Bank of America's 34th Annual Financial Services Conference. This is Craig Siegenthaler, North American Head of Diversified Financials at Bank of America, and I'm joined on stage by Ivory Gao, who specializes in the U.S. asset strategies for our team. We are both very pleased to introduce Dave Brown from Victory Capital. Dave has served as CEO of Victory Capital since 2013, and Chairman since 2014. He also chairs VCM's Investment Committee, and he joined Victory back in 2004, and previously held several senior roles, including President and COO. Dave, thank you for joining us. Thank you for having me. So quick background on Victory. Victory ended 2025 with over $300 billion in assets under management. It is a global, diversified investment firm that operates a multi-independent investment boutique model that leverages common resources at the center, including distribution, and the asset manager seeks to combine the benefits of boutique investment companies with the scale advantages of a fully integrated and centralized operating platform. With that, let's get started on industry consolidation. So Victory's model is capitalizing on this theme as the big get bigger and smaller firms need help with things like distribution. What is your perspective on the consolidation theme, and what is Victory's objective? Let me start off on the consolidation theme. I think the industry is started to consolidate, and I think it's gonna go through a mass consolidation. And the reason for consolidation, as you mentioned, is the big need to get bigger, size and scale is gonna matter. You know, and so when you think about consolidation and you think about how Victory is gonna participate, you know, we've done eight acquisitions since we did our management buyout in 2013. We're just coming off of completing the Pioneer acquisition, which we announced in April of 2025. We actually closed it, so we're close to fully integrating that. And when I think about going forward, you know, our role in it, I think we're gonna be a consolidator. We're gonna participate. We have a $1 trillion asset under management kind of objective out there. We put that out there last quarter. And the reason you know really for that number and you know that's 3x where we are today. The reason for that number is, I think that is going to be the level where you're going to be at to be able to compete longer term. So consolidation is gonna happen. It's gonna happen probably faster than people think. And the reasons for consolidation are only actually getting more and more the issues are not getting solved. They're actually becoming more pronounced. So, Victory has actually generated very strong EPS over the last few years. That's helped the stock a lot, but its net flows have remained negative recently. It doesn't help that this last year, mutual funds, active mutual funds, had $800 billion in net outflows. But does Victory really need positive flows to be successful? And do you see them turning positive anytime soon? Yeah. So our earnings growth, you mentioned our earnings growth. Actually, our earnings growth since we went public is the best in the sector. I think it's a 21% cumulative annual growth rate from when we went public in 2018 till today. It's by far the best in our sector, and so we've had great growth from an earnings perspective. You know, and the closing of the Pioneer acquisition has really allowed us to invest in distribution, enlarge our distribution. We invested in intermediary distribution. We've effectively doubled the size of our distribution efforts, entered into more partnerships with large platforms, opened up our international distribution channel. Kind of before that acquisition closed, we did not have a big effort outside the U.S., and now today manage money for clients in 60 countries. I think there's about $55 billion of assets under management, and probably most importantly, is we have the Amundi, 15-year distribution agreement. And that is really gonna help us from a growth perspective. You know, your question around, do we need, organic growth? We want it. I think we're on the cusp of achieving it. You know, and if you looked at our, kind of our evolution of gross flows, last quarter, this previous quarter, the end of 2025 was, a record, from a gross flow perspective, and it was $17.1 billion. That level is enough to produce organic growth. You know, we are really kind of just at the inflection point where we feel with some of the things we have going that are working really well, like our ETF platform, VictoryShares. The Pioneer investment franchise, since the acquisition closed, has been net flow positive every quarter. The international distribution channel has been net flow positive. VictoryShares has had great growth. We've got our West End Advisors investment franchise, which is our model business, has turned to positive flows. So we have a lot of really good things, and we have really good investment performance underneath it. A lot of good things happening, and I think we will turn the corner, as we think about 2026 and forward. But for our business to work, the way we want it to work, we want organic growth. We've grown earnings, we've expanded our margins. I think we've done an excellent job on capital return for shareholders, but we want organic growth, and I think, I think we're right there. So Dave, you know, you mentioned a few things there, Pioneer, West End, maybe even the ETF business, but what are the two or three drivers that could improve net flows to a level where you actually inflect and generate positive inflows? Yeah, I'd start off with the international channel, and for Victory, it's really all white space. So our products, really, we did not have access to clients outside the U.S. in a big way. And now today, we have our entire product set from the legacy Victory perspective now, you know, available on the institutional side. We've launched five UCITS at the end of 2025. Our U.S.-listed ETFs are now being sold or getting ready to be sold in Asia by the Amundi sales group. And so this international channel is total white space for us. The Pioneer Investments franchise is already well-developed in that channel and being sold. Other products are being sold. We're investing in that to do more of that. So I'd start off with the international side. Our ETF business has seen great growth. I don't see that slowing down in 2026 and forward. There's industry tailwind there. Our ETF platform is a little bit different than others. It is truly, if you think about it, an active solution, not really around beta. And you can see that in actually our average fee. Our average fees for our VictoryShares platform is about 34 basis points. We have 23 ETFs, an active fixed income group of ETFs, our free cash flow series, a volatility management series. We're launching new ETFs, and so I think there's gonna be great growth there. The other area I would point to is, you know, you're seeing a lot of investors in the U.S. look outside the U.S. to allocate dollars, either international products or potentially global products. We have really strong offerings on the global side and on the international side. Super strong performance and products with scale and size on the fixed income side with two franchises. We offer that in mutual funds, ETFs, institutional separate accounts. I think that's gonna be a driver of growth as well. And then our multi-asset offering under the Pioneer franchise, we've seen really good growth there. There's an income element to that. And so we have a lot of things that I think are gonna be, you know, positive. We will face headwinds as everyone else with active equity and mutual funds. You know, I think there's, you can look at the industry data and see that there's headwinds there. I do think some of that will slow down, given where the market's going. I also think ETF as a share class is gonna be impactful there. So, when you put all that together, you know, we think that, you know, those are gonna be the drivers to our, you know, having green in the organic growth side. As you mentioned, for your M&A strategy, that magic number of reaching that $1 trillion in AUM, historically, you've pursued a mix of cheaper consolidation deals and more strategic transactions that could enhance your net flows. So on that front, what does your M&A pipeline look like, in February 2026, as we sit here today? Yeah, and we've I mean, our approach to M&A has always been, you know, since we've started in 2013, has always been to start off as, does the acquisition make your company better? Does it make our platform better? And then, if it does and really, that comes from a strategic perspective. Does it get us more access to clients? Does it expand our distribution? Does it give us size and scale? Are there an expansion of your product set? Does it get you into different, you know, investment, you know, types of products? And so we've always approached it from a strategic perspective, and then from there, we've worked down to say, you know, does it culturally work? Do they have investment excellence? Then, the last piece of it for us really is around the financial side. Our platform is so conducive to acquisitions that the financial side or the financial element is so superior to, I think, what others are able to do, that when we buy businesses that check all those boxes, we're then able to take out a lot of costs. I think that that's, yeah, I think that that's really special. So for us, you know, when we think about buying businesses, we care about size and scale today, and if we're gonna get to $1 trillion, we're not, we're not gonna get there by doing very, very small deals. It doesn't mean that we're not going to look at those and potentially do them from a strategic perspective, but we're looking for size and scale, but we're always looking is, you know, is it a strategic transaction that makes our business better? A good example, if you looked at the Pioneer acquisition, you know, what we bought is, we bought a business that gave us size and scale, over $100 billion, expanded our investment capabilities pretty significantly in fixed income and equities and multi-asset. It opened up a brand-new distribution channel for us outside the U.S. And oh, by the way, you know, we announced $100 million of net expense synergies. We upped it to $110 million. We're early on that, and we announced low, low double-digit accretion, and we today are close to 20% accretion on that transaction. So that's how when we look at it, we look at it strategically, and then there's a financial element that our platform just allows us to execute in a way that it's really financially accretive. And on that same front of M&A, are alt managers a big part of your M&A pipeline as they're seeing larger inflows, although the deals might be a little bit pricier? And I guess, how will Victory participate in the democratization of alts theme, and are you a believer of it? Yeah, so, so I would say first, you know, we, you know, when we think about, pricing on transactions, either it's traditional or alternatives. We've always, I think, been patient and tried to be smart buyers from a pricing perspective. You know, if we're buying something, typically we're able to synergize it down, the cost of it or using a tax asset. And so when you really get underneath it, the price that we're paying for a lot of the acquisitions we've done are well below what the market is when you're done with those kind of pieces. Alternatives is a little bit different. You know, we've always thought that they've been richly valued. I think you've seen a pullback in some of the valuations. You know, we do believe at some level that the retail investor, the individual investor, the financial advisor, does need some access to private markets. There's a debate on how big of the portfolio that should be, how they should access it. I think we have opinions on that. And so we will participate in it. It won't be the driver of our acquisition strategy. We'll get the manufacturing either put in our models that we'll go and offer from a retail perspective, or to offer products like evergreen or interval products, depending on how the clients want to access it. But we're a traditional asset manager. We're not trying to buy an alternatives business, have an alternatives offering to go and hide something on the traditional side that isn't good. You know, we love our business, we think we're well-positioned for the future, and so alts will just be like as we thought about ETFs years ago. It's gonna be another way for clients to go and access our products. We need that manufacturing. We'll get it in a smart way. I like to say we get it in a Victory way. But we're not trying to be an alternative manager. I don't think we can compete with the alternatives. And I think a lot of the acquisitions you've seen in the industry, in the past, I think if you go back and really peel them back, the costs that were paid, the value that was created, you know, I'm glad we sat on the sidelines and watched and studied and strategized. Dave, what's the M&A formula? When you think about the M&A formula, a lot of these transactions, you know, low valuation, you identify some cost saves, preserve the investment culture, provide them access to centralized distribution and things like, you know, what is the game plan and what's kind of secret to your M&A formula? So you laid out a lot of it. I mean, first and foremost, we are looking to not disrupt the investment franchises, the teams that we're buying. So if you're buying an investment process and a team, I think the last thing you wanna do is go and disrupt what you're buying that was actually doing well. So we're very careful not to do that. I think the second piece of it is we really care about the client experience, and so if you look at, again, Pioneer, Pioneer has had organic growth since we closed the transaction to today. So we have more clients signing up with Pioneer than leaving Pioneer, you know, after we've closed the deal. That's a little bit different. Usually, there's some leakage. So we really care about the client experience. It's really important to us. That's the starting point of the formula. Then from there, what we do is, how do you enlarge, how do you better the platform? Distribution, product set. We then take a look at our platform, the platform that we're buying, and how do we make one and one equal more than two from a well, from a effectiveness perspective, but less than two from a cost perspective, and that's where you get some of the cost takeout. We eliminated all the duplication around administration, operations, technology. You don't need to do things twice. We also look at, you know, a good example, again, is on the Pioneer acquisition, we enlarged our sales force, we enlarged our partnerships with our platforms. So every single franchise on our platform benefited from the Pioneer acquisition because we have more people selling, we have more partnerships, and more vehicles to sell in. So that's part of the formula. And then I think, you know, the piece that just probably goes underappreciated is, we have done this for a long time. We were doing acquisitions when they weren't mainstream, and we have the same people working on the acquisitions over the years. And so we don't hire consultants to do diligence, we don't hire consultants to do integration plans. It's part of our DNA of who we are as an organization, so we don't have a separate M&A team. It is the operators of our business that are effectively evaluating, diligencing, creating the integration plan, and then executing on the integration plan. That is so underappreciated and undervalued that, you know, we are looking at this through an operator's perspective. And so that's the formula, and if you go back and look at all of our acquisitions, kind of pre-IPO, post-IPO, they all really effectively are the same kind, same structured acquisition. And each one is just a little bit different, but all of them are the same, and we're still executing on the same strategy that we laid out, you know, in the middle of 2013, the same one we laid out in 2018 when we went in IPO. And I think the industry is starting to come to what our platform is. So Dave, with the Pioneer deal, you gained international distribution, because, like, to date, you've only been focused on really the U.S. market. You know, it's under 5% of the world population, but now, you know, really for the first time, you're kind of, you know, you have some big pipes outside the U.S. Maybe walk us through the details of that arrangement and have you been seeing some net flow progress, mainly from Europe already? Yeah. Yep. Yep. So, one of the big pieces, and I think one of the real strategic pieces of the transaction, was this 15-year distribution agreement with Amundi. And Amundi is a $2.7 trillion manager. I believe they're a top 10 manager in the world. And they have, from a size perspective, fabulous distribution outside the U.S., in Europe, in Asia, in the Middle East. They have an unbelievable connection into so many different geographies. And so the agreement basically says that any traditional active management product that's coming out of the U.S. has to come off of our platform, so they have to sell it. And so effectively, what we bought with Pioneer was the U.S. manufacturing arm. Pioneer was already into their system, already being sold under the Amundi brand, and now that's continuing to be sold, and now we're adding Victory's products to that. We really have an exclusive on for what they can represent outside the U.S. The biggest areas that we see opportunity in is, I'd start with Asia. Asia, including Japan. They have great distribution. There is a desire to buy kind of U.S. dollar-based products, fixed income, equities, and so there's great progress there. We have a nice base there with the Pioneer products, Victory also has some clients in Asia preexisting the Amundi acquisition, so we see a great opportunity there. I'd say that's the immediate first, and a close second is through Europe. And really through Europe, not because I believe Europe—and I'm generalizing because there are a lot of different geographies in Europe, but, not because Europe is desiring a U.S. product. Actually, it's more of global today, and probably some of it's allocated away from the U.S., but because Amundi has such great distribution in Europe, and they're so well-positioned, we'll benefit from that. And I'd say third is the Middle East for us. Amundi just entered into a distribution partnership with the First Abu Dhabi Bank. And I think there's an area where there is a desire for U.S.-based strategies. You know, and so, so when I look at all of that, we're really excited about it. I talked about it being white space, really, for Victory. We're net flow positive there since we did the acquisition. We've launched. There's 22 UCITS already today. We've launched five at the end of 2025. We'll launch more in 2026. We're selling our ETFs in Asia. We've invested in our distribution infrastructure in the U.S. to support the outside the U.S. efforts, and then we've also hired outside the U.S. to accelerate those efforts. That is an area where, again, as I said, like, what's gonna drive growth, that's to be an area where we think is gonna drive growth. And I think you're right, you know, we were historically focused on the U.S. with a desire to globalize our business. This distribution agreement really globalized our business. And I would also say, you know, we are riding some of the progress Amundi's making when, you know, again, they entered into this partnership in First Abu Dhabi Bank. They're growing their business and their distribution, and we're gonna be beneficiaries of that as well. You know, the Fed, you know, at BofA, our economists expect the Fed to cut twice this year. The Fed's been cutting. You know, with interest rates in the 3% zone, what happens when they get down to 2%, 1.5%? Could we see this record money market AUM move off the sidelines? And if it does, which of your products are you most excited about in terms of grabbing, you know, some of that money in motion? Yeah, I think you know, I think your guess or your economist's guess is as good as mine on what the Fed does with rates. But I think most people would think rates will come down in 2026. I believe so. Whether that shakes loose this record balance of the money market assets, I don't know, but I imagine it's not going to have the money market balances increase. If anything, I don't know how much will shake loose, but what does shake loose will be more than what's happening today. And so I do think a lot of those assets will go into fixed income asset classes. I believe, you know, our active fixed income ETFs, which have long track records, have $ billions of assets, are really well-positioned on the platforms and also well-positioned from a performance perspective to gather assets. We also have a number of kind of extended short-term type products, where if a client is still looking for yield but doesn't want money market, but doesn't wanna stretch, you know, we have our ultra-short product, which is well-positioned. You know, and so I think we'll gather assets there. I do think some of the fixed income assets will find their way into equities. And maybe not, you know, traditional asset classes like a large cap or a small cap, but different kinds of equity products, and I'll use our free cash flow series. You know, how do I get equity exposure, but I don't want to be into the AI or the Mag Seven trade? You know, how and some of those kind of solutions that you can go, like our VFLO or SFLO or our free cash flow series, I think you'll see some of the assets go there. But I would imagine, you know, as rates come down, if it doesn't happen in 2026, if it's 2027 and 2028, I think people will not keep their money in money market if there's low yielding. I think we've seen that over the years. Then kind of transitioning to investment performance, your overall investment performance is excellent in aggregate, and we focus on a percent of AUM that is rated four or five stars on a three-year basis. Within our coverage, you've been within the top one to two. I guess, what's exactly driving this? Yeah, it's, I'm glad you point that out because, I mean, we're pretty proud of our investment performance, and it's across so many different asset classes and so many different investment strategies. So I'd start off saying that our investment performance, the way we're set up with our franchises and our solutions platform, they don't share research. So every single one of our franchises has its own unique investment process. They do their own research. Some are more quantitative-based, some are more qualitative-based, some are macro-based, some are, you know, bottoms up, and they construct their own portfolios. So truly, we have independent investment streams, you know, performance streams all rolling up. And so when you roll all of these up, they're not correlated from a actually, you know, opinion on rates or oil or whatever, you know, metric you have, but they roll up, and they're all really good. So you say: How is that? And really, our whole model is about having the investment professionals spend 100% of their time managing money, take away all of the administrative burden, take away all of the business distractions, have them spend all their time managing money, put them in the best situation to perform well, have transparent compensation systems, give them effectively no budget, so all of our investment franchises can travel as much as they want, buy as much research as they need. And do all of that, put them in the best position to be successful, and then they need to be successful. And I think we've done a really nice job over the years, kind of getting to the point where we have really good investment professionals, really good people that know what they're doing, and then we put them in the best position to be successful. And that's, I think, one of the reasons why, you know, we, we talk about our company being the acquirer of choice. And really, what's underneath that concept is we think the investment franchises wanna come to our platform to do all the things I just mentioned. They wanna manage money. They wanna practice their craft. They don't wanna have issues around, you know, cost allocations, around going to this meeting or that meeting. I think they wanna just spend their time managing money, and then they wanna go raise assets, talk to clients, and service clients. Going back to the UCITS that you mentioned, five were already launched, and you're also planning to launch more in 2026. Your UCITS have been performing well, and I guess we were wondering what factors support this, and how could this maybe improve flows? So a lot of the UCITS today are sitting, or most of the UCITS today are sitting kind of under the Pioneer Investments franchise. And the Pioneer Investments franchise, one of the things we were extremely impressed with, and actually, as we brought them onto our platform and learned a little bit more about them, we're even more impressed, is they are great investors. This is a brand that's been around for, you know, probably close to 100 years. They have such a DNA, an excellent DNA from an investment perspective. So a lot of the performance is off the Pioneer Investments platform. There's really an equity side to it, there's a multi-asset side to it, and then there's a fixed income side. And on the equity side, there's an international, global, and then a US side. I would say that, you know, it's the investment performance is really just—it is just a great team and a great environment, and I think we've only enhanced that. As I said, Pioneer's growing. I think we're putting them in a position to grow even more. We're gonna launch more UCITS that are gonna be off the Pioneer platform. Some things that we're actually doing in the U.S. that we'll package up into UCITS, and then we also have from the Victory perspective. Our UCITS kind of launch timeline is—actually goes onto Amundi's timeline. So we might wanna launch things a little bit faster, but we're not the only UCITS Amundi's launching. They're launching their own UCITS out of their own manufacturing, so we're kind of in a line, in a queue. We've moved to the front of the queue, which is great, but I would anticipate in 2026 we're gonna launch more. And as those get out there, so as the Victory UCITS get out there, as we've put more resources, the growth is just gonna increase. And then on top of that, not just the UCITS side, what's available, every single Victory product, every single Pioneer product on the institutional side. So Amundi has institutional salespeople around the world. They don't need a UCITS structure to sell. They just need to be educated on the product, which we've done, and they're out talking to consultants, talking to relationships on selling kind of the entire Victory platform. So, Dave, I wanted to jump into West End. So, you know, West End had a better net flow result last year than 2024, but is there a line of sight into positive flows here? And when you take a step back, how do you think about the total contribution of West End flows in the bigger firm? Yep. So, we purchased West End in 2021. Since we closed that acquisition, West End is cumulative net flow positive, a few billion dollars. And so, 2025, as you said, was better than 2024. We ended the last quarter in 2025 with organic growth for that franchise. We're off to a really good start in 2026. And so what we've done with West End is that has been historically just a model offering business. So models on the intermediary platforms to go hand in hand with the home office models or maybe to replace home office models. Part of what we've done is we've increased their distribution from a number of platforms that they're available on, and also the number of advisors that are doing business with them. In addition, we launched ETFs off of their investment process. So where the way they articulate their investment thesis today is they have a model, and they buy underlying ETFs to express their kind of viewpoints. They don't buy VictoryShares ETFs, they buy different ETFs from different companies, and they're very active from an investment perspective on articulating kind of where they see the market going. And so what we've done is we've launched ETFs that mirror and mimic kind of what they're doing, but they do it with underlying stocks. And so now they can go to an advisor, and instead of this advisor only accessing West End in a model, they can access it now in an ETF. 'Cause some of the advisors, not every single one of their clients can actually go into a model, so they want an offering on ETF, so we've expanded that. A good example is an ETF that West End manages called MODL, and we've seen good growth there. And so, you know, and then in addition, we are going to expand West End's offerings to have a tax-efficient product. And then also, I would say, as we think about product development, that would be an area maybe potentially to add a private market-type allocation under one of their models and give their clients and new clients a potential offering of: you could buy West End, here's the allocation, and also we have a product that now has a private market offering within that allocation. So from a West End perspective, we think they're gonna be a contributor to our organic growth. This is a business that was growing pretty significantly, slowed down a little bit, but we have pretty high hopes for them. You know, they're pushing on $30 billion. So as they grow, it's not gonna be insignificant, but I think they can be a really good contributor to our organic growth. So, let me just pause as we run out of time a little bit, but, I think we have time for one question from the audience, if there's one. There's one up here in, row two. Thank you. Can you give us an update on your retail SMA initiatives and how flows have been trending there? Yeah. So we have a few offerings on the retail SMA side. It's an area we want to grow. We're net flow positive, but I'd say it's not at the level we want it to be. You know, so we're looking at launching new SMA products. We are really, you know, and West End isn't really an SMA offering, but we spent a lot of time with West End in developing kind of what they're doing, and then kind of our next phase is develop our retail SMA side. So I'd say that's an opportunity for us. We have a few products today, and we'll launch more, you know, as we're kind of moving through 2026. Great. Any more questions? We have one in the front row, too. You mentioned, you mentioned ETF share classes kind of in passing. I was wondering if you could expand on... First, I guess, do you envision all of the Victory mutual funds eventually having ETF share classes? And, and then what does that mean for flows? Yeah. So I think first, ETF share classes, I think, is gonna be a great thing for firms like ours that have, you know, a sizable mutual fund complex. I think it will allow a mutual fund holder to really now not have to really exit out of a mutual fund and still get kind of the benefits of an ETF. And so for firms like us, I think it's really good innovation, and it's gonna be great for the industry. I think it's also not gonna happen as fast as people think it's going to. There is a lot of operational, you know, progress that needs to be made in a lot of different areas. So I don't think it's gonna happen right away at the levels maybe people think it is. That being said, for Victory, not every single one of our mutual funds will have an ETF as a share class. It just won't make sense, and there'll be different reasons why it maybe doesn't make sense to put that strategy into an ETF share class. There might be other issues around it. But I would imagine that a good amount, not all of them, will have an ETF share class. You know, and I think the impact for us is it's gonna help on flows. We have parts of our mutual fund kind of complex where we're net flow positive. You think about fixed income, you think about multi-asset, and then different sleeves on the equity side, and then we have areas where we have headwinds. And I think the areas where we have headwinds, I think that's gonna be the area where it's either gonna slow down the headwinds, stop the headwinds, potentially, maybe, and it's maybe optimistic to think this way, maybe you get actually tailwinds. But I do think it's gonna be net better for us. I think it's gonna impact pricing for many. I think it's, 'cause ultimately, you're gonna bring some of the mutual fund pricing into ETF land, and I think there's a discrepancy for certain products, and I think for certain firms. I don't think we'll be impacted that much by it. You know, we've guided our—like, our fee rate, this guide is 46-47 basis points going forward. We've exceeded that the last couple of quarters. Even with ETF as a share class, it's not gonna impact our guide on the fee rate. But I think net, like a firm, for us, it's gonna be net better, but I wouldn't expect to see every single mutual fund have an ETF share class. Great. With that, we are out of time. So, Dave, on behalf of all of us from Bank of America, thank you very much. Thank you. Thank you.