Oct 28, 2026 earnings call — Expanding credit and alternatives amid equity outflows
Net client outflows totaled $10.6 billion for the quarter.
Revenue $0.3B (est $0.3B) · EPS $1.03 (est $0.96)
Key quotes
"For the quarter, Credit Strategies generated $290 million of net inflows, marking the 17th consecutive quarter of positive credit flows, and we raised approximately $770 million in alternatives."
"At quarter end, 92% of our assets under management outperformed their benchmarks over 10 years and 99% since inception gross of fees."
"As previously disclosed, approximately $7.8 billion of the net outflow included $1.9 billion associated with the U. S. Value team wind down and $5.9 billion related to the rebalancing of large global value client relationship."
Analyst Q&A 5
Interval fund demand and pipeline
Q (Kenneth Lee · RBC): He asked about demand from wealth clients for the interval fund and whether it will use existing credit strategies. He also asked about recent RFP/due diligence activity and client sentiment.
A: Management said the new interval fund will leverage the firm's strength in credit and they are seeing a fair bit of demand with an initially warm reception. On RFPs and due diligence, they said pipeline dollars have grown meaningfully while RFP counts remain relatively flat, and nothing is certain until it is actually crystallized and brought in the door.
"You know, we have we have talked at length about the convergence of capital and the need for you know, more flexible solutions and that the interval fund is clearly an ability to capture that." — Jason A. Gottlieb (CEO)
Credit growth paths and client concentration
Q (William Katz · TD Cowen): He asked where the credit platform can grow most — public-private vs private, by geography, wrapper, or channel. He also asked about M&A plans and concentration risk among the top clients.
A: Management said there are multiple levers: expand capacity (including floating rate), grow alternatives and public-private offerings, and enter Europe for syndicated loans, bonds and possibly CLOs; they are launching a UCITS for global unconstrained on November 2. On M&A they are leaning toward inorganic growth and lift-outs in credit. Management also said the largest clients are diversified across teams, strategies, and channels and not highly concentrated in one or two clients.
"I would say, you know, when we think about, you know, our largest clients and concentration, you know, her largest clients are really diversified across, you know, teams, strategies, and channels." — Charles James Daley Jr. (CFO)
Messaging on performance and fee outlook
Q (Alexander Blostein · Goldman Sachs): He asked how management is messaging weak recent performance in international/global value and the redemption risk over 12–18 months. He also asked about the starting fee rate for Q4 and the fee rate trajectory over 1–2 years.
A: Management said clients are sophisticated and they stress each team's philosophy and process, noting that alpha brings unpredictability and volatility and that the teams can capture opportunities when market breadth normalizes. They said the fee rate should be up and around 70 basis points and relatively stable for now, with offsets from declining mutual fund fees by higher fee alternatives and potential new higher-fee products and performance fees in Q4.
"Somewhere around 70 basis points, up probably a little over 1 basis point than where we were trending." — Charles James Daley Jr. (CFO)
ETF launch plan and international demand
Q (John Dunn · Evercore): He asked whether ETF share classes will be priced or positioned differently and whether launches will be phased. He also asked about regional differences in demand for international distribution.
A: Management said ETFs, if approved, will be pari passu to existing strategies and not offered at lower fees, and launches will be staged over several quarters starting with Select Equity and the Focus Fund, then more in Q1 and through 2027. On international distribution they said they are expanding in the UK, Europe and the Middle East, adding resources and new share classes and launching a UCITS global unconstrained fund to meet local demand.
"If they are launched, they will be pari passu to the existing strategies." — Jason A. Gottlieb (CEO)
Fixed cost outlook and performance fees
Q (William Katz · TD Cowen): He asked for an update on fixed cost guidance and preliminary thinking for 2027. He also asked which areas are driving performance fees and how performance-fee payouts should be thought about.
A: Management said the fixed cost outlook is unchanged from the guidance given at the beginning of the year and they guided to mid single digits excluding the added cost from Grand View acquired in January and the LTI exchange. On performance fees they said, through September 30 they estimate a similar outcome to last year but the final result could change; they highlighted strong opportunities from the EMsights team and said 7 of 8 performance-fee teams are currently in the money and the opportunities are broadly diversified.
"So, you know, we guided to mid single digits if you think about excluding the addition of the cost from a Grand View, which we acquired in January." — Charles James Daley Jr. (CFO)