Eaton Vance Corp. (NYSE:EV) Q1 2020 Earnings Conference Call - Final Transcript

Feb 26, 2020 • 11:00 am ET


Eaton Vance Corp. (NYSE:EV) Q1 2020 Earnings Conference Call - Final Transcript


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Thomas Ewart Faust

this key growth measure. As we assess the performance of our business in the first quarter, achieving mid-single-digit organic revenue growth is certainly among the highlights.

By this measure, the first quarter of fiscal 2020 was our best growth period since the third quarter of fiscal 2018. Last June, we announced an important strategic initiative involving our Parametric, Eaton Vance Management and Eaton Vance Distributors affiliates. As we described at that time, the initiative has three principal components: rebranding EVM's rules-based systematic investment-grade fixed-income strategies as Parametric and aligning internal reporting consistent with this revised rebranding; internally integrating under Eaton Vance Distributors the sales teams serving Parametric and EVM clients and business partners in the registered investment adviser and multifamily office market; and then third, combining under Parametric the technology and operating platforms supporting the individual separately managed account businesses of Parametric and EVM. I'm pleased to report that the internal change process supporting this initiative is substantially complete and that we are already starting to see real benefits to our business. Combining our systemic systematic equity and investment-grade fixed-income strategies within the same investment affiliate and consolidating our separate account technology and operating platforms positions Parametric and Eaton Vance to build upon our market-leading positions in custom indexing and laddered bond separate accounts as market demand for these strategies continues to surge. As you can see in our press release and accompanying call slides, we have made certain changes in how we categorize our managed assets and flows for reporting purposes. The new Parametric Custom Portfolios reporting category consists of individual and institutional separate accounts managed by Parametric for which customization is a primary feature. The new classification includes the Parametric equity and multi-asset strategies that formerly composed our old portfolio implementation reporting category, which are primarily Custom Core and centralized portfolio management as well as the laddered bond separate accounts that were formerly managed by Eaton Vance Management and previously categorized as fixed income for reporting purposes.

In the press release and call slides, the presentation of managed assets flows for all prior periods has been revised to reflect the new classifications. As noted earlier, we have already we have also changed the name of our former exposure management reporting category to Parametric overlay services. This reporting category consists primarily of futures-based overlay strategies and services offered to institutional clients to enable them to efficiently add or remove market exposure without affecting underlying portfolio holdings. While this is our lowest fee business with an average current fee rate of 4.9 basis points, it is also nicely profitable and growing. Since entering the business through the acquisition of the former Clifton Group in December 2012, our managed assets and overlay services have more than tripled, growing from $32 billion at acquisition to a record $97.5 billion at the end of January. Looking at our first quarter flows in more detail. We had positive net flows for all of our mandate reporting categories, except floating-rate income. Annualized internal growth in