Welcome to Franklin Resources' earnings conference call for the quarter ended March 31st, 2024. Hello, my name is Sylvie, and I will be your call operator today. As a reminder, this conference is being recorded, and at this time all participants are in a listen-only mode. I would now like to turn the conference over to your host, Selene Oh, Chief Communications Officer and 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, 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 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 results for the second fiscal quarter of 2024. I'm joined by Matt Nicholls, our CFO and COO, and Adam Spector, our Head of Global Distribution. We'll answer your questions in just a few minutes, but first I'd like to review some highlights from the quarter. In terms of public equity markets, 2023 was, to some extent, a tale of two markets: the Magnificent Seven and the S&P 493, with the former contributing the lion's share of returns. So far in 2024, in the public equity markets, we've seen a significant dispersion emerge in performance among the Magnificent Seven, leading to a better environment for fundamental research to capture alpha and, when augmented by robust risk management, can deliver compelling portfolio results for clients. Given the current backdrop, we believe equity allocation should, in general, tilt towards sectors and regions that are being overlooked due to the heavy concentration in the largest companies. In addition, the theme of artificial intelligence will likely continue to be a significant stock driver, both positive and negative, for the haves and have-nots over time. Meanwhile, on interest rates, consensus estimates currently indicate a notable decrease in the number of expected cuts for 2024 by the Federal Reserve from 6 to now 2. Fed speak increasingly signals openness to delaying rate cuts to later in the second half of this year on the back of improving economic growth and slower disinflation. Against this background, while cash may continue to look attractive in the very near term, fixed income opportunities will likely provide a better total return option over high-yielding cash equivalents as the cutting cycle commences. Looking at private markets, secular trends and macro tailwinds continue to create opportunities in Alternative credit, secondary private equity, and select areas of real estate. In addition, investor demand for private market exposure is increasing given its diversification benefits, potential for higher risk-adjusted returns, and as a hedge against inflation. Broadly speaking, these signals point to a complex market environment that creates opportunities for active managers. This quarter, my executive team and I had the opportunity to travel extensively outside the U.S. to meet with many of our key clients to hear firsthand what is top of mind and how Franklin Templeton can better serve them. As a global active manager with $1.6 trillion in assets under management and operating in 35 countries around the world, we believe that Franklin Templeton is positioned to take advantage of the money in motion by assisting our clients with a broad range of investment capabilities across public and private assets in vehicles of choice. We were also pleased to learn that our clients recognize the steps we have taken over the past few years to further diversify and strengthen our presence in important markets and distribution channels outside the U.S. We again saw aggregate positive net flows in non-U.S. regions, which now have approximately $490 billion in assets under management. Furthermore, a number of our clients continue to progress toward working with fewer asset managers and, in this regard, expect not only a broad range of investment capabilities but also other services including technology, portfolio construction, customization, and thought leadership. At Franklin Templeton, we leverage the skills of multiple specialist investment managers to deliver expertise across a wide range of investment styles and asset classes. Our investment teams benefit from Franklin Templeton's scale with centralized investments in content, technology, data, and most recently artificial intelligence, where we're excited about collaborating with leaders in technology on AI platforms. Moreover, the diversity of our model benefits our corporate shareholders given that no single specialist investment manager at our firm represents more than 12% of adjusted operating revenue, and most of our specialist investment managers are diversified within themselves as well. Turning to highlights from the quarter: ending AUM increased by 13% to $1.64 trillion from the prior quarter and increased by 16% from the prior year quarter due to the addition of Putnam, as well as positive markets and net inflows. Average AUM increased by 13% and 11% to $1.58 trillion from the prior quarter and the prior year quarter, respectively. Investment performance continues to be strong and resulted in 62%, 51%, 62%, and 69% of our strategy composite AUM outperforming their respective benchmarks on a one, three, five, and ten-year basis, benefiting from the addition of Putnam. In terms of mutual funds, investment performance resulted in 51%, 60%, 44%, and 56% of mutual fund AUM outperforming their peers on a one, three, five, and ten-year basis, and performance strengthened versus peers across the three, five, and ten-year time periods quarter-over-quarter. Our long-term net flows were $6.9 billion in the quarter, including reinvested distributions of $3.1 billion, and $13.7 billion was funded out of the $25 billion allocation from Great-West. Long-term net inflows were spread across asset classes, investment vehicles, and geographies. Fixed income, multi-asset, and alternative assets led the way from an asset class perspective, and we continue to see growth in our separately managed account, ETF, and Canvas offerings. Each have achieved at least four consecutive quarters of net inflows, and all are at record high AUM. Long-term inflows of $85 billion increased by 23% from the prior quarter and 37% from the prior year quarter. Excluding reinvested distributions, which are seasonally elevated in the prior quarter, and inflows from Great-West, long-term inflows increased by 17% from the prior quarter and 15% from the prior year quarter. In terms of flows by asset class, fixed income net inflows were $8.3 billion. We saw client interest reflected in positive net flows into core bond, highly customized corporate bond, multi-sector, municipal, and high-yield strategies. Equity net outflows were $5.3 billion. We saw positive net flows into large-cap value and smart beta. Excluding reinvested distributions, which are seasonally elevated in the prior quarter, equity net outflows improved by 29% from the prior quarter. Multi-asset net inflows were $2.9 billion, driven by Franklin Templeton Investment Solutions, the Franklin Income Fund, and Canvas, our custom indexing solution platform. Alternative net inflows were $1 billion, driven by growth into private market strategies, which were partially offset by outflows in liquid alternative strategies. Benefit Street Partners, Clarion Partners, and Lexington Partners each had net inflows in the current quarter with a combined total of $1.4 billion. As we mentioned last quarter, in January, Lexington Partners closed its latest flagship global secondary fund with $22.7 billion of total capital commitments. Fund 10 ranks among the largest funds raised to date and significantly exceeded Lexington's prior secondary fund, which closed with $14 billion in 2020, and we were delighted that approximately 20% of the capital raised in the fund came from the wealth management channel. Also in January, Benefit Street Partners closed its fifth flagship private credit fund with $4.7 billion of total capital commitments. Reflecting the strong demand for the asset class, BSP exceeded its fundraising target. We believe the current market opportunity and backdrop for U.S. direct lending and alternative credit in general is attractive, and BSP has significant underwriting experience, loan structuring expertise, and focus on deep due diligence, which provides us with a competitive advantage. In the wealth management channel, Alternatives by Franklin Templeton has increased the number of product offerings and expanded platform placements, increasing market share and growing our client base. Our distribution force of more than 350 individuals partners with our 50-person group of alternative asset specialists to educate financial advisors and their clients on the potential benefits of private market investing. We expect a busy next 12 months across private markets. From an investment vehicle perspective, ETF AUM ended the quarter at $24 billion and generated net inflows of approximately $1.6 billion, representing another quarter of net inflows exceeding $1 billion and the tenth consecutive quarter of positive net flows. SMA AUM ended the quarter at $138 billion and generated positive net flows of nearly $3 billion, representing the fourth consecutive quarter of net inflows. Canvas generated net inflows of over $750 million with a robust pipeline and AUM increasing by 23% from the prior quarter to over $7 billion. Investment Solutions leverages our capabilities across public and private asset classes to pursue strategic partnerships. This quarter, Investment Solutions generated positive net flows with assets under management of over $75 billion, including the addition of Putnam. This quarter, our institutional pipeline of $1 billion unfunded mandates was $20 billion, a significant increase from the prior quarter and does not include the remaining allocation from Great-West Lifeco. The pipeline is one of the strongest it's been and remains diversified by asset class and across our specialist investment managers. With the close of our acquisition of Putnam on January 1st, we are a $1.64 trillion investment manager. We've been pleased with the positive reaction from our clients, and in the quarter, Putnam contributed positive net flows and its AUM increased by 8% to $160 billion, or 18%, since our announcement in May last year. With our expanded capabilities, our AUM in the insurance and retirement channels now exceeds $650 billion. Putnam's investment performance continued to be strong, with 89% or higher of mutual fund AUM outperforming peers in the one, three, five, and ten-year periods, and 91% of mutual fund AUM in funds that are rated four or five-star by Morningstar. We were also thrilled to see that Barron's ranked Putnam the number one fund family for one and five-year performance and number five for the ten-year period. Since the closing, we're also pleased to see that Putnam's average monthly gross sales has increased by approximately 30%, demonstrating the strength of Franklin Templeton's distribution. Turning briefly to financial results, adjusted operating income was $419.6 million, an increase of 0.6% from the prior quarter and a decrease of 4.7% from the prior year quarter. As always, we continue to focus on disciplined expense management while also continuing to invest in growth and innovation for the benefits of our clients and shareholders. Before I turn the call over to you for your questions, I would like to thank our employees for their many contributions and always staying laser-focused on our clients' financial future. Now, let's open it up 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 anyone should require operator assistance during a conference, please press star zero on your telephone keypad. We request that you limit to one initial question and one follow-up. One moment, please, for your first question, which will be from Craig Siegenthaler at Bank of America. Please go ahead. Thanks. Good morning, everyone. First, we have a big picture net flow question. Lots of ins and outs in the $7 billion, especially with the $14 billion in from Great- West. So how should we think about the core net flow run rate if we back the $14 billion out of the $7 billion of long-term net flows? So, Craig, thanks for the question. Let me answer that question in first kind of how we're positioning ourselves, and I promise you I will get to those points, and Adam can add some additional color. So, the way we're positioned at firm, I think of it as in four key secular trends that have driven our acquisition strategy and what we think will drive flows now and in the future. So, the first, obviously, is our movement to alternatives. We think that it's not going away. Private credit's here to stay. Banks aren't going to lend the same way that they've done in the past. Private equity's here to stay. And so, if you look at our breadth of capabilities from Lexington, Clarion, BSP, Alcentra, we think we have the broadest alternatives capability of any traditional asset manager. From a flow standpoint, obviously, well known in the institutional space, what's really important is that in the wealth channel, there's a desire to go from about a 5% allocation to a 15% allocation. What's significant there, if you just take the four biggest wirehouses, a 1% increase in allocation is $130 billion. What we're excited about is that, as we mentioned in the prior comments and the opening comments, Lexington's 20% of that fundraise was in the wealth channel. Believe me, that was years of learning, starts and stops, and blocking and tackling, learning about education, educating our own team, educating the advisors who were selling to be able to be successful in that. We think we can take that same strategy with any of our alternatives. The second, and I'm going to name four of them, the second is just customization. You're seeing from technology advances that clients want either specific vehicles or the portfolios to be customized. And so if you look at this quarter's trends, things like our SMA, which is positive, Legg Mason made us a top three SMA provider. You're seeing more and more flows going into SMAs. ETFs, while we were late arguably to the passive ETF space, we were actually early in the active ETF space. And today, at our $24 billion in ETFs, the largest category is actually active ETFs. And we're seeing that in markets like Europe, where the regulatory environment's changed, there's a greater demand now for ETFs. And we're having success in our green bond and Paris-aligned. So a lot of the ESG ETFs are doing very well in Europe. And then finally, in kind of that customization and being vehicle agnostic, is the direct indexing. And not only we're seeing positive flows consistently with Canvas, but we added 11 new partners to the 88 partners that we have with Canvas. And once you get embedded in the pipes, you continue to see flows. So it's just a great opportunity. But I think what gets us most excited about Canvas is the fact that as you're seeing this trend towards greater SMAs, Canvas was built as a technology platform. Some of the direct indexing were more about people who focused on tax optimization. This is truly a technology platform. So we can see taking traditional active portfolios and being able to tax optimize as well as tilting. And you have to have the right technology for that. The third big trend, I think, is really global distribution. You have 1 billion people that are entering the middle class. 87% of those are in Asia. And so we've got that massive global distribution. We were in Taiwan in 1985. We were the first foreign manager in India. We have local asset management capabilities in emerging markets like in the Middle East, China, India, Brazil, as well as local capabilities in a lot of developed markets. And so we think we're really uniquely positioned to take advantage of that trend, as a matter of fact, this quarter, you saw non-U.S. flows were positive outside the U.S. And then the fourth, and obviously really important, is the technology and technological advances. And that's where I would say I think the players so far, if you've played the AI move, you've been playing in the picks and shovels of artificial intelligence. It's going to be the firms who really figure out how to make this work for them to make it a competitive advantage that's important. You'll hear about an announcement later this week where we are announcing a strategic partnership on some AI work that we're doing with one of those big players. And then the secondary is blockchain. And we came out with a tokenized first one to have a 40 Act shareholder system on the public blockchain. We came out with a tokenized money market fund in 2021, so the first to do that. We are actually a node validator in the space with 11 different nodes. It's an area we know well, and we think it's going to be really significant. We announced a partnership with a UAE-based firm. They're going to leverage our blockchain technology, shareholder servicing systems to launch a stablecoin, and we'll be managing the portfolio there. So as you bring those together, now to answer your question, it's about execution, right? And I can tell you, I think we found it was probably it's a challenge when you do 10 different acquisitions and you're trying to choose best athlete for your distribution team. And we genuinely believe we put together the best team. But there are headwinds to that where you get a new wholesaler in a region and you've broken relationships maybe with the prior wholesalers' clients. And so it takes time to build those relationships back. But we feel like we're really seeing that pay off this quarter. You see it in our pipeline. I mean, to go from $13 billion to $20 billion and not have – that's not any Great-West Lifeco. That's just good, solid wins in the pipeline growth. Interesting statistic is our core sales, and we define core sales as sales less than $100 million. So these are the ones that just you get on an advisor's platform and they continue to just allocate to you. So excluding Putnam, those are up 14%. And again, those are where that wholesaler is out there meeting. And so I think good success there. And then if you look at inflows excluding reinvested distributions, Great-West Lifeco, they're up 17%. So we're positive in all those vehicles. We're positive outside the U.S. We've got good pipeline strengths. And then you take a firm like Putnam, and this is where we've talked about this, and I think you see it with Putnam where the big distribution companies or big distributors are saying they want to consolidate the number of partners. And so you take Putnam, we've actually grown Putnam sales by 30% since the acquisition. And that's just really, in some cases, where we're a preferred partner with a distributor and they weren't, and now they get the benefit of being part of that preferred partnership. It's where our 350-plus client-facing wholesalers can be out there telling the phenomenal story of the performance of the Putnam's funds. And so to see a 30% increase in really the first quarter of Putnam because of bringing it together, that distribution is really exciting. So long-winded answer, Craig, but I think we feel like all that we've put together is coming together in distribution now. Thanks, Jenny. We're looking forward to seeing your AI announcement later this week. We have a follow-up on alt flows. Over the last eight quarters, we added it up, Franklin had $13 billion of alt inflows. And I know this excludes realizations too. If we add up Lexington 10 and Benefit Street 5 combined, they added $27 billion. So, alt flows look to have been maybe negative $14 billion excess to flagship fundraisers. So similar question, but honing in on the alts business, how should we think about the alt go-forward net flow trajectory just given that dynamic? So I think there's a little bit of noise in the alts numbers. If you just look in calendar year 2022 and 2023, we talked last time about how we raised $40 billion in the private markets. But the reality in our alternatives business, we raised $55 billion, and 80% of it was private markets. But the net change in AUM, you saw $40 billion added to the private markets AUM net, net of realizations, distributions, market, everything, but $16 billion negative in the liquid alts portfolio, which represents about 6% of our alts portfolio now. So that's where you're shifting from much the good news is it's the higher fee private markets that had solid inflows in that window, but it was a little bit masked by the lower fee liquid alts. Now, fast forward to this I'll go this fiscal year. So the first two quarters, first of all, we said that we would be raising between $10 billion and $15 billion. That's our goal for the year. We're on track for that. We've raised about $7.3 billion in the private markets and another just under $2 billion in the liquid alts. But if you net out distributions, realizations, FX, and market and to be honest, market, the only negative market was real estate with Clarion, the others were all positive. We'd say it nets to flat. So again, kind of a gross number there. But if you take away the distributions, realizations, and FX, FX was actually pretty significant. Matt could probably give you more details on this, but we netted flat so far in this fiscal year. Yeah, Craig, just for perspective, for the last quarter that we're just reporting on, realizations and distributions was $2.6 billion, for example, and we had negative FX of another $1 billion. But we do get these questions, and I think we're going to try and improve our disclosure on this to try and help the question around this. Now we've got the bulk of our alternative assets together. Remembering in previous quarters, we've always said when we were much smaller, we've always said, "Look, realizations and distributions, they're just not significant enough to report and break down the explanation of AUM." But they're now getting to the point where we're going to start providing that level of detail. But just for information, the last quarter, again, the one we're reporting on was $2.6 billion of realizations and distributions and $1 billion negative FX. Craig, the only thing I would add is that the other thing we've been able to do really is to work more closely with our distribution partners on the wealth management side over the last few quarters. We're able to secure calendar spots further into the future than we ever thought was possible. I think that speaks well to our future fundraising as well. Great. Thanks, everyone. Thank you. Next question will be from Glenn Schorr at Evercore. Please go ahead. Hi. Thank you. So I wanted to talk about fixed income a little bit. So I see pension-funded status is much, much better, and rates are higher. I like the $8.3 billion in flows in the quarter, but I don't know if how much of that came from Great- West or something else. So maybe you could talk about that. And then bigger picture, do you feel this is the beginning of a broader trend, the long-awaited fixed income flows? Maybe you can give us a little bit of insight from whether it be RFPs, client combos, or the consultants if we're at the precipice of some larger flows into fixed income. Thanks. Yeah. Thanks, Glen. So interestingly, let's face it, as long as people believe rates have peaked and potential to come down, they're going to go longer duration, right? So the only thing is you're now starting to hear the noise for the first time where actually people think rates may be higher for longer, and somebody was even talking about a potential rate increases. So that could slow things. But let me give you what we're seeing. So we obviously had positive flows. But just looking at the pipeline, and the pipeline doesn't include any Great-West Lifeco, if you look at it, well, about 70% plus of the growth in the pipeline is fixed income, and that crosses Western, Franklin, and Brandywine. If you actually add BSP because I always think private credit really should be thought of in the fixed income because the decisions around that are often how you're thinking about your fixed income portfolio. The growth in the pipeline, 97% of it comes from fixed income. Six of our top 10 gross-selling funds in the last this past quarter were in fixed income, corporate bond, core bond, multi-sector munis, highly customized core plus. So definitely demand in the last quarter. But if you actually look at the pipeline going forward, the institutional pipeline, you see very strong demand for fixed income. I would say that it's also pretty broad-based. If you take a look at that funding pipeline, it's really across all four of the fixed income firms we have, which all have very significant pipelines right now. If you take a look at the products we're offering, we're positive in core and high yield. Munis was our best-selling segment. Really broad-based fixed income appeal, not just one product. Yeah. Last thing I'd say on that is they're also positioned differently in terms of their view on where rates are going. That means where we've had performance weaknesses, it's being offset, not always fully, but being partially offset by strengths in other parts of the franchise. While the institutional business that you asked about is strong, we're also positive in ETFs and SMAs, muni ladders. Lots of different fixed income vehicles doing well for us. So, just a tiny follow-up on that same topic. Have allocations changed a lot? In other words, I hear you on the flows. That's a very bullish commentary for the forward look. But if you took a snapshot of a year ago and two-year-ago allocations to where we are now and maybe two years forward, do you think we'll see a major equity fixed income shift? Or, I know it's a lot broader than that, but will fixed income allocations be a lot higher two years out? I mean, again, I think it depends on your view on rates. And as I think Adam or Matt mentioned, our fixed income teams are all kind of spread out as far as their view on where rates go. The Franklin guys probably think a little bit higher for longer. Western is probably more aggressively positioned for rate cuts. So I think it really depends on your views. I do think if rates stay higher for longer, it has impacts on returns on equity markets as far as expectations, private markets as well. So Glen, again, I think it's going to depend on where they think they should position their portfolio. I don't know. Adam, do you want to add anything? Yeah. I think it depends on the client, right? You mentioned more fully funded pension plans, right? If we get a wave of more immunization going on, we're going to see that drive fixed income flows. At the same time, really, in every channel around the world, what do we see is a move towards alternatives. That money is coming out of all of the other traditional buckets. So I think both of those are kind of competing with each other and pushing fixed income allocations in the opposite direction. Thank you for all that. Appreciate it. Thank you. Next question will be from Dan Fannon at Jefferies. Please go ahead. Good morning. Thanks for taking my question. I guess, Matt, maybe we could start with some expense questions. So curious about what the delta was in comp versus your guidance. And then as we think about the seasonal impacts of some of this quarter, how much do you expect to roll off as we go into 2Q and then maybe update us on kind of the full-year outlook for expenses? Yeah. Thank you. Thank you, Dan. So a couple of things on expenses around the second quarter. I'll get to the comp and benefits in a second. I'd just like to say that notwithstanding the higher resets around compensation, calendar resets around compensation that I'll talk about in a minute, and meaningfully higher markets, if you exclude Putnam, which was the main addition we had in the quarter, our expenses would have been flat. So hopefully, that demonstrates some discipline there. In terms of your specific question around comp and benefits for the second quarter, the difference is, I'd say it's around almost half of it's the performance fee. A little bit less than half is performance fee increase relative to where we thought it would be. And then there's these higher. I I would sort of—we were expecting calendar resets in compensation, but they're just higher than we thought they'd be. So things like the 401(k), mutual fund units in compensation, deferred compensation plans, vacation accruals—they were all. When were all. When you add all those things up, plus the performance fee delta, it adds up to about $30 million. So when you add the $30 million to—I think I guided $815 million on the call, that gets you to pretty much where the $844 million is, where we ended up where we ended up. So that explains that part of your question. In terms of the annual guide, last quarter, we guided to $4.6 billion, and that's excluding performance fees, but including the double rent that we've talked about around our New York City consolidation exercise. I would increase that just slightly to probably $4.64 billion-$4.65 billion, a very narrow range. Less than 1% higher. That's really driven by the higher markets that we've experienced. If markets come back down again, as we've been experiencing very recently in the first part of this quarter, it wouldn't surprise me if our annual guide remains flat. But right now, all else remaining equal, we'd expect it to be just slightly higher for the annual guide. Great. That's helpful. And then maybe just to follow up on that with regards to the effective fee rate, I think you had talked about it coming into the mid-38s as the year progressed. So, I guess given where mixes, AUM levels, all the dynamics that go into that, how do you see that trending? Yes. Thank you for the question. So the EFR for the quarter dropped to 38.5, and I believe that's exactly how we guided for the quarter. And we were able to do that because we had a pretty good feel for the mix that were coming in in terms of flows. And I think I also pointed out that we were a basis point higher than usual, let's call it, or the effective fee rate for the last quarter was inflated by a basis point based on Lexington catch-up fees. Going forward on an annual basis, I would say that our EFR should remain in the 38s, probably in the mid-38s. It'll be slightly higher than that, driven by episodic alternative asset fees as we've experienced over the last 12 months and highlighted those clearly, I think, in our results. And the other thing that will help it be higher is a larger percentage of alternative assets and a higher percentage of equities. With the public markets going up as much as they did in the first quarter, obviously, as a percentage overall, our alternative assets came down a bit. So that brought the EFR pressure down slightly. And then we had quite a few successes, as Jenny mentioned in her remarks, in ETFs, Canvas, separately managed accounts. And all these things are lower-fee-rate businesses. It's less about fee erosion per se, I'd say. It's just more about the business mix. So for the next quarter specifically, we'd expect the EFR to probably be even in the high 37s. So let's say high 37s- 38. But this is because of the success that we didn't anticipate, as much success with Putnam because the overall Putnam business is a low effective fee rate. They're kind of in the mid-35s. Faster inflows from Great-West Lifeco at the lower fee end, as we communicated hopefully clearly enough, that the $25 billion of AUM that we expect to come in from Great-West Lifeco, that will ultimately, when we get it all in, that will be in the mid-teens. But the initial amount that we've got in are all in the lower fee categories, things like investment-grade credit, for example, for general account. But then on top of that, we expect continued growth in our ETFs, Canvas, and separately managed accounts, all of which are lower fee rates. Now, the reason why we keep the guide for the year in the 38s is because we have a view, again, as Jenny mentioned, of our alternative asset fundraising capabilities and expectations for the next 12 months, let's call it. So on an annual basis, we expect the mix of business around alternative assets, equities, fixed income, and then these other areas of growth that I just mentioned to offset the fee reductions that at times in various quarters could go into the high 37s. But that's just based for that one quarter on the mix, that one quarter. But for the year, we expect to remain fairly stable in the 38s area. Great. Thank you. Thank you. Next question will be from Ken Worthington at JP Morgan. Please go ahead. Hi. Good morning, and thanks for taking the question. On the institutional pipeline, when you win an institutional fixed income mandate, are you getting a bunch of cash, or are you getting a portfolio of securities that you transition and then remanage? And do you get a sense of where the assets are coming from? If it's going into fixed income, is it investors going from rates to credit? Are they going from equities to fixed income? Are they going from cash to fixed income? Or are they just switching managers because of performance? So any view on what you've seen in this pipeline that's driving the fixed income success you're having? You might not like the answer, but the answer is yes. I think we're seeing all of those things, right? So often, people will switch managers because of performance. We see people beginning to extend duration out. Those are usually funded by cash. We see some of the plus sectors being added to. Those are funded in a mix of different ways. And then, of course, on the retail side, it's typically a sale of a fund, so you really don't know where that's coming from. In terms of how folks fund things, I would say that's a mix. We see three different ways. We see being funded in cash. We see people using a transition manager. And then sometimes, we'll see folks fund us with securities and ask us to get to the new point by a certain time. The other interesting thing we see in terms of how accounts are funded is actually outside of fixed income on the Canvas side, where we see significant use cases for Canvas as a tool to aid in the funding of accounts for taxable accounts, where we're able to do that in a much more tax-efficient way. Okay. Great. Thank you. Just on ETFs, how are you thinking about ETFs outside the U.S.? You're having nice success in your franchise within the states. How are you thinking about leveraging the brand, or are you thinking about leveraging the brand you have and the ETF franchise that you've already built? Yeah. ETFs outside of the US have grown in two important ways. One, I don't think this was the point of your question, but our single-country ETFs, so ETFs that focus on a country, even if they're sold in the US, that's been a huge success for us, where we're able to price those very competitively. But also, in terms of ETFs that we're selling outside of the US, regardless of investment mandate, we've seen real growth there in Canada and in EMEA in particular. Some of that is the single-country flow. As Jenny mentioned in her remarks, we've seen some of the more sustainably oriented products go quite well. Green bonds, Paris- Aligned, S&P 500 would be two that are examples of that. Outside of the U.S., we continue to see a mix of active, passive, and Smart Beta. Passive is still the most significant portion of the market, but active has by far the highest growth rate. Just to put things in the context, I believe that if you look at our flow for this quarter, about half of it or so was from outside of the U.S. in terms of our ETF business. Really trying to expand that to the best we can and seeing very good results. Great. Thank you. Thank you. Next question will be from Alex Blostein at Goldman Sachs. Please go ahead. Hey. Good morning. Thanks for the question as well. Jenny, I was hoping to dig into your comments from the prepared remarks when you talked about being quite busy over the next 12 months with respect to private markets. Could you, I guess, expand on that a little bit? And I'm assuming wealth is going to be part of the answer. So when you think about the opportunity set and the wealth channel and lots of other folks coming in with offerings already, and it seems like that part of the market is getting a little bit busier, what are you guys doing to make sure you don't miss the window and opportunity there? Thanks. Yeah. So I mean, we're in the market with a few different things. And as Adam mentioned, we are getting on calendars. This stuff is laid out. I'm probably surprised early on to learn this. I mean, sometimes up to two years in advance. So the areas that we're talking, Lexington obviously has capabilities beyond their traditional fund 10, where they've got middle market and co-invest offerings. In the case of real estate, Clarion's top three biggest funds are all perpetual, so they're always fundraising, although we definitely see kind of muted demand for real estate. They've got terrific performance. And so I think when things shift back, Clarion should do very well there because they have very little exposure to office. In the case of the private credit, real estate debt is really interesting, and we're talking to several clients about that. Obviously, CLOs, structured credit, special situations. Then actually, we've been successful—I never know how much I can talk about—but in our venture. Our Franklin Venture Group is in the wealth channel right now raising money and first fundraise there, and it's going very well. So you just had two between BSP and Lexington close their flagship funds. So then you're in that they're digesting and investing in those cycles. They're doing more of their niche-type strategies, but they're in markets with those. And as soon as those are deployed, I think Lexington's probably deployed 60% of their Lex 10. They'll come back into the market for another flagship. But in the meantime, they've got their middle market and co-invest. And I cannot emphasize enough, in the wealth channel, it's 50% the right product and 50% where you got the heft on the distribution side. And I think that is often underestimated. Our 350-plus client-facing wholesalers, internal, external, specialists included, can sell to an advisor's entire book. If you don't have the breadth of capability that we have, that's incredibly expensive because let's say you're just an Alternatives manager. You're only selling to 5%-10% of that advisor's book. And so it gets really expensive to build the breadth of capability that we have. And the years of investment that we've done in the academy again, our academy is global, where we've now been able to bring Alternatives by FT, which is a website that has tons of training on how advisors should think about Alternatives in their portfolios to supplement just that wholesale being out there in the field, I think has been really important. So very much focused on the Wealth Channel, really excited about it. I think we have a great suite of products to be able to meet the needs in that market and the distribution capability and expertise to be successful there. I gotcha. Okay. All makes sense. And then clarification for you guys on the pipeline. It sounds like there's a bunch of things in the institutional pipeline, as you discussed earlier. Could you guys help us just size the fee rate of the institutional pipeline, excluding Great- West as you described it? And then, I guess, is it fair to assume that the remaining piece of Great- West that's going to come in will be committed at a much higher fee rate? So, kind of north of that 30-ish basis points, just given that the backend or what's come through came at a pretty low fee rate? Yeah. The fee rate is slightly up from last quarter. But look, anytime you one, it's institutional, so that's lower fee than your traditional EFRs. And then number two, it's heavily weighted in the fixed income, well, the new stuff is heavily weighted in fixed income, but probably overall pipeline, I don't know, Adam, is 60% plus probably fixed income. So, I never know if we give guidance on the actual numbers in the pipeline, but it's stable. Matt, have we given guidance there? I would say it's consistent with our institutional fee rate. Got it. Okay. It's in the mid to high 20s, Alex. But it can be it's gone from anything from the mid to high 20s to our overall effective fee rate, depending on the quarter and depending on the type of the nature of the pipeline at that particular time. And then to answer your second question, yes, the additional flows we expect to come in will be higher on average on the rest of the Great-West Lifeco flow, and that's expected over the next 12 months. As we've said, we'll, of course, put that detail into our monthly flows so you can see that. And then we'll provide detail on the effective fee rate when we have these calls and provide updated information. Great. Okay. Perfect. That's what I was looking for. Appreciate it. Thanks, Alex. Next question will be from Bill Katz at TD Cowen. Please go ahead. Okay. Thank you very much. I apologize. I'm under the weather. So, if I start with your reported net flows of $6.7 billion and I back out the $3.1 billion of dividends reinvested, which the industry doesn't include, I get down to about $3.5 billion. If I back out the initial capital from Great- West, that's -$10 billion. If I then back out the $1.4 billion from the three alt managers you highlighted, I get to about $11 billion. And then if I back out the Canvas, ETFs and the SMA, I think I get to about -$18 billion for what I would consider to be a long-only business. A, is that math, correct? And B, if it is, what's the go-to plan here to sort of stabilize that part of the business? So, I'm not Matt Nicholls. I can't do the math that quickly. He probably could, so I couldn't quite follow all of that. But I will tell you that the growth areas were some of the things you wanted to pull out: Alternatives, ETFs, Canvas. I think we've said consistently that those are our growth focuses and that they're growing a little faster than the rest of the business. If you take a look at the more traditional business and you look at our outflow rate, our decay rate, it's really been stable to improving. So, I think over the last few years, we've been able to do a very good job at protecting ourselves on the downside. As we said earlier, I think Jenny pointed to a notion that we talk about in terms of core sales, which is our smaller sales, which are up pretty consistently at about 14% on average. So stable outflows, increasing core sales. We're feeling pretty good about the traditional part of the business. And I'll just add, look, we've been very open and honest that we've been underrepresented in the retirement channel. As I mentioned on the last quarter's call, we were ranked 14th on Empower's platform, and it's similar in some of the others. And with this acquisition of Putnam and the relationship and the absorption of their retirement team, as well as their target date products, a third of retirement flows go to the qualified investment plans, and they've got phenomenal performance of their target date products, as well as stable value. We think we are poised to and again, if we just take our market share, it's a massive increase. And the retirement channel is still a very traditional asset-oriented channel, traditional mutual funds, equities, and fixed income. We just think with our distribution capability, not just to benefit from Empower, but taking that to all the different retirement platforms and gain more market share there. And then the last thing I'd just add, Bill, is that this area you're trying to get to, which we actually have a little bit, it's not really 18, but we think of it as, I think it's more like 10 that we got to. But anyway, when you get to those numbers, it's very concentrated in areas where performance is even more important than usual, let's call it. And in those areas, performance has begun to improve, certainly on the equities side in particular, quite significantly. So, we've seen quite a slowdown in those outflows. On the fixed income side and a couple of areas, we've had some weaknesses there, as you know, but we've seen some improvement there too. So, it's a fairly concentrated situation that you're referring to and one that, as performance improves, you see a correlation of slowdown in outflows. Finally, Bill, I would add that it's sometimes difficult to separate investment product from the vehicle itself. We have a number of instances where an investment team is positive, but they're positive because their SMA, their usage, their ETFs are all positive, and the mutual fund might be negative. So, is that the core business or not, right? It's a traditional asset class. They're gaining flow, but they're gaining it because of the vehicle choice, not necessarily because the mutual fund is positive. That makes tons of sense. And just to follow up on all of that, Matt, maybe for yourself, just your base fee rate, it just seems like it's bouncing around a little more than I would envision just given the sheer sizing of the platform today. So can you help me understand if you're going to be sort of in that 37% range plus for the next quarter, and then you sort of bounce back into the fourth, is that imputed to a very high level of flow in the alts managers? And if that's the case, is that just vehicles that are just turning on from capital to raise, or is that from new money coming in the door? And if so, where might that be? Thank you. Well, remember, the annual guide I gave included the first quarter or so where we had an elevated EFR for the reason that I explained around the catch-up fees and so on. I think we were pretty close to 40 basis points at one point. We've been trying to be quite clear about that. So, when you normalize that out, you get into the 38s. And then the only thing that's driving it down periodically from quarter to quarter is the areas of growth. And when you add those areas of growth up and you just did that a second ago, Bill, when you went through your analysis on the traditional side, the business versus other areas of growth, when you start adding up ETFs, Canvas, SMAs, and then the flows from Putnam, the overall Putnam remembering that it's not just the flows coming from Great- West Lifeco on Putnam, it's the $160 billion, which is 17% higher than when we announced transaction of AUM that's at a multiple point lower than the EFR of Franklin. So, the fact that we've been more successful in that, that's what's driven the EFR down a little bit. But what we'd expect is that going into at least fiscal 2025, what we experienced at the beginning of fiscal 2024, depending on what products we have and everything that Jenny just went through in alts, there's a possibility that it could step back up again into the higher 38s based on the episodic Alternative asset fees. But that's just an explanation around why it could go up a little bit more and down a little bit more than usual. It's those offsetting factors. It's basically a form of business mix plus the episodic activity out of Alternatives. Thank you for taking all the questions. Bill, I'll also answer because I think you had the question on a little bit more of a breakdown of our third quarter. I'd already gone into some detail on the EFR. In terms of comp and benefits for the third quarter, we expect that to be around $820 million. That assumes performance fees of $40 million. That's lower than the previous quarters driven by lower performance fees out of our real estate business for the reason that Jenny mentioned. It's important to note that the relative performance of Clarion is very strong, but the absolute valuation of real estate as it's come down, that's impacted the extent of performance fees. So that's why we're guiding that down to $40 million from $50 million. IS&T, we expect it to remain at $150 million. Occupancy, $80 million. As you all know, that's going to come down later on in fiscal 2025 based on the double rent going away, but for next quarter, we expect that to remain at 80. And then G&A, we expect to be probably around $175 million. It could be as high as $180 million because we're planning on spending more in advertising, but it shouldn't go beyond that. So, let's say $175 million-$180 million in G&A. And I already provided the annual guidance earlier on based on Dan Fannon's question. 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, everybody, thank you for participating in today's call. Once again, we would like to thank our employees for their hard work and dedication delivering this quarter. We look forward to speaking to all of you again next quarter. Everybody, stay healthy. Thank you. Ladies and gentlemen, this does indeed conclude today's conference call. You may now disconnect your line.