you know, I mean, the turnover that happened obviously happened all before the deal was announced, and it was really at the senior level. You know, I think that the area of concern was the direct lending, and the rest of the business has been growing very well and has had very good performance. I think it's important. There's a lot of noise around that, but I think that it's important to understand that was just at a very senior level, which is why there's an opportunity with the fact that we can roll it in with Benefit Street Partners that already has a good senior leadership team. One of the things that I think we understand really well and why we've been successful in acquisitions is we understand that you're buying an investment team and their investment process, and so it's important that you have retention. We've built in retention to ensure that we, you know, we minimize any kind of the future anybody leaving in the future. I think that what's really exciting is that our distribution in Europe has continued to improve. Now you take a product like this that we think, you know, is. Our distribution is incredibly excited about having private credit to be able to sell. Being able to bring these two things together, we are very optimistic. Adam. Yeah. Anything else you want to add? I would just say that Alcentra brings, you know, two things. That one is a product capability that's very European specific in addition to other products, but that really helps us out with our alternative franchise and a real distribution capability as well. Both of those things are additive. Yeah. I'll just end by saying, Patrick, that, you know, as you know, we study M&A pretty hard in the asset management arena, including both traditional and alternative assets. You know, we felt that globalizing, as Jenny just mentioned, globalizing our alternative credit capabilities by adding Europe is very important given the growth potential in across that region, frankly, both the U.K. and Europe. We concluded, while we like to grow things organically ourselves, you know, it's our number one priority is always to grow organically where we can. There are some things that just take too long to become a leader, too long to grow, too long to be relevant, frankly. In our opinion, it would have taken us perhaps a decade to create what Alcentra has become, just like it's taken, you know, 15 years to become what Benefit Street Partners has become. We just concluded that this was the best way to become a true global leader in alternative credit. That's why we did what we did. To your point on price, the price is driven a little bit around some of the uncertainty in the overall markets. But also it's just a function of how M&A can be structured. We've done that very carefully, and we've got a great partnership with Bank of New York that has a lot of upside participation in the growth of this business, and we expect there to be growth. As Jenny mentioned, there are multiple sectors, multiple strategies at Alcentra, and we expect that to continue post-closing into calendar 2023. I would just add, you know, during the due diligence process, as you can imagine, we checked on the reputation of the firm with the consultants and institutions, and we're very comfortable with it. We think they still, despite, you know, some of the headline stories around turnover, have an excellent reputation in the market. Great, helpful. Thanks. Just one quick follow-up. Would you be willing to give the total AUM and kind of this core flagship strategy that Western Asset's in so much of institutional that we can't see? I don't think we've got an update on that in a while. The core plus strategy or core and core plus strategy? The core and core plus. Yeah. Core plus together is about $150 billion. Thanks so much. Approximately at Western. Sure. Great. Thank you. Thanks, Patrick. Thank you. The next question comes from Stephanie Ma of Morgan Stanley. Please proceed. Hi, this is Stephanie on for Michael Cyprys. My first question is on expense and performance fee outlook. Hoping you can just give us an update or mark to market on expenses given lower AUM levels. Then performance fees, that continues to be much stronger than you had guided. Any color on that outlook would be helpful as well. Yeah. On overall expenses, I think in the last call, last quarter, we guided to $3.9 billion-$3.95 billion of adjusted operating expenses for the full fiscal year ended October 30. The update to that I would say is that we expect to be on the lower end of that. Instead of just saying $3.9 billion-$3.95 billion, we expect to be closer to $3.9 billion than to $3.95 billion. Remember, that includes Lexington. We a couple of quarters ago, I think I explained that, you know, we were in the $3.9 billion-$3.95 billion, excluding performance fees and excluding Lexington. Last quarter, we said $3.9 billion-$3.95 billion, excluding performance fees, but including Lexington. This quarter, we're saying $3.9 billion-$3.95 billion, excluding performance fees, including Lexington Partners, and we'll be on the lower end, we believe, all else remaining equal for the year. In terms of specifics around that, I think last quarter I guided to the different line items, and we'd expect those to be approximately the same. G&A to be approximately $140 million, occupancy around $57 million, and IS&T to be around $125 million. All those things are obviously inclusive of Lexington Partners. Our comp ratio, we've guided to around 45% for the year, and we expect that to also be at 45% for the year. In terms of performance fees. Great. We don't guide on performance fees, frankly. The way I've communicated this in previous quarters is to say that we think for modeling purposes, you know, $30 million-$40 million is reasonable. Obviously, we acknowledge the fact that we've been higher than that for a few quarters now. It's very hard to calculate where our performance fees are gonna be. All I'd say is that, you know, obviously, the reason why performance fees have gone up is because we're performing well in a number of our asset classes, both across real estate and credit and other areas. Frankly, it crosses about nine of our specialist investment management companies, although it's concentrated maybe in three. You know, it's because we're just getting larger in alternative assets. The potential to earn more performance fees is going up as we continue to increase our alternative asset business. I'm sticking with- Great. That's very helpful. Thank you. If I can just pose another follow-up here. We noticed a reference to the China JV of 12 billion of AUM. Hopefully you can expand on some of the initiatives there. Are there any plans to raise your ownership? What sort of growth are you seeing in that region? I believe that we have said that we, you know, we would like to expand our ownership in there now that the regulations have changed. We're, you know, in discussions to do that. We also have a wholly owned WFOE, which would give us other optionality, you know, if we were not able to buy 100%. You know, look, China is a massive important market. We were early, as far as, you know, firms, asset managers who did joint venture partners. We have unbelievably excellent performance, have had really stable investment teams there. We hired Dr. Ben Meng, who is our Chairman of Asia Pacific and is well connected. You know, it has been a profitable business for us. We think it can be much more meaningful as far as its contributions over the long run. Great. Thank you. Thank you. Next question comes from the line of Alex Blostein with Goldman Sachs. Please proceed. Hey, thanks for the follow-up. A A couple of quick ones here. I guess just going back to performance fee discussion for a second. You know, Matt, given the fact that it's gotten a bigger portion of the overall business model, maybe you can frame to us sort of the sources of performance fees that you saw this quarter and any kind of ideas on performance fee accruals that could be realized over time as investments kind of crystallize, or just to kind of get a better sense of what that or the bucket of potential performance fees could look like going forward. Yeah. I mean, a good portion of the increased performance fees quarter-over-quarter has been from our real estate franchise, Clarion Partners, where the performance has been outstanding. I'd say probably you know, a good 60% of it or something like that, and probably a higher percentage of the increasing performance fees that we've had is frankly just from performance thresholds being met. Quarterly you know, realizations of that performance has made the performance fees you know, accrue. I'd say that's the primary source of the increase in performance fees. You know, we wouldn't want to understate the performance of our credit business also that has led to, you know, performance fees and performance fee increases over the last two or three quarters in particular. It's really a combination of realizations, quarterly performance fee thresholds and annual performance fee thresholds. Maybe it's helpful to say that we think that our performance fees would probably peak at the calendar year-end, so that would be the end of our first quarter. you know, perhaps another useful point is out of our $127 million this quarter, approximately 70% of it is specifically quarterly performance fees. You know, you might be able to argue that something, you know, between $60 million-$70 million could, if we had exactly the same performance, next quarter or this quarter. You know, again, I'm not guiding you this way for modeling purposes. I've already explained how I'd look at that, but you could argue that we could, at least get up to $60 million-$70 million if we were to repeat that. Yeah. Okay. I got you. That's helpful. Another quick one for me, just around the balance sheet. Lots of moving pieces. Obviously, Lexington payments come out. You guys have contingencies coming up as well. How are you thinking about sort of the discretionary cash balance today? If you were to think about maybe both cash and investments, and you say, okay, how much of that is sort of truly available for corporate purposes or whatever else, and how much do you guys think you're gonna need to use towards future GP co-investment and GP balance sheet commitments, given the fact that your illiquids are getting bigger over the next couple of years here? Yeah. Firstly, out of our roughly $2.6 billion of investments, I'd say half of that is very liquid, highly liquid, like, well over $1 billion of it is highly liquid. It's been important to seed new funds in order to accelerate access to distribution opportunities. I think we've explained that we've got a very, very good multiple on that seeding in terms of the AUM that's been created from it. That's sort of number one. We wouldn't want to liquidate that, but we can recirculate that. We've got much more disciplined of not just letting seed capital sit in funds for, like, five years. Every year we're able to circulate several hundred million dollars, I would say, out of the $2.6 billion. A portion of that recirculation, Alex, is going into more of the alternative asset area. We probably have, you know, $800 million or something like that now invested across the alternative asset businesses that we have, which is more longer-term investments versus the rest is more shorter-term capital. Number one, we're getting better at circulating it even without increasing the $2.6 billion. Number two, you know, every year we are earmarking a meaningful amount of our income and our cash if we need to continue to invest in GP-level alternative asset opportunities. I should say that when we provide that commitment, we also allow our senior employees at both the alternative asset business and across Franklin to invest. We're getting so much interest from employees to invest in these areas that the actual commitment that Franklin ends up making off the balance sheet is reducing versus increasing. Again, if we don't have that interest because of general market conditions or something, Franklin is there, and we could expect that to increase meaningfully. In terms of the amount of cash that we think we have, so let's say excess cash or cash available to do you know further investing and including M&A, I'd put that in excess of $1 billion. Obviously, in this current market conditions, we are very cautious, very disciplined, and we think having cash on hand for opportunistic situations is gonna be a competitive advantage of ours. That's how we look at cash. We feel that we're in a good position with around $6 billion or more of cash and investments, discipline with circulating the investments, adding to it carefully each year. With the cash piece, you know, you mentioned upcoming acquisition-related payments. You're right. That's why we're conservative with it, because we do have $1.6 billion of acquisition-related payments over the next four years. We also have $1.4 billion of debt over the next five years coming due, which we can refinance, but we also like to be at a delever where it's when debt's getting more expensive. That's how we look at that. Awesome. Thanks a lot for all that detail. Sure. Thanks, Alex. Thank you. The next question comes from Brennan Hawken of UBS. Please proceed. Good morning. Thank you for taking the question. This is Adam Beatty in for Brennan this morning. Kind of a two-parter or multi-parter on alts distribution. In particular, we were wondering about some of the nuances of alts distribution in the European market, particularly for European retail and what you're seeing there. In kind of a separate angle, just wanted to get your thoughts on how much sort of product and distribution crossover you're expecting between Alcentra and BSP. Thanks very much. You know, I think, I'm not sure I know, you know, sort of the detail nuances other than there's a couple of just trends that are relevant everywhere for alts, right? We've talked about it before where, you know, you're just seeing companies waiting longer to go public. You're seeing less opportunities on equities to invest in. That universe has shrunk. I think banks, Basel III capital requirements have made it such that banks are much more careful with who they're choosing to lend to, which has created this proliferation of private credit. I think that is a direct response to some of the capital changes that have happened in the banking industry. You see meaningful excess returns in the private markets. There is such an opportunity to naturally bring that to the wealth channel. The problem is, it's a bit like running with scissors, where you've got these illiquid assets to often people who require it. Creating those types of vehicles is important and being really aware about how you do that. That's the type of thing our product development team is working on. Then same as in the U.S., it requires just a massive amount of education, plus the complexity of things like signing up for these. You know, big opportunity there, but it's a lot of blocking and tackling that happens before you really start to see the traction. I think in the U.S., we are finally starting. I mean, we've been talking about this for two years as a core priority, and we're only now starting to finally see that traction. We think it's going to be similar. Again, we all say Europe, but the reality is every country is different. You might have EU regulations, but then they get interpreted, and so it's actually even more complicated to bring the customized products to those markets. Adam, anything you want to add to that? Yeah. I would add that if you think about all of the transactions that Franklin Templeton has done, one of the real hallmarks of them has been a lack of overlap in product. As you get larger, that gets harder and harder to have zero overlap. In general, we feel really, really good about the transactions we're doing and how little overlap there is across the product set. I think there's also a real advantage of having a regional specific alternatives manager, which means that those products will be even more geared towards the local market. Two other comments I would add is that within Europe, there's really two different pieces of bringing alternatives to the wealth channel. One is really at the ultra-high net worth level, and the other is more at the mass affluent level. We want to make sure we address both. Finally, I would say sustainability continues to be a big trend around the world, but especially in Europe. In Europe, to the extent that you can add sustainability to your alternatives in the wealth channels, that's where I think the real growth will be. And to an- Sorry, go ahead. Answer your question about BSP versus Alcentra, very little overlap there. Are you planning to sort of be able to cross-distribute that? It's similar to what you've done with Legg Mason Legacy. Well, yeah. Well, There's little overlap, Adam, but the opportunity to work together, whether it's on transactions, flow with, you know, from a distribution perspective, helping raise capital together. I mean, there's really meaningful opportunities on a global scale with the two together. Obviously the relationships across two are also complementary. We think there could be some real, really interesting opportunities there as they work together. That's perfect. Thank you very much. Just to add. Oh, sorry. Go ahead. Okay. Well, I was just gonna say BSP was very, very U.S. focused, right? Alcentra had very little footprint in the U.S., a little bit I think on CLOs and things. You know, Europeans tend to like to buy. Everybody loves to cheer for their home, you know, home team. Europeans tend to like to buy European private credit, as opposed to, it's much harder if you can even do it, to sell U.S. private credit into Europe. You know, there can be global products. You can have some of the deals worked on together from a team. Some of the research can be shared. The good news is it was really hard for BSP to sell their products into Europe, and now we have excellent private credit to sell into Europe, and even Asia. Very interesting. No, thank you so much, Jenny. Appreciate it. Thank you. This concludes today's Q&A session. I would now like to hand the call back over to Jenny Johnson, Franklin's President and CEO, for final comments. Great. Well, I just want to thank everybody for participating in the call today. You know, once again want to thank our employees for their hard work and remaining focused on our clients, particularly in this type of market environment, and also for supporting each other. We look forward to speaking to you guys again next quarter, and I just say enjoy the rest of your summer and stay healthy. Thanks, everybody. Thank you. This concludes today's conference call. You may now disconnect.