Janus Henderson Group PLC Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brennan Hawken - UBS AG - Analyst : Ali and Roger curious about the ETF strategy. So momentum has been really quite solid. And it's really quite remarkable given the heritage in equities rather than fixed income. So you've said in the past, you're not really interested in clone-type ETF products. So could you maybe give us an idea about how you're thinking about bringing equity products. We've seen a few filings and heard of a few filings. But what are the plans for 2025? And how big do you think that offering can get?

Question: Brennan Hawken - UBS AG - Analyst : That's helpful. Roger, my follow-up, I'd love to ask you about the 2025 outlook for expenses. So you mentioned that assumes flat markets. So curious if you could please let us know what kind of leverage -- operating leverage you'd expect in both comp ratio and on the sensitivity for non-comp to upside from market beta.

Question: Brennan Hawken - UBS AG - Analyst : Right. But is there any like rule of thumb, whereas 100 basis points in markets translates to blank leverage? Or is it not that simple?

Question: Craig Siegenthaler - BofA Securities Inc - Analyst : So I don't normally say these things, but I did want to congratulate you on the successful turnaround in place, which we know is very hard in asset management. I think this actually was Janus' first positive flow year since 2009 for legacy Janus, even then it was barely positive.

Question: Craig Siegenthaler - BofA Securities Inc - Analyst : So, Ali, my question is on fixed income. So investment performance is currently very strong. I think the timing is pretty perfect for duration extensions. We're already seeing a nice lift in your flows there. We know there's many funds inside of that business, and we know there's a big one driving that. But I'm curious in terms of performance, what factors and themes do you attribute the strong performance to besides just security selection? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 2:00PM, JHG.N - Q4 2024 Janus Henderson Group PLC Earnings Call

Question: Craig Siegenthaler - BofA Securities Inc - Analyst : And just sticking with fixed income, but flipping the conversation from performance to flows. What is the outlook for 2025, just given the likely better industry flow outlook, your very good performance, you have money in motion from a very large competitor and you also ended the year with a lot of momentum heading into the fourth quarter.

Question: Bill Katz - TD Cowen - Analyst : I appreciate the update and the guidance. Just thinking about the development you've seen in the Protect & Grow side, particularly on the intermediary, which is the biggest swing factor for your business. And then on the institutional side, the incremental opportunity. I was wondering if you could just unpack and maybe click in one more layer deeper in terms of what you're hearing from either the gatekeepers or sort of on-the-ground financial advisers that is allowing the acceleration of growth and sales, both net and gross. Is it just the brand campaign? Is it the efficacy? Is it the marketing, all of the above, the data seems very compelling to me. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 2:00PM, JHG.N - Q4 2024 Janus Henderson Group PLC Earnings Call And then you mentioned that you're seeing some good signs in the build-out of the sort of the institutional block. Just sort of wondering what's resonating with the consultant community and how you think about that looking ahead?

Question: Bill Katz - TD Cowen - Analyst : Okay. And just as a follow-up, you mentioned the M&A story a little bit. I was just sort of wondering, obviously, you have a couple of deals that you're integrating into the new year. That seems to be going along very well. You're generating a ton of free cash flow. Your payout rate is only REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 2:00PM, JHG.N - Q4 2024 Janus Henderson Group PLC Earnings Call about 70%. So how do we think about the opportunity on the inorganic side? And I'm wondering if you could also talk about the possibility of beefing up your ownership of Privacore, which could then potentially increase your flow profile.

Question: Ken Worthington - JPMorgan Chase & Co - Analyst : First, I'll start. The presentation you guys have put together very helpful. So thank you for that. In terms of questions, maybe starting with fee rate, you've been able to maintain and improve the fee rate for the last seven quarters, so almost two years. If I look at mix, I assume strong equity markets over the last two years have had some positive contribution to that fee rate, I'll call it, complementing, I think, your commitment to being disciplined about pricing. If 2025 experiences more normal equity and fixed income market returns, what do you expect the fee rate to do? And I know there's a ton of puts and takes, which is why I asked the question, you've got new products, you've got transactions, you've got certain ramps. What is your sense? Does it continue to stay flat here? Or does it edge one direction or the other? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 2:00PM, JHG.N - Q4 2024 Janus Henderson Group PLC Earnings Call

Question: Ken Worthington - JPMorgan Chase & Co - Analyst : Okay. Okay. I'll try some fishing here on Anemoy. You're managing their tokenized fund through, I assume, a sub-advised relationship. You called this out. This seems like it could be interesting. I guess the question is why take on this business? It's hard to think that this is a big money generator. So I look to blockchain and tokenization, do you have more interest in that sort of technology? Like is there something underlying your willingness to kind of take on this business?

Question: Alex Blostein - Goldman Sachs & Co - Analyst : Just was hoping to double-click into a couple of strategic areas you guys talked about, I guess, one being European ETF marketplace. Clearly, nice developments there. Could you spend a minute on sort of the economics in that market relative to the US market with respect to things like distribution cost and fee sharing arrangements, et cetera?

Question: Alex Blostein - Goldman Sachs & Co - Analyst : Yes. I got you. That makes sense. On your point about acquisition pipeline, and you sounded, obviously, like it's quite busy. It's busy for a lot of folks. You remain disciplined. But what are the areas that you feel are more likely to materialize in an actual transaction, either in terms of geography or product base?

Question: Dan Fannon - Jefferies Financial Group Inc - Analyst : I wanted to follow up, Roger, on your guidance. Obviously, flat AUM and flat markets, I get, but performance fees are another attribute that as we think about 2025 have the potential to improve given some of the performance as well as it looks like above high watermarks on some of the other strategies. So how should we think about performance fees into 2025, given what you know today and how that might translate into the expense profile and guidance you've given? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 2:00PM, JHG.N - Q4 2024 Janus Henderson Group PLC Earnings Call

Question: Dan Fannon - Jefferies Financial Group Inc - Analyst : Okay. And I guess just following up on what's embedded in your guidance, is the -- any improvement in the mutual fund side and kind of implied in the guidance that you've given for the ranges for 2025?

Question: Mike Brown - Wells Fargo Securities LLC - Analyst : The flow story at JAAA and the tangential products have been very, very strong. I just wanted to ask a little bit about the broadening out by client type. So Ali, you alluded to the fact that you're seeing kind of broader institutional use of the product. I wanted to just ask about kind of what inning that's in, in your view? And then are you seeing any increasing competitive pressure just given the success of the product and some of the new product launches that have come to market?

Question: Michael Cyprys - Morgan Stanley & Co LLC - Analyst : Just wanted to come back to a comment, Ali, you made about innovation at the core of Janus Henderson's corporate strategy. I was hoping maybe you could talk about how you're thinking about and investing in technology to enhance your investment engine and support alpha generation. How do you see that evolving in the near term versus looking out more longer term?

Question: Michael Cyprys - Morgan Stanley & Co LLC - Analyst : And maybe just on that latter point on AI, maybe we could just double-click on that for just a moment. Maybe you could talk a little bit about how you're using and thinking about using generative AI and LLM tools across the organization. I think you mentioned an RFP use case broadly. How REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 2:00PM, JHG.N - Q4 2024 Janus Henderson Group PLC Earnings Call many use cases have you guys identified? How do you see that evolving in terms of putting them into production over the next year or two? And as you think about over the near to medium term, what -- how meaningful could this be to top versus bottom line results?