Bill Katz

Johnson quantified the raise at $33 billion year-to-date versus a $25 billion to $30 billion target, guiding to about $40 billion; Lexington was about 40% of the quarter's $10.3 billion. Direct.

Johnson said 30% is a stop along the route, expecting margin above 30% over time; Nicholls framed 30% to 35% as the industry zone. Direct.

Jenny: Lexington XI expected at least size of Fund X (~$22.7B), on track with good demand. On 351 tax: ICI discussion is about making mutual fund treatment fairer, not removing ETF advantage. Daniel: Franklin ETFs don't use options overlays in that structure; MOST (SMA options) unaffected by discussion. On capital: dividend first, organic growth (seed/co-invest to $3B), employee share repurchase, opportunistic buyback, active M&A mostly distribution and alt bolt-ons.

Matt detailed expense cadence: add Q1+Q2 guidance, then split remainder evenly across Q3/Q4 with larger savings realization. 20% of $200M realized in Q1, rest spread over next three quarters with larger amounts in Q3/Q4. Margin expansion to high 20s in Q3/Q4. Q1 margin lower by ~2% from accelerated deferred comp.

Matt confirmed 35-40% variable expense ratio providing downside protection. Jenny on Western: DOJ declined criminal charges, investment team stable, $6.6B gross sales, integrating corporate functions. On alts: $9.5B private markets from 33+ vehicles without Lexington flagship. Fund XI targeting Fund X size (~$25B), first close expected this year.

Jenny detailed: significantly cheaper to run tokenized funds, $20 minimum vs $500 traditional. Calculate yield every second, pay daily 365 days/year. Partial-day yield for collateral use. Binance partnership (270M wallets) for tokenized ETF distribution on crypto exchanges. Vision: all mutual funds and ETFs eventually tokenized due to efficiency.

Jenny detailed Benji as only digitally native on-chain money market fund. Patent on wallet operating across 8 blockchains. Managing reserves for 4 stablecoin providers plus first state-issued stablecoin. Blockchain disintermediates toll-takers via smart contracts, ownership entitlement, and payment mechanism. White-label conversations now happening in US after Genius Act clarity.

Jenny noted Franklin fixed income now largest SIM in institutional pipeline (unheard of 5 years ago). Western gross sales increasing, performance near 90th percentile. Outflows from $37B in December to $4.1B in June to $3B in July. Matt stated no reserve update. Capital priorities: dividend, organic growth, employee share repurchases, $100M debt deleveraging, potential $450M debt paydown next year.

Jenny confirmed $10B is net outflows inclusive of $5B gross sales. Strategically, prefers having alt capabilities under one umbrella vs alliances. Open to partnerships (e.g., Apollo in DC space) but believes own platform is advantaged.

Matt confirmed expense math: FY2025 flat (ex-perf fees, normalized for Putnam), then minus $200-250M for FY2026. Not assuming zero Western contribution, will provide monthly AUM updates with Western effective fee rate of 16.5bp.

Jenny confirmed outflows concentrated in Western's core/core plus/macro ops (~$90B). Some headline-risk redemptions but no material spillover to other SIMs.

Matt explained Western is 8-9% of adjusted revenue, 5th-6th largest SIM by revenue. $53B outflows imply ~20% Western revenue decline, ~2% at Franklin level. Working through economic adjustments.

Dukes sequenced the revolver ahead of more preferred repurchases, put the preferred timing at later this year or early next, and said organic returns have beaten inorganic options.

Dukes reaffirmed a high-30s margin objective and repeated the $15 million per quarter implementation and $10 million platform-fee run rates from Q1 guidance.

Andrew highlighted ETFs (inherent tax efficiency), SMAs ($40B platform with tax optimization as key feature), and model portfolios as three vehicles well-positioned for after-tax return trend. Primarily a U.S. phenomenon with no specific regulatory changes on horizon.

Allison confirmed mid-30s margin achieved, now targeting high-30s through disciplined expense management, simplification efforts, and scale benefits. Andrew added that highest-growth areas (ETFs, China) scale particularly well for profit growth.

Allison outlined near-term focus on revolver paydown and 5-year term loan, with ongoing MassMutual discussions for future preferred repurchase. Share buybacks increasing to $40 million in Q1. M&A remains opportunistic but organic investment and partnerships are priority.

Allison confirmed implementation costs will disappear over 2027, with additional savings from decommissioning existing systems, partially offset by ongoing AUM-on-platform costs.

Allison declined to share specific quorum numbers but confirmed overwhelming majority voting in favor. Marketing expense reclassification is purely accounting-driven from SEC comments, no change to approximately 4 bps operating income impact.

Andrew framed the QQQ conversion as part of broad value-unlock effort. Allison clarified marketing budget would be $60-100 million (2-3 bps at discretion), and approximately 4 bps would flow to net revenue and operating income with no additional operating expenses.

Andrew noted institutions pausing future allocation decisions but not stopping existing fundings. Conversations active with clients seeking consultation and solutions.

Andrew highlighted existing private market strategies, Barings partnership potential for DC products, and global retirement opportunities including UK and Asia Pacific.

Allison declined to share wave migration percentages but confirmed substantially all public market assets will ultimately move to alpha platform.

Andrew outlined organic private market growth through wealth management channels, plus partnership-based inorganic expansion. Allison noted 60% payout target balanced against debt maturities.

Shoukry detailed three criteria: cultural fit (Card family alignment), strategic fit (maintaining Clark's independence and brand), and financials. Active corporate development apparatus with significant capital. Looking for deals across all businesses but won't force them.

Shoukry detailed January sweep balance decline: $2.6B total ($2.1B sweep, $500M ESP) including $1.8B fee billing. Remaining decline from client reinvestment into markets. SBL grew nearly $2B in Q1 alone. Funding from diversified sources: sweep cash, third-party redeployment, TriState Capital Bank deposit gathering.

Shoukry pointed to 20%+ adjusted pretax margin target from Investor Day, to be updated at next Analyst Day in May/June. Proud of achieving 20% margin while investing heavily in growth. Technology investment increasingly differentiating from smaller competitors.

Shoukry confirmed multiple funding levers: bring third-party bank deposits on-balance-sheet, continue running down securities portfolio, and leverage diversified treasury management capabilities across Raymond James Bank and TriState Capital Bank.

Shoukry characterized impact as a glide path rather than sudden change given the massive $1.6T asset base. Magnitude of new recruitment would need to be very substantial to move firm-wide ratios.

Shoukry detailed active corporate development across spectrum from early to advanced discussions. PCG is top acquisition priority, then capital markets and asset management. Bank already has 2 charters with utility-style structure. Three criteria: cultural fit, strategic fit, attractive valuation.

Shoukry declined to discuss specific M&A targets. Confirmed 10% Tier 1 leverage target remains appropriate. Framed $400-500M quarterly buyback pace as keeping ratios stable while preserving M&A capacity.

Oorlog detailed AFS maturities of $350M in Q2, approximately $275M in Q3, and $325M in Q4 being redeployed into loans. Shoukry noted SBL continues growing through April volatility but corporate loan demand remains tepid.

Shoukry ranked PCG as top M&A priority, then capital markets (team hires/niche acquisitions), then asset management (only with good organic growth profiles). Reilly highlighted geographic opportunity in Northeast and West Coast.

Shoukry noted most non-comp growth is revenue-correlated (sub-advisory fees, branch expense, FDIC insurance). Committed to long-term 3-5 year investment horizon regardless of short-term macro.

Shoukry noted asset mix remarkably consistent with equities at roughly 60%. Shift has been within cash category between transactional and investable cash. Sorting deceleration now revealing organic growth.

Shoukry cautioned against assuming margin improvement across all segments simultaneously. Capital markets margin benefited from loss reversal in Q4 but first three quarters were weak. Puts and takes are natural.

Jarrod cited new products (data center, GCP integration post-TSA), the biennial AGM expense normalizing out, and deployment-driven revenue as margin drivers, while stressing reinvestment for growth.

Phillips explained that extended durations in credit waterfalls actually increase accrued balances, reiterated full-year realization guidance, and noted flexibility for FRE margin expansion including data center business shifting from FRE-negative to positive.

Mike detailed flagship credit fund timelines: ASOF III final close Q1 at or above prior $7.1B vintage; Pathfinder III launched, expected done by summer at or above $6.6B plus $3.5B extension; SDL IV first close potentially Q4 2025; EDL VII early 2027. Real estate values down 18-20% with undersupply and rate tailwinds. Secondaries doubled since Landmark acquisition.

Jarrod highlighted GCP's role in making Ares a top-3 alternative real estate manager. Data center sites are urban-adjacent, low-latency, attractive to cloud computing with AI optionality but not AI-dependent. $6B in ground for development. Self-storage business also seeing meaningful tailwinds.

Mike noted product ready to go with retirement services conversations ongoing. Tempered enthusiasm by stressing tension between capital base and investable opportunity. Warned against disproportionate focus on AUM growth versus quality deployment.

Mike reported steady April flows of $1.2B equity, no increase in redemptions during CADC April 10th redemption period. Two new products added: tax-advantaged infrastructure BDC and sports/media/entertainment.

Mike emphasized any partnership product must be client-led and differentiated, not just bundling alternatives with traditional assets. Noted T. Rowe complementary distribution but stressed it is too early to tell.

Jarrod noted European waterfall provides flexibility but needs to be established before meaningfully impacting compensation. Full benefit expected after year one or two of waterfall kick-in.

Lynne signaled continuity of strategy; Terry outlined the 60-day CFTC response window landing in August with a judge assigned.

Lynne attributed Q1 expense growth to variable costs from record activity, particularly compensation and technology. Expects occupancy to grow with Dallas facility and technology costs to rise with cloud migration.

Terry emphasized commitment to dividend and share repurchase but left door open for M&A if the right opportunity arises within CME's scope. Currently in a strong position on both dividend and buyback.

Lynne confirmed OSTTRA proceeds being deployed to repurchases over time. Julie emphasized data is core trading input, not susceptible to AI disruption. Terry views AI as enhancing, not disrupting CME's data business.

Lynne acknowledged competing RPC forces: international non-member activity (higher RPC) vs retail micro trading (lower RPC). Focus is on total revenue growth.

Julie highlighted commercial participants up almost 30%, record non-US options growth of 1.5M ADV up 20% YoY, and buy-side strength in both EMEA and APAC.

Lynne explained the mix shifted away from clearing fees toward collateral fees. Changes concentrated in crypto, metals (micro and options), nat gas, and grains.

Terry made a forceful case for US resolution authority over sovereign debt clearing, citing Secretary Bessent's comments. Positioned CME's argument as gaining traction.

Rowan expressed optimism Athora is set up for mid-teens returns after folding excess overhead into operating subsidiaries, with AAA nearing its 10% target.

Rowan stated the bar for acquisitions is very high given technology now makes building challenger businesses nearly free. Prefers aggressive stock buybacks in risk-off markets and organic growth.

Zelter framed future origination growth as geographic expansion: Europe and Asia-Pac. Rowan described Apollo Sports Capital model as template for ecosystem strategies. Kelly guided ~100bp annual FRE margin expansion.

Rowan reframed the narrative: investors are reducing equity risk, not chasing yield. Apollo in risk reduction mode, top of capital structure, lower leverage. Zelter added secular demand from global retirees overwhelms cyclical spread dynamics.

Zelter attributed the acceleration to the integrated toolbox effect under consolidated origination leadership, ATLAS scaling from 200 to 300 facilities, and the flywheel of combined capital solutions.

Rowan described two announced partnerships (State Street, Lord Abbott) and framed traditional asset managers as a major new demand source. Emphasized these are early experiments and origination is the binding constraint.

Rowan gave an extensive, detailed answer covering 401(k) market structure, target date fund limitations, regulatory outlook, and specific product channels. Highly engaged response.