Welcome to the Franklin Resources Earnings Conference Call for the quarter and fiscal year ending September 30, 2022. My name is Candice and I will be your operator for today's call. As a reminder, this conference call is being recorded and at this time all participants are on listen-only mode. I would now like to turn the conference over to your host, Selene Oh, Head of Investor Relations of Franklin Resources. You may now begin. Good morning, and thank you for joining us today to discuss our quarterly and fiscal year results. Please note that the financial results to be presented in this commentary are preliminary. Statements made on this conference call regarding Franklin Resources, Inc., which are not historical facts, are 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 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. With that, I'll 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 fourth quarter and fiscal year 2022 results. As usual, Matthew Nicholls, our CFO and COO, and Adam Spector, our Head of Global Distribution, are also joining me on the call. This month, we officially celebrate our 75th anniversary as a company. Our firm was founded on the values of advice, active investment management and helping people achieve the most important financial milestones of their lives. Since 1947, we have transformed from modest beginnings into one of the world's largest investment managers, and today we partner with millions of clients in more than 155 countries. Although much has changed in 75 years, we are proud to say we have a history of innovation and we have always maintained our commitment to evolve our organization to meet the needs of our clients and shareholders around the globe. Consistent with this, I'm pleased to say that we made good progress in fiscal 2022 on executing our long-term plan and further diversifying our business by expanding our investment capabilities and deepening our presence in key markets and channels. Since January, macroeconomic and geopolitical uncertainty have resulted in significant volatility and correlated declines in both global equity and fixed income markets. Our assets under management and flows were impacted by these unprecedented conditions and industry-wide pressures. However, as always, we have been actively engaging with our clients by providing insights and thought leadership to help them navigate the latest conditions, including drawing upon the expanded resources of our various specialist investment managers and the Franklin Templeton Institute. This fiscal year, notwithstanding flow pressures, investor interest continued in all asset classes. We benefited from having a diversified mix of assets and generated net inflows in the alternative and multi-asset categories and reduced net outflows in equities, offset by increased outflows in fixed income and steep market declines. In terms of our progress, we are more diversified than at any point in our history across asset classes, client type, regions and investment vehicles. Starting with asset classes, we continue to thoughtfully expand our alternative investment capabilities, which are an increasing source of client demand and can offer superior returns. Just a few years ago, we managed about $15 billion in alternative assets. Pro forma for Alcentra, as of September thirtieth, today we manage $260 billion or approximately 20% of our AUM in alternatives, and these assets account for an even higher percentage of adjusted revenues. This makes Franklin Templeton one of the largest managers of alternative assets. Speaking of Alcentra, we were excited to announce today the completion of our acquisition ahead of schedule. Alcentra is one of the largest European credit and private debt managers, and with this closing, our alternative credit assets under management nearly doubled to $75 billion and we expand our capabilities into Europe. We now have a meaningful portion of the key alternative categories, including secondary private equity with Lexington Partners, real estate with Clarion Partners, hedge funds with K2 Advisors, alternative credit with Benefit Street Partners and Alcentra, and venture capital with Franklin Venture Partners. For the fiscal year, alternative net inflows were $6.3 billion, including outflows in liquid alternative strategies. Our three largest alternative managers, BSP, Clarion and Lexington, each had positive net flows with a combined total of approximately $12 billion. There is tremendous opportunity in the democratization of private markets as individual investors are under-allocated to the asset class when compared to institutions. Over the past year, we have focused on product development and suitability, sales and marketing, and client education in the distribution of alternatives in wealth management. On the product side, BSP recently launched its first multi-strategy interval fund. Additionally, Clarion Partners Real Estate Income Fund and Franklin BSP Capital Corporation, a private business development company, were onboarded on two alternative Fintech platforms that offer direct access to financial advisors and individuals. Again, this is all part of our broader effort to enable more investors to benefit from diversification of private markets and other alternative strategies. In this regard, to complement institutional-focused resources within our specialist investment managers, we have created a dedicated alternatives distribution team that covers wealth management channels. In addition to being diversified within our alternative asset strategies, we also benefit from a broad range of fixed income, equity, and multi-asset strategies. In the multi-asset category, our flagship Franklin Income Fund, which has an approach that is adjustable to changing market conditions, generated net flows of $4.8 billion in the year due to increased interest from investors in Asia and Europe. Turning to fixed income, we benefited from a broad range of fixed income strategies with non-correlated investment philosophies, including positive net flows into U.S. income, intermediate, and highly customized. Notwithstanding the pressure in growth equity in particular, equity net outflows improved by 61% from the prior year, with positive net flows across a diverse array of strategies, including infrastructure, sector, emerging markets, all cap core, and equity income. From a client perspective, less than 3 years ago, retail investors represented 74% of our asset mix. Today, our business is balanced with approximately 50% individuals and 50% institutions. Furthermore, we continue to expand our private wealth management business and Fiduciary Trust International generated its eighth quarter of consecutive positive long-term net flows. Our firm is also diversified by geography, and our efforts to implement a regionally focused distribution model that has shifted decision-making and resources closer to our clients is yielding results. For example, we have seen an improvement in our non-US business, including a 70% reduction in long-term net outflows from the prior year. EMEA long-term net flows turned positive, and there was a significant decrease in long-term net outflows in our APAC region. Turning to diversification by investment vehicle, we continue to build on our strengths in delivering investment expertise through our clients' investment vehicles of choice. Similar to the industry at large, we are seeing strong demand for SMAs and ETFs in particular. We are a leading franchise in SMAs with $100 billion in assets, and this year we enhanced our position by acquiring O'Shaughnessy Asset Management and its custom indexing platform, Canvas, with positive net flows since acquisition. Today, our ETF AUM is in excess of $11 billion, and we continue to have positive net flows. Our ETF platform is differentiated with approximately 50% of our AUM in actively managed strategies. The evolution of technology in the industry continues to be another area of focus. This year, we made 4 minority investments in wealth distribution technology firms that expand access to private securities and/or digital assets to individuals. We launched the world's first tokenized U.S. registered mutual fund as well as two digital asset SMA strategies. In June, we opened a second Fintech incubator in Singapore and now have corporate investments in 14 early-stage companies separate from our venture capital funds. In January, we successfully launched the Hello Progress campaign globally to introduce a refreshed view of Franklin Templeton. The campaign reinforced the trusted relationships we have built with clients for 75 years, highlights the increased breadth of the firm, and reflects our commitment to finding innovative ways to meet client needs. Looking forward, we will continue to purposefully invest in key areas of growth across all geographies, including technology, alternative assets, customization, wealth management, and distribution initiatives that benefit all our investment teams. Of course, none of our efforts this past fiscal year would be possible without the hard work and dedication of our employees, of which I and our leadership team very much appreciate. Now, I'd like to turn the call over to our CFO and COO, Matthew Nicholls, who will review our financial results from the fiscal quarter and year. Matt? Thanks, Jenny. Fourth quarter ending AUM was $1.3 trillion, reflecting a decline of 6% from the prior quarter due to market depreciation of $62 billion and long-term net outflows of $20.4 billion. Reinvested distributions were $2.5 billion this quarter. Adjusted revenues decreased by 4% to $1.53 billion and investment management fees, excluding performance fees, declined 5% from the prior quarter both primarily due to lower average AUM which decreased 5% from the prior quarter. Adjusted performance fees increased slightly to $133.3 million compared to $127.1 million in the prior quarter. This quarter's adjusted effective fee rate, which excludes performance fees, was 38.8 basis points compared to 39.5 basis points in the prior quarter. The prior quarter effective fee rate was slightly higher as a result of the shift in AUM mix and the timing of the closing of Lexington Partners. Adjusted operating expenses were in line with the prior quarter at $1.04 billion. Lower compensation and benefits was offset by an increase in G&A, which included $8 million of episodic expenses. Adjusted operating income declined 13% from the prior quarter to $494.1 million and adjusted operating margin decreased to 32.2% from 35.3%. Fourth quarter adjusted net income and adjusted diluted earnings per share declined by 5% to $394.4 million and $0.78 per share benefiting from a lower tax rate in the quarter. Turning to fiscal year 2022 results. Ending AUM declined by 15% from the prior year, primarily due to market depreciation of $269 billion and long-term net outflows of $27.8 billion, reflecting an increase of 10% from the prior year. Reinvested distributions were $32 billion. While long-term inflows have been challenged in this risk-off environment, long-term outflows improved 11% from the prior year. Adjusted revenues of $6.5 billion increased by 2% from the prior year, benefiting from six months of Lexington and increased performance fees, offset by lower average AUM, which declined 2%. Adjusted operating expenses were $4.2 billion, an increase of 5% from the prior year, including the impact of our acquisitions and increased performance fee compensation, partially offset by expense savings. Excluding performance fee compensation and the impact of six months of Lexington, adjusted operating expenses decreased by 1%. This led to fiscal year adjusted operating income of $2.3 billion, a decrease of 2% from the prior year. Adjusted operating margin was 35.9%, 180 basis points lower from the prior year. Excluding performance fees, performance fee compensation, and the impact of six months of Lexington Partners, adjusted operating income decreased by 11%. Compared to the prior year, fiscal year adjusted net income declined 3% to $1.9 billion and adjusted diluted earnings per share was $3.63, also a 3% decline. As a reminder, our fourth quarter last year included a one-time tax benefit of $155 million or $0.30 per share. Reflecting challenging market conditions during the fiscal year, we strengthened the foundation of our business through prudent and disciplined expense management. Among other measures, we outsourced our global transfer agency function, simplifying our business while reducing future capital expenditures. This initiative follows the previously announced outsourcing of our fund administration and certain other technology functions. From a capital management perspective, we were able to close the acquisitions of both Lexington Partners and O'Shaughnessy Asset Management, make several minority investments, and return $773 million to shareholders in dividends and share repurchases, and ended the year with $6.8 billion of cash and investments of approximately level with the year earlier. We will continue to prioritize our dividend, purchase shares to hedge our employees' share grants, and review targeted acquisitions to reach our objectives at an accelerated pace. As Jenny mentioned, our acquisitions have been driven by goals to deliver a diversified range of investment strategies to more clients in more geographies and in vehicles of choice. This diversification has also added significant cash flow and led to new sources of long-term growth and income potential for our corporate shareholders. In this context, with the closing of Alcentra, we have further diversified our alternative asset capabilities, which are in aggregate anticipated to generate approximately $1.3 billion in annual management fee revenue, excluding performance fees. Given our global reach, financial flexibility, business model, and experience in execution, we're able to attract highly talented teams and partnerships looking for a combination of investment independence, support, and collaboration on a global and local scale to create new growth opportunities. Looking ahead, these factors position us well to capitalize on potential strategic activity in the sector. Now we would like to open the call up for your questions. Operator? Thank you. If you'd like to ask a question, please press star one on your telephone keypad. The confirmation tone will indicate your line is now in the question queue. If someone should require operator assistance during the conference, please press star zero on your telephone keypad. We will request that you limit to one initial question and one follow-up. Our first question comes from the line of Craig Siegenthaler of Bank of America. Your line is now open. Please go ahead. Hey, good morning, everyone. Hope you're all doing well. Morning. So, um- Morning. My question is on Alcentra's investment performance and organic growth. You know, I know this deal just closed, but I was interested to see how the investment performance has trended this year, and also how the fundraising and overall organic growth has also trended in 2022. Good morning, Craig. I think, look, we just announced the closing today, as you mentioned. We're very glad to be closing ahead of schedule by at least I think a couple of months. We're very happy with the team. Performance is good. We're now turning to execution with an emphasis on business growth opportunities for the future. I think the best way to describe it is that, you know, our teams together are gonna be in marketing mode quite quickly from here on. I think that's all we can comment so far. Great. Matthew, do I get a follow-up? I forget if it's one or two here. Yeah. Please go ahead, Craig. All right, perfect. All right. My next one is on kind of future liabilities given a very active period of M&A. Just remind us what the next few years look like in terms of liability items like earn-outs from the acquisitions you've already announced. Yeah, we have about $1.3 billion of deferred payments that are due on previously announced acquisitions over the next four years. We also have $1.4 billion of debt due over the next five years. Great. Thank you, Matthew. Thank you. Thank you. Our next question comes from the line of Bill Katz of Credit Suisse. Your line is now open. Please go ahead. Okay. Thank you very much. I think diamonds for 75 years, Jenny, if I did the math correctly, so congrats on that. Quick question just on expenses. Matt, normally in the press release or the supplement, you'll put some information there, sort of how to think about expenses. Given the new year, you got a lot going on, revenues are down, you got some deals. Can you give us a sense how we should think about the base expense outlook for fiscal 2023 and how to think about whether the fiscal fourth quarter is a jumping off point or we need to normalize and just how to think that through, if you don't mind. Yes. Thank you, Bill. First of all, you know, as you know, we don't usually give guidance on the revenue front because it's difficult to predict where markets are heading. Obviously that's a large portion of where revenues go with respect to percentages up or down. Obviously we want to just make the point that we're adding Alcentra from today, so that's about $35 billion under management to add to our overall AUM as of today. I would also increase our effective fee rate because of that and other mix shift that we expect to happen in the next quarter back to roughly where it was in the last quarter. Let's say the mid-30s. In terms of expenses, I'll go through the different line items to try and be as helpful as possible in terms of the modeling. This is for the first quarter, so first quarter guidance for 2023. I know it's very early obviously, but I'll try and give an annual view also in terms of just our expenses excluding performance fees. Starting with comp and benefits for the first quarter of 2023, this assumes performance fees of approximately $50 million for the quarter. We would expect comp and benefits to be essentially flat to the quarter that we just reported, the fourth quarter of 2022. Note that that does include two months of Alcentra, and it also includes $35 million accelerated deferred comp, which is an annual adjustment, let's say. Too, IS&T, again, first quarter 2023, we'd expect it to be flat to this quarter or to the fourth quarter 2022 inclusive of Alcentra, so around $122 million. For occupancy, first quarter 2023, again, we would increase that to about $60 million inclusive of Alcentra, and this reflects also a more normalization of return to office. G&A, we expect this to be elevated for the first quarter to approximately $160 million. This includes a one-time TA international outsourcing fee and higher placement fees. Following this quarter, though, for the future quarters, we would expect G&A to go back to approximately where we are at in the fourth quarter 2022 in the mid- to high $140s, but this is inclusive of Alcentra and likely continued occurrence of higher placement fees. It's also worth noting that G&A guidance also includes higher T&E as activity returns to more normalized levels. To put that into context, you know, just in the second quarter of 2022, our T&E was around $7 million. It's now $15 million, or it was $15 million in the fourth quarter. We expect that to probably rise to around $20 million going forward. We expect the tax rate for the quarter, as we've outlined in the executive commentary, to be 27%, which is usually elevated, and then for the year for it to be 25%-27%. In terms of the year, again, this is very early, obviously, but we thought this might be helpful, that we would say excluding performance fees, but including a full year of Lexington. Remember, last year was only six months of Lexington. So full year 2023 will be 12 months Lexington, so adds another six months. Eleven months of Alcentra as we closed today, so it's another 11 months. So that's an expense of an additional $225 million or something around that nature. Excluding performance fees, we expect expenses to be around $3.95 billion-$4 billion. Very flat to our expenses for 2022. Again, really absorbing all of the additional expenses that come with an additional six months of Lexington and almost a full year, or eleven months, of Alcentra. That's very helpful, very thorough. Thank you, Matthew. Then Jenny, maybe one for you, just in terms of you listed off a number of things you're doing on the retail democratization side. Can you just maybe level set, where you are today in terms of maybe the more major wirehouses, both in the US and your distribution partners globally, and where you might be able to sort of increase penetration or just see some market share opportunity? I mean, I'd say, you know, as we talked about, you know, it's complicated as far as it's not just about getting on the platform. There's a lot of education. We've done a couple of things. We have actually created a separate group that's staffed with specialists focused on, you know, the alternatives channel to be able to support the, you know, the wealth channel wholesaler, right? They can be pulled in, and they'll have a background in all the different areas. On the product front, you know, BSP has launched their multi-strat interval fund. Clarion Partners Real Estate Income Fund has had actually good traction. Up till now, they sort of smaller distributors, and we're now in due diligence with several other large platforms. You have to have a certain amount of size to be able to get on the larger platforms. They're in the process of doing their due diligence there. We partnered with both CAIS and iCapital. We're listed on both of those platforms, which are really important. I actually attended one of the conferences, and you know, the top comments from the financial advisors were, "It's so complicated to do the paperwork and the capital calls," and so it's really important that that is improved, and both CAIS and iCapital are trying to tackle that. We are now, you know, have our products listed on both of those platforms. We feel very good with the progress that we're getting and, you know, it's one of those where as the inflows start, you're able to then expand onto more and more platforms. We feel like we're at that inflection point where the big distributors are now doing their due diligence on them. Thank you. Thanks, Bill. Thank you. Our next question comes from the line of Brennan Hawken of UBS. Your line is now open. Please go ahead. Good morning. Thanks for taking my questions. On Alcentra, you in the past have spoken to their distribution capabilities and strengths. Are those primarily on the institutional side? You know, where does the penetration of the retail channel in Europe stand compared to the U.S.? What's that opportunity set like? Sure. I think what we're seeing globally is that the adoptions of alts as a more significant portion of the portfolio is occurring in every region we operate in. We see that in Latin America, we see it in Asia, the U.S., and EMEA. To the extent that Alcentra runs a lot of European-based product, we think that they have the best shot of increasing their penetration there in the short run. We're going about it the same way we are everywhere in the world. We think we have world-class institutional brands. We've got a wealth management distribution presence, and then what we're doing to boost Alcentra in that market is really to add specialists, so that there's a specialist team that works between the investment teams and the general sales force to make sure that we're telling the story the right way. Because as Jenny said, we think that success in retail alts is gonna be largely based on ease of access as well as education, and that's where we're putting a lot of our efforts now. Given that the transaction was just announced today, we're a little early in executing on some of that, but we're working on it now. Excellent. Thank you. I'll just add a couple of points to Adam's remarks. Each of our specialist investment managers that we've acquired in the alternative assets space has had an attractive organic growth rate profile based on historical performance and activity in the institutional client base. And so there's already that embedded growth rate as we acquire the firms. So the future potential is on top of that that Adam talks about. We expect a natural organic growth rate tied to the institutional side of the business, and then that to be boosted, as Adam mentioned, on more of the wealth management channels. The additional acquisition targets that we look at that will complete our sort of build out, if you will, of the alternative asset specialist investment managers are exactly the same. They're all institutionally focused with embedded growth rates on the institutional side, of which we believe there's some very interesting opportunities in the broader channels where Franklin can leverage. I'm just gonna add one more thing in that. You know, there's always a home country bias that people have when they're making investments. I can tell you know, our we're positive net flows in the EMEA region. This, you know, the excitement by the distribution team of just having, you know, local credit, private credit, it was really important to expand that capability. So we're optimistic there. Great. Thanks. The final thing, you can tell how excited we are about all. Yeah, here we go. I hit a live wire with this one. We're going on alternatives. Each of our alts firms is institutionally focused historically and has, you know, long-standing distribution. We are supplementing that with FT relationships where we have particular strength. We're seeing that benefit each and every one of our firms. Got it. Oh, sorry, FT? Franklin Templeton. Correct. Franklin Templeton. Yeah, got it. Franklin Templeton. Sorry. That's yes. That's obvious. Okay. Thanks for all of that. Really appreciate the thorough color. I'd love to transition to maybe a more mundane topic on expenses. Matthew Nicholls, thinking about the. I know you caveated it, right? Early days and whatnot. You helped us sort of quantify the what your expectation is for an uplift to T&E. And obviously it's an inflationary environment, and you've got Alcentra. But how much is Alcentra adding into that $395-$400 base? You know, how much do you have wiggle room in order to continue to grind that down through the year as we work through this very challenging environment? Yeah. Thanks, Brennan. So, on Alcentra, it's approximately $100 million. And as I mentioned, we expect to absorb all of that into our cost base. By absorb it, I don't mean cut it. We're finding other places within Franklin Templeton to be more efficient so that we end up with an attractive expense base given the very difficult market conditions. So wanna make that clear. We're not, you know, cutting costs over in London in the company we just acquired. This is how, this is where scale can matter, where we can find other places to be more efficient across the platform. I think what you're sort of getting at in a way is the margin. I think we do expect the margin to go a little bit down before it comes back up. I'll just point to a couple of important things. You know, 35%-40% of our adjusted expense base is variable with the market, but we're also very focused, and Jenny asked me to do this in sort of one of my new roles here, is to be very focused on the other 60%-65%. Even though 35%-40% is truly variable with the market and performance, you know, we do have other interesting areas to explore. You know, in a down market of this magnitude, it takes time for, I would sort of call it, carefully considered adjustments to keep up with the sharp revenue declines that the industry is facing, but while making sure that we remain competitive in terms of compensation and investing in the business. Investing in the business right now, given the evolution of change in our industry, is probably more important than at any time. It is extremely important to keep up with where things are heading. However, you know, we have already taken or are in the process of taking action, such as you know, pausing non-essential hiring. You know, we've announced a voluntary buyout, which excludes investment staff. That's, in our view, a very effective and fair way to downsize our head count. We have execution plans to introduce additional operational efficiencies across the firm, things like span of control, layering. You call it mundane, but it's extremely important to get these things right. In a firm of our size, we think we do have meaningful levers, and hopefully we've demonstrated in the past, you know, few years even when the markets were going up, you know, in addition to the savings from our merger transaction, you know, we've already outsourced various activities I mentioned in my prepared remarks. That's created efficiencies for our funds, importantly. Our fund shareholders have frankly benefited the most from the decisions we've made to outsource. Importantly, it's lowered future capital expenditures from a corporate perspective. This is all about, you know, lowering our future out. You know, capital outlay in operational areas that are not core to our growth. It also simplifies our company operations. By operating this way, by having this discipline, not just as the market deteriorated, but frankly over the last three years, you know, it's enabled us to continue to invest in, you know, wealth tech, alternatives, SMA customization, distribution, all the things that we spent a lot of time talking about. I think you'll see us continue to be very active strategically and investing in our business as a result of our ability to be able to reduce expenses even in this and keep up in this difficult environment. Thanks for all that color. Thanks, Brian. Thank you. Our next question comes from the line of Dan Fannon of Jefferies. Your line is now open. Please go ahead. Yeah. Hi, good morning. This is actually Rich Roy on for Dan Fannon. Just thinking about the macro setup for fixed income, you know, in the coming year, several of your peers have highlighted the potential for increased allocations to fixed income, you know, just kind of given the historically beneficial setup that we've seen. With the performance of certain flagship Western products that at least the ones that, you know, are visible to us, do you see them as the Western franchise as, you know, a share winner or loser in this environment? Then, maybe just adding on to that, you know, any color on the Brandywine and legacy Franklin fixed income sort of product sets would also be helpful. Adam, you want to take- Yeah. Thanks for the question. Yeah. We're thrilled about the opportunity for fixed income to offer more value to investors right now. Fixed income finally has yield embedded in and across all the sectors. We have about 121 fixed income composites that we can offer investors, and 45 of those are outperforming on the 1-, 3-, 5-, and 10-year periods. We have tremendously attractive fixed income in a range of categories. Core fixed income, core and core plus, we're obviously under pressure this year, but what we've seen is that we're able to compete really very effectively at the shorter end of the curve in credit products, in multi-sector, in global, and we're seeing significant wins there. Despite the performance, Western's core and core plus are some of our absolute biggest growth sales products with healthy pipelines, and we're excited for that to continue. A tough year in performance in some spots, but a really good fixed income lineup across the board. The other thing that we've been able to do effectively this year is to pivot out of fixed income securities to equity income strategies, multi-asset class income with our Franklin Income Fund, things like infrastructure income, and able to produce income without duration. To the extent that people are still worried about rising rates, we have other opportunities, but within traditional fixed income, a range of things that are exciting, and we are seeing increased demand from investors. Yeah, appreciate the extra context around that. If I may, just on the performance fees, obviously has been, you know, somewhat elevated the last two quarters at least. How might we think about performance fee eligible AUM and where that sits currently, obviously, with, you know, Alcentra now in the mix and, you know, what assets are below any high water marks? Just to get an idea of, you know, the going into next year. Yeah. I don't think we change our guidance on this. I realize that we have had another quarter of increasing or higher performance fees than we talked about on our previous call, the guidance we've given, which is around $50 million. I'll just say that, you know, about $55 million or so, the performance fees from the fourth quarter was from clients rebalancing or taking strong returns off the table, and this triggered, you know, an accelerated performance fee payout. I don't think we were too far above what we suggested we'd be at except for this acceleration through rebalancing. In terms of the performance fee, you know, what assets under management are our performance fees linked to, it's very much in line with the AUM that has been highlighted in our remarks, which is the full $260 billion. Of course, some of that's quarterly, some of it's annual. You know, the potential for performance fees in the future in our business is very significant. The $55 million of rebalancing related performance fees, let's say is not from a very large rebalancing, it has to be said. They produced a very strong performance fee and we're so far above the performance threshold in those assets under management that if there's other rebalancing, we will get higher performance fees. Again, I would just stick to the guidance that we provided. It's extremely hard to provide guidance on performance fees, as you all know. That doesn't mean we're not confident that our performance is very strong across all of our alternative asset specialist investment managers. Yeah, I think $50 million for, you know, modeling purposes is the right number. Appreciate it. Of course. Thanks so much. Thanks. Thank you. Our next question comes from the line of Ken Worthington of J.P. Morgan. Your line is now open. Please go ahead. Hi, good morning. How are you doing? This is Michael Choe for Ken. I just wanted to go back, follow up on the 2023 framework that was provided. I guess, you know, Matthew talked about investing in the business, and it's more important than ever. I guess my question is, you know, in terms of your intention to continue investing and diversify your business in terms of alts and wealth and fintech. I guess would your intention also be to increase or decrease, or even maintain the pace of investment, you know, when we think about the efforts to diversify the business as we look into 2023? In terms of if you define investing in the business in areas where basically we have very little operating income today that we expect to grow in the future, we're increasing that substantially for in 2023 because we think there's very substantial opportunities in the future. We intend to increase our investment in that area. I'll ask Jenny if you want to comment. Maybe I misunderstood the question, but here's, you know, we've, I think, been pretty clear on how we think about acquisitions from that investment standpoint, and our view is, I think we have the broadest lineup of alternative managers of any traditional asset manager, and I think you, if you just compare our performance fees, you know, to other traditional managers, you'll see the impact of that. Yet we still have some areas of gaps, things like infrastructure. Then, you know, we've talked about globalizing the various types of capabilities we have. If those opportunities came up, you know, we'd be interested. The other areas that we've talked about is, you know, increasing distribution, so any kind of investments that help us increase our distribution capability as well as the wealth channel. Those are the three that we look at. We would say that right now the bar is higher, because, you know, we're digesting some big acquisitions. On the other hand, and I think this is, you know, a product of a company that still has founder involvement and has been around for 75 years, we always keep cash available because we want to be opportunistic if something comes up, and we feel that we have that flexibility. We're also going to be very picky because we're really happy with the lineup that we have currently. Yeah. I'd just emphasize that, you know, number one priority, and I think Jenny just mentioned this clearly, is organic growth strategy internally. Yes. The question you had around are we increasing the dollar investments organically? The answer is yes, we are increasing those. In terms of the other activity around M&A, as Jenny mentioned, I think we've mentioned in our prepared remarks, we have $6.8 billion of cash and investments. That's roughly level with last year, exactly this time last year, after two important acquisitions and four minority investments and other investments we've made in the business. Now, of course, a lot of that is made possible through operating income, you know, cash flow and so on. But when we look forward and when you think about the guidance I just provided to you, we still have the room to make the organic investments, which is very important. Also, we have the room on our balance sheet to continue to make targeted acquisitions, which as Jenny mentioned, the bar is higher now. The level of interest in some of these things has certainly not waned in any way. Just to give you some color on, you know, kind of the organic investments, I mean, and these are all incorporated into Matthew's guidance. You know, the Alternatives by Franklin Templeton that we've set up is really newly staffed with expertise in distributing to the wealth channel alternatives, and that's a pretty substantial investment there. As well as we continue to invest in fintech and, you know, have investments in tools that can be leveraged by financial advisors. Those are not, you know, profitable on their own. They're profitable when you add the models and other capabilities to them, but you have to constantly invest. All of that is incorporated in, you know, our earnings guidance. Okay, great. Thank you. Thank you. Thank you. Our next question comes from the line of Michael Cyprys of Morgan Stanley. Your line is now open. Please go ahead. Great, thanks. Good morning. Maybe just coming back to Alcentra. Can you talk about where you see the most compelling opportunity set to accelerate the growth at Alcentra? Is that from retail distribution in Europe? Maybe you could talk about what actions you might take there with Alcentra to help them accelerate growth. Yeah, absolutely. I think the first thing we want to state is that they've got a really high-quality team on their own. We've met with them recently, and we think standalone they can do quite well. That being said, we have a huge footprint in the EMEA region. As Jenny said, we find there's a significant home bias, home market bias to all investors, retail and institutional. What we've seen with some of our other alternative capabilities that we try to distribute in EMEA is that there can be a desire for more European-based private credit. We think that is one of the areas where we can take our significant footprint in the region and add it to their institutional capabilities. I would say that in the wealth management channel, that is more greenfield. That's gonna be where there's fewer assets at play, where allocations are rising significantly. There, I think being an earlier player, focusing on education, focusing on making the placement easier, will give us a leg up there. The final thing I would note is that, while I think most of our alts managers are strong in the major markets, it really helps at FT, where we have a presence on the ground in over 30 markets. In some of those smaller markets where our alternative firms might not get to on their own, and we have significant relationships, that's a place where it can really boost distribution. I think the additional thing I would add to Adam's comments is I think it's important to note the fact that this transaction is one that we described as globalizing a specialist investment manager we already have in BSP. We're globalizing the business. Alcentra and BSP becoming part of a global team as opposed to a largely U.S. and a largely European business, you know, that helps with fundraising, it helps with strategy formation, it helps with talent retention and origination. It would just become a more interesting place for both investors, ideas, and talent. That was one of the reasons why we thought this was very compelling and why we acquired Alcentra. This is something that another. The point that Jenny mentioned a second ago around the bar being high, obviously the first thing we always ask ourselves is, can we do this ourselves? Can we build this business organically? There are some things that just frankly take too long to get to a leadership position or even to, frankly, gain credibility in a particular strategic area. In our view, it would have taken us too long to do this ourselves. We're delighted to acquire Alcentra and for that to help globalize our also outstanding BSP team and leadership. Great. Just a follow-up question, maybe more for Jenny. I I wanted to come back to the money fund that you guys cited as registered to use the blockchain. I was hoping you could elaborate on that. What's the timing and process look like to bring that to the marketplace? How an individual or institution may be able to access that fund and the benefits that you see there? Yeah. You know, it's a tokenized money market fund. Technically, you could go on the Apple Store and download the Benji app and have a wallet that accesses that money market fund. We built a transfer agency system on the blockchain, so all the shareholders' books and records are there. You know, I'm a believer that you will see '40 Act funds expressed over time, you know, in tokenized records. That will have an impact on things like ETFs and traditional mutual funds. If you think about a token, it can have a smart contract that prices all the underlying investments immediately. You can always have an NAV that's dynamic. Even ETFs are only priced a couple times a day. We did it because we think that this is an important space that's gonna happen over time, and we wanted to understand the marketplace there. We are talking to firms about how to leverage it. You know, you have to hold those tokens in a crypto wallet. So if that isn't part of your infrastructure as a distributor, it's not that valuable to you today, but it will be over time. We also did an investment in a company called Eaglebrook, and we have several strategies there where they are fundamental research on some of the coins in the marketplace. We think these two things ultimately converge where you'll have traditional sort of investment capabilities that are held in a token or coin, and you will have companies that will be reflected by a coin and investors will have both on their platform. I think it's really early stages in this. Great. Thank you. Thank you. Our next question comes from the line of Brian Bedell of Deutsche Bank. Your line is now open. Please go ahead. Thanks very much. Good morning, folks. First one, for Matthew, just a clarification on the 2022 adjusted expenses excluding performance fees. I know we use a formula for that typically, but do you have a precise amount, dollar amount for this fiscal year? You mean 23, Brian? No, 22, the actual adjusted expenses excluding performance fee compensation. All right. For the end of the year. Yeah. It's around $3.87 billion. So. 3.87. Okay. That, as you may remember in the last call, we guided to 3.9-3.95, and then I said we'd be on the lower end of that. We're actually about $35 million inside of our guidance. Perfect. Great. Then, Jenny, if I can ask you or Adam, just if you can give us an update on your view on sustainable or dedicated sustainable products at Franklin, maybe just an update on the AUM you have in those products. I realize, of course, ESG is utilized throughout the investment process across the firm, but what I'm trying to sort of get at is the actual dedicated products that have that as the primary investment objective. Jenny, maybe just your view on what's happening in Europe with Article 8 and Article 9 reclassifications, if you think that's going to accelerate or they're going to get maybe more disciplined and not raise the bar a little bit more to clear those hurdles. I actually think the way to describe kind of the ESG is actually looking at the European framework with Article 8, 9 and Article 6 because they do a pretty good job of defining it. You see Asia following it, and I think the U.S. will probably model the concepts around it. We have about $35 billion in 48 strategies in Article 8 and 9. They're in positive flows there. We were very conservative, I think, in our initial evaluation. Our compliance group was quite active in determining what would be categorized in those 6, 8, and 9. We feel very good about that. I think you're only gonna see more requirement around transparency and to document how your process is. You know, whatever you say, show us that you're doing it. Most regulators, you see it in the U.S., you see it in Europe, are saying, you know, "If you don't document and show us that you're actually doing what you say you're doing, we're not gonna give you credit for it." You see it with like the U.K. 2022 Stewardship Code. You know, again, it's all about kind of documentation there. I do think that there is a recognition of a couple things. One is that you should measure ESG considerations with risk to the underlying company and then portfolios to the risk of external externalities, and that often these get blended. I think you're gonna start. My gut feel is over time there'll almost be two different measurements for that. So I think that's a natural progression. I think that there's a recognition that, oh, by the way, we're fiduciaries, and so you need to consider returns in all of this, and that has to be part of the measurement as well. I think they capture that in the Stewardship Code, the UK Stewardship Code, you know, too. I think it's here to stay. I think it's just a natural evolution of transparency and over time better and better data and remembering that we're all fiduciaries. I will again remind that we are asset managers, not asset owners, so, you know, we are at the discretion of our clients as far as their desires, and we talk and educate them on things, but in the end it's their money. Great. Thank you. Thank you. This concludes today's Q&A session. I would now like to hand the call over to Jenny Johnson, Franklin's President and CEO, for final comments. Great. Well, I just wanna thank everybody for participating in today's call. Well, you know, once again, we'd like to thank our dedicated employees for their hard work this past fiscal year and their laser focus on our clients. We look forward to speaking to all of you again next quarter. Thank you. Thank you. This concludes today's conference. You may now disconnect your line.