Affiliated Managers Group Inc. (NYSE:AMG) Q2 2016 Earnings Conference Call - Final Transcript

Aug 01, 2016 • 08:00 am ET


Affiliated Managers Group Inc. (NYSE:AMG) Q2 2016 Earnings Conference Call - Final Transcript


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Greeting and welcome to the AMG Second Quarter 2016 Earnings Call. [Operator Instructions]

I would now like to turn the conference over to your host, Selene Oh, Vice President, Investor Relations for AMG. Thank you. You may begin.

Selene Oh

Thank you for joining AMG to discuss the results for the second quarter of 2016. In this conference call, certain matters discussed will constitute forward-looking statements. Actual results could differ materially from those projected due to a number of factors including, but not limited to those referenced in the company's Form 10-K and other filings we make with the SEC from time to time. We assume no obligation to update any forward-looking statements made during the call.

AMG will provide on the Investor Relations section of its website at a replay of the call and a copy of announcement of our results for the quarter, as well as a reconciliation of any non-GAAP financial measures to the most directly comparable GAAP financial measures, including a reconciliation of any estimates of the company's economic earnings per share for future periods that are announced on this call.

With us on the line to discuss the company's results for the quarter are: Sean Healey, Chairman and Chief Executive Officer; Nate Dalton, President and Chief Operating Officer; and Jay Horgen, Chief Financial Officer.

With that, I'll turn the call over to Sean Healey.

Sean Healey

Thanks, Selene, and good morning, everyone. Against the backdrop of volatile markets and muted investor risk appetite, AMG generated solid results in the second quarter, including stable economic earnings per share and year-over-year growth of 8% in our pro-forma assets, bringing our total assets under management to approximately $700 billion. Our Affiliates produced excellent relative investment performance and positive net client cash flows and we added outstanding new Affiliates, including Winton Capital Management and Capula Investment Management.

As Jay will describe, given the increased earnings power of our business, even in a relatively difficult environment for the asset management industry, we see continued earnings growth for the balance of the year and through 2017. Notwithstanding, elevated market volatility, which resulted in industry-wide risk aversion, we generated positive net client cash flows during the quarter. As Nate will discuss, our strong net inflows in the retail and high net worth channels were partially offset by lower institutional sales, especially at the end of the quarter as a number of global institutional clients decided to pause implementation of investment decisions in response to the unexpected outcome of the UK's Brexit referendum. We believe that this was essentially a short-term response, and looking ahead as markets have stabilized and investor expectations adjusted, we are seeing a resumption in sales momentum and expect to benefit from these delayed fundings through the balance of the year.

We also believe that rise in dispersion in the market will increasingly favor differentiated performance oriented strategies, including focused active equities and a range of value-added alternative investment products. Our Affiliates equity strategies performed well in the quarter, including Tweedy Browne, Harding