Virtus (VRTS) Q4 2025 Earnings Call Transcript

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Date

Feb. 6, 2026 at 10 a.m. ET

Call participants

• President and Chief Executive Officer — George Aylward
• Executive Vice President and Chief Financial Officer — Michael Angerthal
• Operator

Takeaways

• Assets Under Management (AUM) -- $159.5 billion at quarter-end, declining from $169 billion due to $8.1 billion of net outflows and negative market performance.
• Net Flows -- Outflows totaled $8.1 billion, with equities responsible for nearly all net outflows, while ETFs contributed positive $600 million in net inflows.
• Sales -- Total quarterly sales were $5.3 billion, down from $6.3 billion in the prior quarter, which included a $400 million CLO issuance.
• Equities Impact -- Quality-oriented equity strategies, representing half of AUM, drove elevated outflows due to continued underperformance in momentum-dominated markets and "several meaningful institutional partial redemptions."
• Product Mix and Channel Detail -- Institutional accounts made up 33% of AUM, retail separate accounts comprised 27%, U.S. retail funds were 26%, and 14% was in closed-end funds, global funds, and ETFs.
• ETF Growth -- ETF assets under management increased to $5.2 billion, up $500 million sequentially and 72% year over year, with three new actively managed ETFs launched in the quarter and more planned for upcoming quarters.
• Operating Results -- Operating margin as adjusted declined 60 basis points sequentially to 32.4%, and net income as adjusted per diluted share was $6.50, 3% lower than the $6.69 level in the prior quarter.
• Fee Rate Guidance -- The average fee rate was 40.6 basis points, with management projecting 41-42 basis points for Q1 and a medium-term outlook of 43-45 basis points post-Keystone acquisition.
• Expense Control -- Employment expenses as adjusted declined 3% to $95.8 million due to lower incentive compensation, while other operating expenses as adjusted were $30.2 million, remaining within historical quarterly ranges.
• Capital Management -- The firm repurchased approximately 60,000 shares for $10 million in the quarter and over 347,000 shares using $60 million across the year, representing 5% of beginning shares outstanding, while maintaining $386 million in cash and equivalents and an undrawn $250 million revolver.
• Private Markets Expansion -- Virtus announced the acquisition of a 56% majority interest in Keystone National Group, a $2.5 billion asset-based private credit manager, and a 35% minority investment in Crescent Cove, focused on venture debt for technology companies.
• Investment Performance -- Over three years, 76% of fixed income and 60% of alternative assets outperformed benchmarks, despite only 39% of AUM outperforming due to equity challenges; over ten years, 65% of equity funds and 87% of fixed income funds outperformed their peer median.

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Risks

• Net outflows accelerated to $8.1 billion, nearly doubling from $3.9 billion in the prior quarter, mainly driven by "continued style headwind for quality-oriented strategies" and "several meaningful institutional partial redemptions."
• Operating margin as adjusted declined sequentially from 33% to 32.4%, primarily due to reduced average AUM and ongoing asset mix pressures.
• Management noted persistent market headwinds for quality-oriented equities, stating that performance in these strategies has lagged momentum stocks for "They've had the longest period of underperformance versus more momentum-type strategies, in decades," creating sustained AUM and revenue pressure.

Summary

Virtus Investment Partners (NYSE:VRTS) reported lower quarter-end AUM and decreased sales, with strategic messaging centered on product diversification and expanding private markets capabilities. Executives highlighted swift execution of ETF launches and growth initiatives while actively managing expenses and balance sheet discipline. The firm detailed the planned Keystone National Group acquisition and Crescent Cove investment as key platform extensions, supported by management commentary on accelerating distribution and channel opportunities.

• Management emphasized that 84% of rated retail fund assets were in three, four, and five-star funds, with 23 retail funds rated four or five stars.
• “Our AUM continues to be well diversified across products, and asset classes,” according to Angerthal, with broad representation in both equity (domestic and international, mid, small, and large cap) and fixed income strategies.
• Management projected net leverage to remain controlled at 1.2x EBITDA after closing the Keystone acquisition and executing annual cash outflows.
• Executives committed to maintaining a balanced approach to capital allocation through share repurchases, strategic M&A, and consistent dividends, referencing "eight annual dividend increases."
• Management confirmed Virtus remains substantially underweight in technology software exposure, with Angerthal stating at Crescent Cove, "they don't have specific holdings that are at risk of being disintermediated by AI."

Industry glossary

• SMID Cap: Refers to investment strategies focused on small- and mid-capitalization companies, typically those with market capitalizations between $300 million and $10 billion.
• CLO: Collateralized Loan Obligation—a security backed by a pool of loans, often used to raise capital within asset management structures.
• Tender Offer Fund: An investment vehicle allowing periodic redemption of shares at net asset value, often used for less-liquid alternative or private market assets.
• Asset-Based Lending: A form of lending secured by specific collateral, such as receivables or inventory, distinct from unsecured or cash-flow-based loans in private credit.
• Organic Growth Rate: Growth in assets or flows not attributable to M&A or consolidated acquisition impact, but from ongoing business activity or client wins.

Full Conference Call Transcript

George Aylward: Thank you, Sean, and good morning, everyone. I'll start with an overview of the results we reported this morning, and then Michael will provide more detail. The fourth quarter reflected a challenging environment for us given the quality-oriented equity strategies, which represent half of our AUM, remained out of favor, resulting in an increased level of net outflows. As we have previously noted, our quality-oriented equity strategies have delivered strong long-term performance across cycles and have previously been our largest drivers of growth when in favor. However, the market backdrop continued to favor more momentum-driven stocks resulting in near-term underperformance.

Importantly, the impact from our quality equity strategies has overshadowed areas of strength across the business, which in the quarter include positive net flows and strategies from several managers, including in growth equity, emerging markets debt, listed real assets, and event-driven. Continued strong positive net flows in ETFs, product introductions of differentiated actively managed ETFs, expansion into private markets with two strategic investments, solid long-term investment performance, with fixed income and alternatives also having strong near-term performance continued return of capital, with $10 million of share buybacks in the quarter, and a solid balance sheet meaningful liquidity, and de minimis net leverage at year-end.

We continue to execute our strategic priorities in the quarter, including broadening our product offerings, with several ETF introductions and expansion into the private markets. For ETFs, we launched three new actively managed funds in the quarter, including a growth opportunities ETF from Silvent, and U.S. and international dividend strategies from our systematic team. We expect several additional active ETF launches over the next two quarters across managers, including Stone Harbor, Duff and Phelps, and Silvent. We now have 25 ETFs spanning a range of strategies and continue to focus on broadening access to them in distribution channels. In addition, we have several other new offerings in process or filing including interval funds and additional retail separate account strategies.

And as mentioned, we also have expanded into private markets with the previously announced pending acquisition of a majority interest in Keystone National Group, an asset-centric private credit manager, and a minority investment in Crescent Cove, a venture growth manager. I will discuss both in more detail shortly. Looking at our fourth quarter results, assets under management were $159 billion at December 31, down from $169 billion due to net outflows and the impact of market performance. Total sales of $5.3 billion compared with $6.3 billion in the third quarter, which included a $400 million CLO issuance. Total net outflows were $8.1 billion and across products, the outflows were almost entirely driven by equities.

Looking at flows across asset classes, equity net outflows largely reflected the continued style headwind for quality-oriented strategies. We had several meaningful institutional partial redemptions in such strategies, as well as some seasonal tax loss harvesting in the funds. Fixed income net flows were modestly negative at $100 million for the quarter, and we saw positive net flows in certain fixed income strategies including multisector and emerging market debt. Alternative strategies were essentially breakeven for the quarter and positive for the trailing twelve months.

In terms of what we're seeing early in the first quarter, our U.S. retail funds continue to face headwinds though there have been encouraging signs in the market of broadening investor sentiment and January sales were at the highest level since June, and net flows at the best level since September, and fixed income net flows were positive. For ETFs, sales and net flows continue to be strong. Within retail separate accounts, while for the month we have seen an increase in sales, there was a large redemption from a client that rebalanced a lower fee model only mandate to a passive strategy. On the institutional side, trends are similar to the fourth quarter with known redemptions exceeding known wins.

Turning now to our financial results. Earnings in the operating margin declined modestly, reflecting lower average AUM, partially offset by lower operating expenses. The operating margin was 32.4%, compared with 33% last quarter. Earnings per share suggested of $6.50 compared with $6.69 in the third quarter. Turning to investment performance. Recent performance reflects our overweight to quality equity, while long-term performance demonstrates we've generated solid performance over our cycles. With the three-year period, while 39% of AUM outperformed benchmark, due to challenging equity performance, fixed income and alternative strategies performed very well. With 76% and 60% of AUM respectively outperforming benchmarks.

Over the ten-year period, 62% of our equity assets, 77% of our fixed income assets, and 71% of alternative assets beat their benchmarks. For just mutual funds, 65% of equity funds, and 87% of fixed income funds outperformed their peer median for the ten-year period. I would also note that 84% of our rated retail fund assets were in three, four, and five-star funds, and 23 of our retail funds are rated four and five stars. As it relates to equities, despite the style headwind, our quality-focused managers continue to invest with high conviction businesses with durable fundamentals and long term potential.

Their disciplined approach has delivered excellent returns over cycles, and we remain confident that as companies with quality characteristics come back in favor, these strategies are well positioned. With the environment year-to-date, we are pleased that although it's a short period several of these strategies have generated very compelling performance. In terms of our balance sheet and capital, we continue to have financial flexibility to balance our capital priorities of investing in the business, returning capital to shareholder and appropriate leverage. During the quarter, we repurchased approximately 60,000 shares for $10 million. The full year, we used $60 million to repurchase over 347,000 representing 5% of beginning shares.

We ended the quarter with significant liquidity, including $386 million cash and equivalents and an undrawn $250 million revolver, positioning us for the upcoming first quarter obligations include including the closing payment for Keystone National. Before turning the call over to Michael to review our financial results in more detail, I would like to provide some highlights on the Keystone National and Crescent Cove transactions which will allow us to provide private market offerings and differentiated strategies with strong track records. We will acquire a 56% majority interest in Keystone, a boutique private credit manager specializing in asset-based lending with approximately $2.5 billion in assets across a tender offer fund, and two private REITs.

Keystone's approach differs from traditional direct lending. Its financings are secured by specific collateral, are self-amortizing with regular payments of principal and interest, have shorter durations, and are structured with robust covenants and triggers. This collateral backed covenant rich design provides meaningful downside protection for investors who are underexposed to private markets and serves as a differentiated complement for those already invested in traditional private credit. We see significant growth opportunities for Keystone across both retail and institutional channels. Their strategies are already available in an at-scale tender offer fund used by an established base of wealth management firms, and we believe we can expand that meaningfully.

In addition, over time, we also expect to introduce the capabilities to U.S. and non U.S. institutional clients. We're excited to welcome Keystone's Salt Lake City-based team to Virtus Investment Partners, Inc. and expect to close the transaction during the first quarter. With regard to Crescent Cove, a private investment firm that focuses on providing flexible capital solutions to high growth middle market technology companies, we completed a 35% minority Crescent Cove has built a strong track record growing to over $1 billion in AUM across multiple private funds with a diversified client base. Their venture debt strategy offers compelling risk managed way for investors to gain exposure to private technology companies.

We see long term growth potential for Crescent Cove, including extensions into other products for broader client usage, and we're excited to be partnering with their team. With that, I'll turn the call over to Michael Angerthal to provide some more details on the financials.

Michael Angerthal: Thank you, George. Good to be with you all this morning. Starting with our results on Slide 10, assets under management. Our total assets under management at December 31 were $159.5 billion and average assets declined 3% to $165.2 billion. Our AUM continues to be well diversified across products, and asset classes. By product, institutional accounts were 33% of AUM, Retail separate accounts, including wealth management, represented 27% and U.S. retail funds represented 26%. The remaining 14% consisted of closed end funds, global funds, and ETFs. Within open end funds, ETF AUM increased to $5.2 billion up $500 million sequentially on continued strong net flows. And up 72% year over year.

We are also well diversified by asset class, with broad representation across domestic and international equities including mid, small and large cap strategies, and a fixed income platform diversified across duration, credit quality, and geography. Turning to slide 11, asset flows. Total sales were $5.3 billion compared with $6.3 billion in the third quarter. Reviewing by product, institutional sales were $1.4 billion versus $2 billion last quarter which included the issuance of a $400 million CLO. Retail separate account sales were $1.2 billion compared with $1.4 billion in the third quarter. Open-end fund sales were $2.8 billion consistent with the prior quarter and included $800 million of ETF sales.

Total net outflows were $8.1 billion compared with $3.9 billion last quarter. Reviewing by product, institutional net outflows of $3 billion were primarily due to redemptions of quality domestic and global large cap growth strategies. Of the total gross outflows in the quarter, 75% were partial redemptions rather than full terminations. Retail separate accounts had net outflows of $2.5 billion driven by quality small and SMID cap equity strategies. Open-end fund net outflows of $2.5 billion compared with $1.1 billion last quarter also driven by quality-oriented equity strategies which more than offset positive ETF flows. ETFs continued to deliver strong momentum generating $600 million of positive net flows and sustaining a strong double-digit organic growth rate.

Before turning to the financial results, I would note that outlook commentary that I provide beyond the first quarter contemplates a full quarter impact of Keystone National. Turning to slide 12, Investment management fees as adjusted were $168.9 million down 4% due to lower average AUM, and a modestly lower average fee rate. The average fee rate was 40.6 basis points, which compared with 41.1 basis points last quarter. For the first quarter, average fee rate of 41 to 42 basis points is reasonable for modeling purposes. And looking beyond the first quarter, we anticipate the average fee rate will be in the range of 43 to 45 basis points.

As always, the fee rate will be impacted by markets, and the mix of assets. Slide 13 shows the five-quarter trend in employment expenses. Total employment expenses as adjusted of $95.8 million decreased 3% due to lower variable incentive compensation. As a percentage of revenues, employment expenses as adjusted were 50.7% and within our range of 49% to 51%. As a reminder, the first quarter will include seasonal employment expenses, which are incremental to this range. Looking beyond the first quarter, we anticipate that employment expenses as a percentage of revenues will be in a range of 50% to 52% as the benefit from the addition of Keystone is more than offset by the decline in equity AUM.

As always, it will be variable based on market performance in particular as well as profits and sales. Turning to slide 14, other operating expenses as adjusted were $30.2 million down from $31.1 million due to discrete M&A related costs in the prior quarter. We have maintained other operating expenses within our $30 million to $32 million quarterly range for several years, and for modeling purposes, this remains appropriate for the first quarter. Looking beyond the first quarter, we believe a quarterly range of $31 to $33 million is reasonable. Slide 15 illustrates the trend in earnings.

Operating income as adjusted of $61.1 million compared with $65 million in the third quarter, with the decline due to lower average assets, partially offset by lower operating expenses. The operating margin as adjusted of 32.4% decreased 60 basis points from the third quarter. With respect to non-operating items, non-controlling interests of $1.5 million decreased from $2.1 million due to the increase in ownership of our majority-owned manager. For modeling purposes, this level is appropriate for the first quarter. Beyond the first quarter, we believe that a reasonable range for non-controlling interests will be $5 million to $6 million, which factors in the Keystone minority ownership.

Our effective tax rate of 25.3% was lower by 70 basis points sequentially due to an update to our blended state tax rate, and this rate is appropriate for modeling purposes in the first quarter. Beginning with the second quarter, we anticipate an effective tax rate of 23% to 24% due to the addition of Keystone. Net income as adjusted of $6.50 per diluted share declined 3% from $6.69 in the prior quarter. Slide 16 shows the trend of our capital liquidity and select balance sheet items. Cash and equivalents at December 31 were $386 million. In addition, we had $36 million of other investments including seed capital to support growth initiatives.

The $1 million decline in outstanding debt reflected the quarterly required amortization payment on the new term loan. Gross debt to EBITDA was 1.3 times, and we ended the quarter with $13 million of net debt. During the fourth quarter, we repurchased 60,292 shares of common stock for $10 million. Other uses of capital during the quarter included the $40 million closing payment for Crescent Cove that is included in the $61 million of investments—equity method row which also includes our minority investment in Zevenbergen. As well as $9 million for an increase in equity of our majority-owned manager which was the last of the scheduled equity purchases.

In the first quarter, cash usage will include our annual incentive payments, typically our highest operating cash outlay of the year, and the annual revenue participation payment which we expect to approximate $22 million, which represents most of the remaining obligation. And as previously mentioned, we will make the $200 million payment for Keystone National upon closing the transaction. Taking into account that payment, and other first-quarter activity, we would anticipate net leverage at March 31 of 1.2 times EBITDA. With that, let me turn the call back over to George Aylward. George?

George Aylward: Thank you, Mike. We will now take your questions. Didi, will you open up the lines, please?

Operator: Yes. As a reminder, to ask a question, please press 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1-1 again. And our first question comes from Ben Budish of Barclays. Your line is open.

Ben Budish: Hi, good morning and thank you for taking the question. Maybe first just on the fee rate, Mike, you gave some color on the quarter and the year. Just curious if you could flesh that out a little bit more. What was the driver of the fee rate compression in the quarter? I assume Q1 guidance is kind of based on what you're seeing year to date, and the full year is going to be benefited from Keystone. But just any more color on the underlying dynamics would be helpful.

Michael Angerthal: Yeah. As you know, we've operated our fee rate in a relatively narrow range for quite some time. I think if you normalize the 40.6 basis points in the first quarter, you get to about 40.9, just under 41 basis points as we had some discrete expenses, especially on the ETF side. So normalizing that, you have a kind of flat profile quarter over quarter. So we've been able to maintain that. And you know, looking off of that 40.9, we gave the range in the 41 to 42, so you have that level. And we're anticipating one month of impact from Keystone as we're on target for closing on March 1. As we've talked about.

So when you factor in one month of Keystone in addition to where we ended the fourth quarter, we think that range is appropriate for modeling and represents our ability to keep our fee rate in that narrow range over time.

Ben Budish: Okay. Helpful. And then maybe just a strategic question. I know you just did a transaction, I apologize that we're already asking you about the next one. But George, in your prepared remarks, you talked about market-wide headwinds, especially to kind of value-oriented strategies where you over-index. I'm just curious—I understand over the last few years, the line of questioning has probably been more around private markets, private credit. But just as you're thinking about future transactions, do you see that as an avenue for additional diversification? You know, does it make sense to broaden your kind of growth equity footprint? And perhaps could you remind us today how much of the AUM is more kind of growth versus value-oriented?

Thank you.

George Aylward: Sure. And, so a couple things. So I think as we think about diversification in addition to diversifying our offerings, right, so our goal is to provide, you know, the building blocks for a well-diversified portfolio, so we continue to build those out. But the other area of diversification we also think about a lot is where our clients are and what channels we're in. So think when we previously talked about M&A, we've obviously talked about adding compelling differentiated strategies. We've also said areas of interest to us would include those things that would either broaden our distribution footprint, particularly outside the U.S., as well as in other channels, we think there's more opportunity for us to garner penetration.

In terms of overall strategies, again, a lot of dialogues around private markets, and we do agree that private markets have an important place in a portfolio. But that's not 100% of the portfolio. So we do continue to think about the other elements of the traditional managers. Right now, as we're living through an overweight towards what I would define as quality-oriented strategies, which include both core value and growth, but of a quality nature. We do have other managers who are more growth equity. They've been our smaller managers. But I think as we said on a previous call last quarter, as well, we've actually seen growth there.

They're just unfortunately smaller than our largest managers that have more of that quality orientation. So a lot of the ETFs and SMAs that we've been launching over the last quarter or two have been in those other kind of growth equity managers. Particularly where we see areas outside of the traditional U.S. basis, some non-U.S. strategies as well as that. So we've been focusing on, like, Silvent, which is not a quality-oriented manager. More style agnostic. That has been an area of growth for us. And we've created several ETFs that have already launched. Several are in filing. So we continue to work on those strategies.

And even within some of our value managers who are classic value managers, some of them actually had very strong compelling performance in the recent quarters, and we look for opportunities to grow those. So we'll continue to evaluate other things that we can add through M&A, but, again, it wouldn't only be limited to those things which provide another investment strategy. It could be things that have other strategic elements to help just overall drive growth on the long term.

Ben Budish: Alright. Great. Thank you both.

George Aylward: Mhmm. Thank you.

Operator: Thank you. And our next question comes from Crispin Love of Piper Sandler. Your line is open.

Crispin Love: Thank you. Good morning. Appreciate taking my question. First, can you share what your software exposure is across your AUM and then relatedly just exposure at Crescent Cove Advisors given their focus on technology and just overall thoughts? Just given the news that's been permeating the headlines this week?

George Aylward: So in terms of overall, just technology and software exposure?

Crispin Love: Yes.

George Aylward: Yeah. I mean and, you know, one of the things that has been a drag on the performance of some of our quality-oriented equities, is they are just generally, as a rule, underweight areas of technology. So that's why this recent period—in particular yesterday, was actually very good for many of our managers. You know? So, generally, I think as a complex, we are underweight exposure to technology. But, again, not all technologies created equal. Right? So there are some that will actually meet the definition of some of our managers and some will not.

In terms of Crescent Cove, I mean, they're in a different part of the market as it relates to the venture part and the earlier growth opportunities. So again, that is an area of focus for them. And again, I think long-term, that continues to be a compelling area of investment. Mike, any other anecdotes you would add?

Michael Angerthal: I would just say at Crescent, they don't have specific holdings that are at risk of being disintermediated by AI. So as George said, those are early stage entities, but you highlighted the key point in the existing portfolio for Virtus Investment Partners, where we're well underweight. Some of these software names.

Crispin Love: Great. Thank you. That's what I thought I just wanted to make sure and all very helpful color there. And then, let me just dig into the flow picture from the fourth quarter. And then as you look forward, just fourth quarter was very challenging across open end, SMAs, institutional. Can you just discuss a little bit what drove the acceleration of negative flows quarter to quarter? The storyline seemed to be roughly similar from the third quarter commentary. And then just as you look at the fourth quarter moving to the first and kind of the longer-term outlook, just how do you feel about the flows? Thank you.

George Aylward: Yeah. And as you said and as we said in our remarks, it was definitely a challenging quarter. Right? So our quality—you know, we're overweight. Half of our AUM is in quality-oriented equity strategies. They've had the longest period of underperformance versus more momentum-type strategies, in decades. That has been quite a challenge. You know? As that culminated in the fourth quarter, again, fourth quarter, a lot of time will there be, you know, either traditional just tax loss harvesting or other repositionings of portfolios for year-end, so it was a higher level of outflows than we had seen previously. But what that means going forward, you know, it's hard to know. Right?

It all depends on what that market environment looks like. Right? If the market environment that we've seen in the last month and five days were to continue, as I alluded to, that's actually been an incredibly strong environment for some of those same strategies. And I think as I said on an earlier call, generally, when there's an inflection in the cycle, usually when you have some of the strongest performance from some of these strategies. It's still way too early. No one knows what that's gonna look like.

Which goes to the earlier question as to why we continue to focus not only on, you know, the opportunity for when these strategies return to favor, but to continue to look for opportunities to grow our other strategies that don't have the same quality equity kind of orientation. So you know, our hope is that the long-term value of the quality-oriented equity strategies will demonstrate itself, and people will again avail themselves of those strategies. But in the meantime, we're looking to grow other areas of the business.

Crispin Love: Great. Thank you, and appreciate you taking my question.

George Aylward: Thank you.

Operator: Thank you. And our next question comes from William Raymond Katz of TD Cowen. Your line is open.

William Raymond Katz: Great. Excuse me. Thank you very much for taking the questions. First question is just in terms of the Keystone transaction. Now you've had a little more time to interact with the management team post the announcement from a few weeks ago, can you talk a little bit about maybe any kind of refined go-to-market opportunity? I think you spoke to leveraging through your distribution channel and/or institutional which makes a ton of sense. But just where do you see the greatest opportunity for that growth by channel, by geography? Love to hear your perspective on that. Thank you.

George Aylward: Yeah. No. Great question. And we've had lots of conversations with management and prior to and post-transaction. And I think one of the joint goals is the excitement that we all have about the opportunity to leverage what they currently have and have been very successful with in the wealth management channel with our broader distribution resources. So our sales teams have spent multiple sessions being trained and prepped and they're all very excited and very eager to introduce those capabilities to our existing relationships as well as other relationships that we can more easily develop now that we have access to this. So we think there's a great opportunity set going forward.

We do think the approach that they take on the private credit side, is asset-based in nature as opposed to the direct lending, is a very differentiated approach. Their main vehicle does not utilize the high level of leverage that some of the competitors do. So we think there's a great opportunity. The fund they have is already retail-ready. It's already being utilized by wealth management firms. As I said in the prepared remarks, we believe we can accelerate that meaningfully, so that does create what would logically be the earliest opportunity set, right? To leverage what they've already built. It is already attractive in the wealth management space, but just through the more extensive resources that we currently have.

But as I also mentioned, we think there's some really interesting opportunities on the institutional side where the strategy, again, as a complement to other types of private credit, could be very compelling. So overall, we entered into this transaction because we thought there was a great combination that could create some long-term growth. The teams that are responsible for driving that growth are all very excited about this opportunity. So we're gonna continue to refine that. And as Mike alluded to, we're on target for our closing transaction date, and we're getting everything prepared in advance of that.

So our sales team will—we're not waiting to close to get educated and do our planning, but all of the plans are in place and the material and everything, so we're very excited and look forward to closing on the transaction.

William Raymond Katz: Okay. Thank you. And just a follow-up and a clarification. On the follow-up, I was wondering if you could speak a little bit to maybe the capital deployment priorities and how that might be shifting given you have Keystone and Crescent sort-of in the wings here. Versus how the stock has been behaving? I appreciate the buyback. But any sort of shift in your allocation thought process? And then on the deal pipeline, so not what have you done for me lately, but how does that pipeline look today, you know, net of the Keystone and Crescent transactions? Thank you.

George Aylward: Sure. In terms of priorities, again, we always take a balanced approach. And in different periods, we'll either overemphasize repurchases or emphasize investments in organic growth, and we always look to maintain a reasonable level of leverage. So I wouldn't say, you know, right now, having just completed two transactions, Mike has spoken to our upcoming obligations, which we will need to satisfy, but we will continue to place an emphasis on other areas such as repurchases. Which generally we have a long history of continued stock repurchase program with periodic pauses when we have other capital needs, as well as the dividend. We do think the dividend is an important element of return to shareholders.

I believe we've had eight annual dividend increases. So that will continue to be something that we prioritize. And as we've always said for M&A, that really is related to only when we have an opportunity that we truly believe is of strategic value to build long-term shareholder value and relative to our other alternatives. In terms of that pipeline, and having just completed two, which as I assume you understand, took a lot of our time, there are still opportunities that are out there We still continue to evaluate and consider. But as always, we'll only evaluate and move forward with something if we truly believe it's additive in terms of the capability.

It's additive in terms of broadening our distribution footprint or in other areas such as increases in scale dramatically. This is a scale business. So that is something that we also consider as much.

William Raymond Katz: Okay. And just one clarification, for Mike. Just in terms of the guidance, I think I picked them all up. I may have just not heard or it didn't come out. For the first quarter, how should we think about the comp ratio? I appreciate the seasonal dynamic, but any sense on the ratio just given some of the moving parts between the top line and the comp line?

Michael Angerthal: Yeah. As you know, the seasonal items do come forward in the first quarter. But our 49% to 51% range is appropriate for the first quarter. And then moving forward, we talked about 50% to 52% once we feather in Keystone.

William Raymond Katz: Okay. Sorry if I missed it. Thank you for taking the questions.

George Aylward: Thank you.

Operator: Thank you. That concludes our question and answer session. I would like to turn the conference back over to Mr. Aylward.

George Aylward: Okay. Well, I want to thank everyone again as always for joining us, and I certainly encourage you to reach out if there's any other further questions. Thank you very much.

Operator: That concludes today's call. Thank you for participating, and you may now disconnect.

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