Brett Perryman - Head of Investor Relations Peter Bain - President and Chief Executive Officer Stephen Belgrad - Executive Vice President and Chief Financial Officer.

Bill Katz - Citi Patrick Davitt - Autonomous Andy McLaughlin - KBW Andrew Disdier - Sandler O'Neill Michael Cyprys - Morgan Stanley.

Ladies and gentlemen, thank you for standing by. Welcome to the OMAM Earnings Conference Call and Webcast for the Fourth Quarter and Full Year 2016. During the call, all participants will be in a listen-only mode. After the presentation, we will conduct a question-and-answer session.

[Operator Instructions] Please note that this call is being recorded today, February 2 at 08:00 AM Eastern Time. I would now like to turn the meeting over to Brett Perryman, Head of Investor Relations. Please go ahead, Brett..

Thank you. Good morning and welcome to OMAM’s conference call to discuss our results for the fourth quarter and full year 2016.

Before we get started, I would like to note that certain comments made on this call may constitute forward-looking statements for the purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are identified by words such as expect, anticipate, may, intends, believes, estimate, project and other similar expressions. Such statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from these forward-looking statements.

These factors include, but are not limited to, the factors described in OMAM’s filings made with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K filed with the SEC on March 15, 2016, under the heading “Risk Factors” and on the Company’s current report on Form 8-K with respect to the Securities and Exchange Commission on July 20, 2016 and December 12, 2016.

Any forward-looking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information or future events. We urge you not to place undue reliance on any forward-looking statements. During this call, we will discuss non-GAAP financial measures.

A reconciliation of GAAP to non-GAAP measures is included in today’s earnings press release, which is available in the Investor Relations section of our website, where you will also find the slides that we will use as part of our discussion this morning.

Today’s call will be led by Peter Bain, our President and Chief Executive Officer; and Steve Belgrad, our Chief Financial Officer. I will now turn the call over to Peter..

Thank you, Brett. Good morning, everyone. Thank you for taking the time to be with us this morning. I’ll make a few opening comments about the business and then turn it over to Steve for a little more detail on the financial results. And then, as always we will look forward to conversation with you about the business and your questions and discussion.

Starting with the analyst presentation and starting on slide three in terms of overview and highlights, our GAAP EPS for the quarter was $0.21 and for the full year was $1.05.

Turning to economic net income or ENI which is how we run the business, our fourth quarter ENI per share was $0.33 which is a 10% increase over the prior year quarter and our full year ENI per share was $1.21 which is just a little more than 2% down from 2015 and really the entire differential in 2016’s ENI per share is a function of the decline in performance fees reflecting the market environment throughout the course of the year.

On the flow front, we had a very strong quarter.

We generated over a $1.5 billion of net client cash flow positive in the quarter, which brought the full year results of a net outflow of just down under $1.6 billion and importantly, the $1.5 of NCCF translated into $14.6 million of organic revenue growth in the quarter, and that brought our full year organic revenue growth in 2016 to $11 million.

2016 is the fifth consecutive year in which OMAM has generated organic revenue growth for our shareholders. That flow in the quarter was generated by $9.9 billion of sales which surpassed Q1, 2016 as the best sales quarter in over a decade and we continued the positive spread trend in the flow in the quarter as well.

The $9.9 billion of inflows came in at a weighted average fee of 44 basis points.

The outflows went out at a weighted average fee of only 35 basis points, so we continued in a positive delta of a 9 basis point spread between assets coming in and assets going out and that to a large degree contributed to the fact that we have generated increase in our weighted average fee rates in Q4, 2016 our weighted average fee in the fourth quarter was 36.1 basis points which compares quite favourably to our weighted average fee in the year ago quarter of 34.7 basis points.

So quite consciously, in a challenging environment we are actually increasing our fee rates. And then the last point I’ll make on the flow front is the improvement and the advance that we made in the positive net flow is a result both of increasing inflows and also declining outflows.

That brought us to an asset under management number at December 31 of $240.4 billion, which is a 2.6% increase sequential quarter and our AUM were up over 13% for the year or $28 billion, and that includes our acquisition of Landmark in August.

Long-term investment performance over the three and five year period remains very strong and our one year performance versus benchmark improved meaningfully during the third quarter.

Strategies representing 49%, 55% and 73% of our revenue is now being generated from strategies beating benchmark at one, three and five year basis respectively and that 49% one year number is actually 14 percentage points up on a sequential quarter basis over September 30, which also reflects our view that the market is now moving into a phase where active investment management and alpha generation can add value to clients if you’ve got the processes in place that can do it.

Fourth quarter in December, we completed a successful secondary public offering of just under 15 million ordinary shares on the half of our Parent, in addition to those 15 million sold secondary down under the market we directly repurchased 6 million from our Parent, both of those capital markets transactions took place at a price of $14.25 a share.

So with as an overview you can switch to slide four and this provides you with the reminder of our four pronged growth strategy pyramid which we tend to try and make sure we highlight each quarter.

This quarter I’ll focus on a couple of layers, particularly, global distribution had a very strong quarter with $1 billion of funded wins in the quarter which brought their contribution in 2016 to $2 billion of inflow and importantly those $2 billion of inflows included generating wins for collaborative strategic initiatives that we had launched with our affiliates as a result of work over the last few years, in particular Campbell Global Fund as well as the emerging markets equity initiative that Barrow Hanley has launched and can elaborate in conjunction with us.

So we like it when the strategy itself begins to dovetail and not only does global distribution contribute flow, but is contributing flow in the collaborative organic initiatives.

And then that top pyramid, the new partnerships this quarter is really the first quarter when you can begin to see the meaningful economic contribution that Landmark will be able to make to the business going forward both in terms of AUM, flows, revenue growth and earnings.

And when you switch to slide five, you can see a quick update on our AUM progression and then diversification of the portfolio. Top left shows you the full year results of flow and the contribution that Landmarks acquisition made to taking the AUM from 212 at the beginning of the year to north of 240 at December 31.

Lower left shows that strong fourth quarter where we benefitted both from the market and our ability to generate organic positive net flow. On the right side of this page, top right you can see the AUM mix by affiliate and there you see Landmark having arrived at the franchise in August with $8.8 billion and having ended the year at $9.7 billion.

And then bottom right you can see the breakdown of the portfolio by asset class which we continue to be very pleased with, with really U.S. equity assets only representing 34% of AUM and when you translate that AUM into actual revenue contribution that percentage declines even further because as we’ve discussed with you, our U.S.

equity assets tend to be lower fee and sub-advisory based relationships. So the balance of the portfolio is really very strongly diversified across alternatives, international equity, global equity and the emerging markets. Slide six provides a little more breakdown of the flow data we talked about.

Here on the left you can see that 1.5 billion positive of AUM flow and on the right [Indiscernible] AUM flow translates into over $14 million of organic revenue growth, again the line items beneath that bar chart at the bottom of the graph on the right show you those 44 basis points on the assets coming in and only 35 on the AUM going out.

It’s that fee spread delta that not only generates a strong organic revenue growth but shifting quickly back to the AUM graph on the left, it also is why that $1.5 billion of actual reported AUM really translates into if you apply our weighted average fee on assets a derived NCCF number of a positive $4 billion in the quarter which is that bottom line item on that page.

And slide five then takes this and breaks it down into its component parts into a little more detail that give you that feel for the role that asset class and the fee rates at the asset class plays in the way we build and manage the business. The graph on the left shows you the AUM breakdown and you can see that 1.7 billion outflow in U.S.

equity as well as the $600 million in hard asset disposals. And you’ll remember as we discussed with you hard asset disposals from our perspective are actually a good event for clients because it means that one of our managers has harvested a gain on the hard asset and distributed the proceeds of the gain out to our clients.

So it is an outflow, and we reported that way but it is infact a good event for a client. And again, taking the fee characteristics of those AUM classes and translating it into the revenue on the right side of this page, there you can see that because we are generating ongoing inflows into our alternative assets and our non-U.S.

equity classes, in the quarter we were able to generate over $21 million of new revenue in those asset classes. Slide eight provides that update on long-term investment performance and as you know we track performance different ways, in three different ways.

One is revenue weighted on the left, the middle is really tracking at-scale products which are north of a $100 million in assets under management.

By what percentage of those products are beating benchmark, we think that provides an important forward-looking view as to how many marketable strategies and therefore opportunities to generate growth we have in the franchise. And then the right side is that traditional asset weighted.

And again here on this page, you can see on the revenue weighted graph on the left that one year outperformance number has gone from 35% at September 30 to full 49% at 12/31. Slide nine provides an update and we do this annually for you.

On the component parts of the strategy driven by the center that we believe are enabled by the business model we built which is that combination of a profit sharing relationship with the affiliates coupled with the affiliates owning real equity into themselves and how that translates into the growth pyramid we talked about on slide four and how the component parts of that pyramid are actually delivering flow into the franchise as a result of the strategic business model we built at the center.

So here on this slide nine you can see the three component parts of that strategic increment that our business model is actually able to add in the multi-boutique world. The top left graph shows you the sales we are able to deliver in the products that we have seeded at our affiliates through our efforts at the center.

That was over $3billion of inflow this year. And then the middle graph walks you through the way we are able to generate flows collaborating with the affiliates, that’s just under another billion and then on the right you can see the $2 billion that global distribution brought in this year.

Taking that detail on slide nine and rolling it up into a comprehensive overview on slide 10 what you can see is from the standing start at the end of 2012 when we really began to implement this business model on this strategy in 2013 we at the center as a result of this business model have been able to consistently generate meaningful incremental flow into the franchise as a result of this strategy and in 2016 you see that translating into a whole 23% of the gross inflow into the system or $6.8 billion of new sales coming as a result of the strategy that we put in place in the business model.

Slide 11 takes us and gives us a quick look at the overall diversification of the growth and the diversification provided by the business model and this is important we do this every year with you as well.

What this shows you is, if you take a look at the top five selling products in the franchise, they are actually being generated by four different affiliates.

So we have infact continued to focus on maintaining this diversification across affiliate within the business model and then layering in through another metrics wins on that question of diversification, if you look at the top five selling products none of them is north of 10% of the actual sales in the system, so you are looking at a business model where not only are four of the affiliates contributing to the top five selling products but the top five selling price, but the top five selling products themselves only aggregate 42% of the sale.

So we continue to be very pleased with the way the model itself is delivering, the actual result is delivering are obviously very strong, but we again continue to focus on of taking some real meaning from the fact that the strong results are actually being delivered in the way in which the model is designed to deliver them.

So with that as an introduction, I’ll hand it up to Steve to provide you with a little more detail on the way the financial results played out this quarter..

Great, thanks Peter and good morning everyone. The fourth quarter of 2016 was a positive one for OMAM and our clients. As near-term investment performance improved U.S. markets recovered and [Indiscernible] was positive led by a strong December.

We are also able to execute on the capital management buyback program we discussed in the third quarter, and saw the beginnings of Landmark’s positive contribution to earnings and flows.

While the financial impact of these positive events had only a minor effect on our fourth-quarter results, given that several were backend loaded in December, this should position the company for a strong 2017 assuming markets retain a normal trajectory.

We expect Landmark to continue to be a strong contributor of earnings growth in 2017, particularly in the second half of the year, if their AUM increases as we anticipate.

And our year-end AUM of $240.4 billion relative to our fourth-quarter average AUM of $235 billion means that we go into the year with over $5 billion of additional assets in our run rate revenue relative to the fourth quarter. Likewise, our December buyback of 6 million shares should increase EPS by about 5% in 2017.

So we are cautiously optimistic about the year ahead. I’ll give additional thoughts on 2017 at the end of this presentation.

Comparing Q4, 2016 to Q4, 2015 economic net income was up 6.6% quarter-over-quarter to $38.9 billion or $0.33 per share, driven by a strong market in the second half of the year and the inclusion of Landmark for the full fourth quarter of 2016.

Total revenue increased $22.9 million or 13.7% as higher growth in management fees were partially offset by reduced performance fees, which fell $1.8 million.

Management fee revenue increased by 15 5% as average assets were up approximately 10% and the yield on average assets excluding equity accounted affiliates rose by approximately two basis points.

The addition of Landmark contributed almost half of this growth in average assets and all of the increase in basis points yield, which equalled 35.6 basis points in the fourth quarter excluding equity accounted affiliates.

While combined operating expenses and variable comp rose 14.6% year-over-year driven predominantly by Landmark, we saw scale on operating expenses as a ratio of operating expenses to management fees decreased from the prior year period.

The slightly higher growth in expenses relative to total revenues cost ENI operating margin to decline slightly from 36.2% in Q4 of 2015 to 35.8% in Q4 2016. Driven by the Landmark transaction, our adjusted EBITDA increased 12% to $57.5 million for the fourth quarter of 2016 compared to 2015.

Landmark transaction also benefited our effective tax rate as the tax benefit of intangible amortization and higher intercompany interest resulted in a tax rate of approximately 23% in the fourth quarter. Slide 13 gives a better perspective of our financial trends over the last five quarters.

As average assets hit a low in the first quarter, and then increased due to market movement and the impact of Landmark. For each period we show the core earnings power of the business by breaking out the impact of performance fees. While this didn’t have much impact in 2016 given the performance fees were only $2.6 million in total.

Overall comparing Q4, 2015 to Q4 2016 before performance fees we see that margin was approximately flat between these quarters, while core EPS was up $0.04 or 14% from $0.28 to $0.32.

With respect to performance fees, as we move into 2017, our hope is that recent improved performance would generate a pickup from the disappointing levels of performance fees this year, perhaps closer to the levels experienced in 2015, but it’s clearly too soon to predict with any accuracy.

In terms of our $8 million to $9 million negative performance fee, wielded [ph] in some of the U.S. sub advisory products, these fee calculations have a three-year measurement period. While we did make up significant grounds in 2016, it’s unlikely to make a material difference over the next 12 months.

Side 14 lays out the same metrics over the period 2012 to 2016 and gives a longer-term perspective of the meaningful growth generated by this franchise. We begin isolating the impact of performance fees. In 2012 to 2016 CAGR is loaded above the relevant metrics, and we've also indicated the change between 2015 and 2016 on a full year basis.

During the five-year period, average assets and ENI revenue increased 11% annually on average, while pre tax ENI had a 10% CAGR.

Comparing full year 2015 to 2016, average assets were generally flat due to market volatility but the weighted average fee rate on AUM was up more than one basis point from 34.3 basis points to 35.4 basis points, as flows came at a higher fee asset categories and the acquisition of Landmark grown on higher fee alternative assets.

As a result, revenue was up 2% including performance fees and 4% excluding them. Gross performance fees were $13.7 million in 2015 and $2.6 million in 2016, a decline of 81%. Pre-tax ENI declined by 6% overall including the impact of reduced performance fees and 4% excluding performance fees.

Margin was down about 1% to 35.5% on a total basis and down 85 basis points to 35.5% excluding performance fees. While total ENI EPS declined approximate 2.4% from $1.24 in 2015 to $1.21 in 2016. Excluding the impact of performance fees, core ENI per share was flat both years at $1.20.

All annual data discussed in this presentation excludes the impact of our non-recurring performance fee in 2015 in the second quarter, which added $11.4 million net of taxes to our income. Slide 15 provides insight into the drivers impacted management fees and revenue from Q4 2015 to Q4 2016.

The overall trend during this period was a shift towards higher fee assets both on an organic basis as well as a result of Landmark. In the left box, you can see average assets for Q4 2015 and 2016 split out by our four key asset classes.

The box on the right provides the gross management fee revenue generated by these average assets and basis points of fees also broken up by asset class. On an overall basis, average assets were up 9.6% period over period and gross management fees including equity accounted affiliates were up 13.7% quarter-over-quarter.

As you recall, our different asset classes have very different fee rates. Global non-U.S. equity and alternatives have average management fee rates of 41 and 50 basis points respectively, while U.S. equities and fixed income have average management fee rates of 25 and 20 basis points respectively.

The increase in the alternatives fee rate from 44 basis points to 50 basis points is attributable Landmark. During this period, the combined share of higher fee global non-U.S. equity and alternative assets went up by 3% to 60% of average assets while the share of U.S. equity decreased approximately 2% to 34% of average assets. Gobal non-U.S.

and alternatives represent 73% of our gross management fee revenue as gross revenue and alternatives increased 43% year-over-year primarily as a result of the Landmark transaction. The average assets in gross fees on these bar charts represent all assets managed by our affiliates including the equity accounted affiliates, Heitman and ICM.

To tie back to ENI revenue, you need to subtract the average assets and management fees associated with the equity accounted affiliates, which we’ve done below each bar. Slide 16 provides perspective regarding ENI operating expenses for the three months and years ended December 31, 2016 and 2015, and breaks out several of our key expense items.

Our operating expenses tend to have the seasonal component with the fourth quarter typically the highest quarter due to payroll taxes accrued on year-end bonuses. On a full year basis, our ratio of operating expenses to management fees, the operating expense ratio was 40.2% in 2016 due to the low-end of our guidance of 40% to 42%.

The increase in our total operating expense ratio from 38.5% in 2015 reflects a decision to continue investing in our business during the first half of 2016 despite the vulnerable equity markets which occurred during that period. Given the recovery of the markets in the second half of the year, we think this was the right decision.

While total ENI operating expenses grew by approximately 14% between Q4 2015 and Q4 2016 for a total of $73.3 million for the quarter, on a like-for-like basis excluding Landmark, these expenses increased quite modestly by approximately 2% while management fees grew by about 4%.

Lower sales based compensation was offset by hiring at several of our affiliates, in some cases relating to new growth initiatives and investment in the business. Technology spending and an affiliate office move drove the increase in DNA from $1.9 million Q4 2015 to $2.5 million in Q4 2016.

At the holding company, including Global Distribution, expenses were effectively flat during this period. On an aggregate basis for the quarter, you can see that the ratio of operating expenses to management fees was down slightly as the Landmark transaction generated scale. This ratio fell from 41% in Q4 2015 to 40.4% in Q4 2016.

I’ll give further perspective on our 2017 expense expectations at the end of the presentation. The next key driver of profitability is variable compensation, shown in more detail in Slide 17. The table at the bottom of the slide divides total variable comp into its two components, cash variable comp and equity amortization.

On a quarter-over-quarter basis, the results were impacted by Landmark as total variable compensation increased 16% from $42 million in Q4 2015 to $48.6 million in Q4 2016. Excluding Landmark, variable comp would be up closer to 6% over this period reflecting significant profit growth at certain affiliates during the year.

Over this period, the variable compensation ratio moved from 41% in Q4 2015 to 41.7% in Q4 2016. The inclusion of Landmark causes ratio to go down over time as greater scale was achieved with respect to holding company compensation.

For full year 2016, the variable compensation ratio of 41.8% was consistent with guidance in the range of 41% to 42% as total variable comp declined 1% in line with earnings before variable comps. Affiliate key employee distributions for the three months and years ended December 31, 2016 and 2015 are shown on Slide 18.

Distributions represent the share of affiliate profits owned by the affiliate key employees. Between Q4 2015 and Q4 2016, employee distributions increased by 18% to $12.9 million. As with other metrics, this one is also highly impacted by Landmark. Excluding the acquisition, this metric would actually have decreased.

While Landmark impact is particularly meaningful since Landmark employees currently own 40% of their business relative to 15% to 35% ownership for our other consolidated affiliates, in some cases after a preference to OMAM. For this reason between Q4, 2015 and Q4 2016, the distribution ratio increased from 18% to 19%.

On a full year basis, distributions increased 7% to $41.7 million, again driven by Landmark and their higher level of employee ownership. The 2016 distribution ratio of 17.3% was in line with our full year expectation of 17% to 18%.

Turning now to the balance sheet, and capital on slide 19, you can see the impact of the several transactions completed during the year; in particular, the investment on Landmark Partners, and the issuance of $400 million of long-term debt, the repurchase of approximately 98 million of shares including 85.5 million from our Parent in December and the impact of the Seed Capital purchase and termination of the DTAD both involved in our Parent and announced in June.

We boxed the most relevant line items namely investments, other assets due to related parties and third-party borrowings.

Determination of the DTAD as of December 31, 2016 resulted in a gain of approximately $20 million book directly to equity and we will make DTA related payments to the Parent totaling approximately $143 million between June 30, 2017 and June 30, 2018.

With approximately $400 million long-term debt, our debt to EBITDA ratio for the last 12 months is 1.9 times as of December 31, including landmark on a full year pro forma basis it would put this ratio closer to 1.8 times which is generally in line with the lower end of our target, debt to EBITDA level of 1.75 time to 2.25 times.

With the return of approximately $50 million in cash to the holding company in early January related to a co-investment and nothing drawn on our $350 million revolving credit facility, our balance sheet retains financial flexibility to meet our financial obligations while executing on our growth strategy and allocating capital to enhance shareholder value including further sharing purchases from the Parent.

On March 31, we’ll pay our quarterly dividend of $0.80 per share to shareholders of record on March 17. This dividend rate reflects our standard 25% payout ratio. Looking ahead to 2017 I wanted to give you a perspective on some of OMAM’S key metrics and how we expect them to trend throughout the year.

These estimates assume a stable market environment and the continued ship in AUM toward higher fee strategies particularly secondary alternatives.

While we tend to have higher seasonal expenses in the first and fourth quarters, on a full year basis we’d expect the operating expenses as a percentage of management fees in the range of 37% to 38%, driven by scale from Landmark and the rest the business.

We should see only minor changes from the current levels in Q1, 2017 with improvement thereafter. The variable comp ratio should also improve with scale and trend towards 40% to 41% in 2017, down from 42% in 2016.

This improvement will be driven by the spreading of variable, relating to the holding company, global distribution and initiatives over a higher profit-based from the affiliates.

As we’ve discussed the distribution ratio will increase in 2017 particularly to the extent Landmark assets rise throughout the year .Given the 40% employee equity ownership with that affiliate, we’re expecting the distribution ratio to blend to 20% to 21% for the year.

Finally, we anticipated that our effective tax rate will increase with earnings in 2017. As you are aware of the tax benefits of our UK domicile as well as the amortization of acquisition intangibles tend to provide fixed dollar benefits.

Therefore as pretax income increases the effective tax rate goes up, given by our marginal 40.2% state and federal rate. We currently expect a 26% to 27% tax rate for the year. In terms of margin I’d expect our topline growth combined with scale in operating expenses and variable comp to driver operating margin higher in 2017.

In a normal market growth environment, I'd expect margin to move into the upper 30s. Now, I’d like to turn the call back to the operator, and Peter and I are happy to answer any questions you may have..

[Operator Instructions] Your first question comes from the line of Bill Katz of Citi. Your line is open..

Okay. Thanks very much for taking the questions this morning. Appreciate all the disclosures exceptionally helpful.

Maybe starting with Landmark, sort of based on, I know you maybe limit to what you can say, but it seems like based on the presentation, it looks like about $800 million of new assets coming in from that business, so I just want to confirm if that’s correct.

Also I wanted if you could talk to the quality of the feedback you're getting in terms of the appetite for the new offerings and is there any way sort of maybe or why [ph] is you’re thinking on the range of accretion as look at 2017, I guess some of its embedded in your guidance right now, just try to triangulate all that into our model? Thanks..

Bill thanks for asking me a whole bunch of questions, the lawyers won’t let me answer, but what I can share with you is the way you’re reading the presentation and the breakdown of the AUM is correct that we acquired Landmark in August that had $8.8 billion at September 30.

They had $9.7 billion at 12/31 and they did contribute therefore that number to our flow in the quarter and we’re very pleased about it. And it's consistent with our views as to what we expected when we partner with them.

Its very difficult because they are in process now of that fundraising for me to engage in conversation about it, because I can't fall into the black hole of being deemed to be engaging in an offering securities, so I can't really give you comment on whether the accretion is proceeding along with our expectations and sort of how the fundraising is going.

I’m just not lead to address it, but certainly Landmark is precisely what we had believe it to be in and continue to believe it to be, so that process is ongoing..

Yes. As Peter said, nothing is really changed in our views at all from what we've indicated previously and that should be captured in the guidance for 2017..

Right. Okay. That’s very helpful. And then just within -- I certainly appreciate the powerful improvement sequentially and particularly impacted Landmark, within the particular line items, there was little bit of erosion global equity and fixed income.

Is that just -- impact, or is there was any kind of pricing degradation going on underneath it?.

Yes. I mean there is – what that really represents is really market-driven mix within those broader categories. So, if you think about it during the fourth quarter you had very different movements in markets that impacted the average assets. So, while U.S.

equity markets went up substantially you had emerging markets which are generally for us higher fee assets going down in those – the market index went down and April was roughly flat.

So, if you're looking at that broader category of non-U.S/local what you really had is the lower fee elements of those categories either were flat or slightly up and the higher fee elements [Indiscernible] were down because of markets. So that’s would really drove the change in fee rate..

So it really is market mixed, Bill and not an inherent change in the fees themselves they we’re earning..

Got you. And just one last one from me, and thanks for taking all the questions in this morning. I guess after season earnings season of just very difficult comps, you sort of pleasant surprise both on fee rates and flows.

Putting Landmark aside for a moment, could you talk a little about what you’re hearing in the institutional channel in terms of qualitative you made in the pipeline or why you haven’t set robust sales, what is it, is it product level, or is it just better geographic penetrations.

Just trying to get a sense of how you’re able to buck [ph] the industry trend here?.

Yes. Well, thanks actually, that’s a nice question to ask. I don't want to – it’s tough to say other then, it’s pretty clear from our investment processes and the investment performance. You saw our short-term numbers improve meaningfully.

Our affiliates engage very consistently with the institutional marketplace and they are very consistent and disciplined in the process. I think they interview that very discipline processes can generate alpha in the market environment today, but you don’t start a conversation with things turn.

You benefit from it because you’ve been having that conversation consistently over the years. I do think we’re in good asset classes. And I do think that the incremental movements we’ve made in terms of building global distribution and going into new markets have been the right markets to turn our attention and gone into.

And I do think you're seeing a little bit of a front end of the investments we've made in building new product and seeding new product at affiliates three and four years ago beginning to become harvestable.

So, I think it's a combination of factors are being very disciplined in your model, being very consistent in investing in it and building it and then having a benefit when people are prepared to pay attention to it..

Look, I think the other element is that in a purely institutional business the timing of when new sales hit can be chunky, the same way timing of redemptions hit can be chunky.

So, I don't think that there is anything that is so much bucking a trend that somehow there some unbelievable secret sauce that’s totally different other than this is an institutional business. And as Peter said, these are flows that are been a long time in the development side and they’ve hit now.

And I think if you're looking at sort of pure, more retail comps that’s going to be more of sort of institutional reaction to more of sort of a instantaneous reaction to what's going on.

Whereas the flows that this represent is really as Peter said, sort of a build-up over, having the right products for the right clients covering in the effective way and this happens to be the quarter where we were awarded and less have come out..

Okay. Thanks guys. Totally appreciate..

Sure, Bill..

Your next caller is Patrick Davitt of Autonomous. Your next question comes from the line of Craig Siegenthaler of Credit Suisse..

Hey, guys. Good morning. This is [Indiscernible] filling for Craig.

Could you please touch on the affiliates that contributed to the positive flows in 4Q? And then if you could what January trends sort of look like and if you’re seeing that more positive momentum continued into 2017?.

Yes. We don’t really break down flow by affiliate, never had and kind of never will because we view it as an overall franchise trying to generate flow.

In terms of I guess looking forward likewise again as you know we've never really commented on forward-looking flow because as Steve frankly said and answering some of Bill’s questions, because we're building an institutionally driven business and because we deal with such large relationships and accounts, it’s very difficult to provide any meaningful pathway on timing and magnitude, because it’s tough to tell when things will fund and its very is difficult to tell how chunky they might be.

Generally, I will share that our sense of the current pipeline is relatively consistent with the way it looked over the last few quarters. We haven't seen it meaningfully diminish or expand, it's a pipeline that we’re comfortable with and it’s holding fairly steady..

Got it. Thanks..

But you know, I think in general obviously on page 11 we had a full year flows and you figure that those same entities are probably contributing on the fourth quarter as well as for the full year..

Our next question comes from the line of Patrick Davitt of Autonomous. Your line is open..

Can you hear me now?.

Hi, Patrick..

How it’s going. Thank you. I just have one quick question, actually a couple.

On the Landmark guidance, first to the extent there's AUM coming in, is that earning fees immediately or is it coming into AUM and not yet earning fees?.

Yes. The way they’re structured, Patrick and that’s a good question. The way these vehicles are structured, when you hold a closing and therefore gathering the commitment, not necessary we call the asset, but confirm the commitment. And there will be sequential closings through this process. You begin collecting fees on the full commitment at that time.

So to the extent there is a reported historical change in AUM at Landmark attributable to a new closing. Those are fee earning assets from the date of closing. And there is, yes, Steve can clarify, there’s another important component on this issue..

Yes. From and this is just in general when talking about a fund, the way that it would certainly work when you have funds that have multiple closings, the fees are actually earned back to the date of the initial closing.

So that if you had a closing that took place in the third quarter of 2017 you not only would receive the fees going forward from that date, but there would be sort of a retroactive fee collection going back to the closing date – the first closing date of that product.

So, as we think about and you think about modeling revenue potential within 2017 there would be some elements that would reflect sort of ketchup in fees back to the end of this year.

The other element and this is more of a general senses, when we report flows we basically try to match in absolute terms assets coming in with a collection of those fees.

So if there was ever a product for instance where there was a -- where the fee wasn't earned until the asset was actually called, we wouldn't count that asset as a flow until was actually was called and began counting fees, generating fees..

Right..

Great. That answers my question exactly.

And then within that theme the guidance that you expect the real pickup in the second half I guess suggest that we’re kind of very early stages of this AUM coming in?.

I think that’s right, Patrick, I think that’s right. Yes. And then in the second we’re going to have some ketchup stuff as well, right..

Exactly.

And then finally on the, I guess broader kind of new affiliate investment pipeline and/or view just kind of update us, what kind of you’re thinking about that side of the capital used?.

Yes, we are, and actually that’s a fair question because we’re pretty diligent in evaluating our capital resources in our liquidity and also the role that strategic acquisitions can continue to make in creating value for the shareholders. We are active in looking at continuing to build the business through strategic acquisitions.

We think it can continue to create value.

We’ve got a pretty clear view of which segments of the industry we’d like to pursue and we've got a very sharp eye on making sure that we have a view when we find the right next acquisition that we've got a pretty clear view into how we’re going to finance it, and some of will be incremental debt, and then we’re going to be prudent about that.

We are not going to over leverage this business. So, if we find the right transaction and then have high degree of comfort in its economic value, I think we'll just explore with the markets the right way for us to issue an instrument that can fund the purchase of it as well..

Thank you..

Yep..

Your next question comes from Andy McLaughlin of KBW. Your line is open..

Hi, everyone. Good morning..

Hey, Andy..

Good morning..

Hey, good morning. Just kind of as a follow-up to the last question.

Have any new potential partners you’ve been talking to, are they concerned all about what the Parent plans on doing just in the coming years?.

Look, that’s an absolutely fair question and its one of those, I think there's a little [Indiscernible] quote about you know refusing to be a member of any club that would have him. I think that we’re working on building relationships with very good businesses, and these are very smart people.

And one of the central questions is who is your ultimate ownership going to be? And we would like some clarity from you on that before we’re really prepared to engage definitively. And then that’s fair and we’re very comfortable with it and the Parents very aware of that fact and they are managing accordingly.

So, yeah, I think the short honest answer is that’s the relevant consideration in our discussions with potential new affiliates..

But you know we are continuing to sort of had discussion, build the pipeline, clearly the offering in December was a nice step forward in terms of answering some of those questions. And we’re sort of to moving forward. It’s not a hindrance to us in anyway, but it’s certainly a factor that has to get work through..

But we’re just carrying on with the business and running it..

All right. Great. Thank you. That’s all I had..

Sure..

Our next question comes from the line of Andrew Disdier of Sandler O'Neill. Your line is open..

Thanks. Hello, and good morning everyone..

Hello. Andrew.

How is it going?.

I’m doing well, thanks.

Yourself?.

Good..

Good. So just digging a bit deeper into the flow data, the disclosure that you provide a very transparent, but one question I do have relates to the gross inflows and gross outflows.

So I’m just wondering if you could provide any detail around the breakout of A, new accounts and assets added compared to assets contributed by existing accounts? And then B, on the flipside terminated accounts versus net assets withdrawn from existing accounts and if possible how that breakout has trended over time?.

Yes. We may have to get back to you on that exact split.

Meanwhile I’m looking at on some of the sub-advise – I mean obviously on the sub- advisory side that’s obviously important as well as some of our institutional accounts have definitely -- we know first on the global distribution side that some of the relationships that’s been developed continue to add for those accounts and that was certainly beneficial, but in terms of the broader perspective we don’t tend to have that breakout that hand.

Yes. Sorry, Andrew..

And then just switching to performance fees, at the end of last quarter, I guess the disclosure in the Q, you have said its about $50 billion of consolidated AUM that are subject to in terms of fees. And then you got related funds look to be the majority of those related assets.

Do you -- consolidated incentive fee earning AUM or held in their..?.

I mean, most of that – I mean, obviously Vanguard is the vast majority of that. The rest of it is really less sub-advisory and more just situations where institutional clients have chosen to have a fee schedule that has a slightly lower management fee and some performance component to it.

In general I would say the products that tend to have a bit more of that would be sort of emerging markets and then there are couple of products within sort of long shore products within Acadian that have tended to have by their very nature performance fees. You know and that is really spread throughout.

If I look those are sort of the two biggest buckets but as I think you’re aware Campbell had performance fees, Coppers rock had had performance fees, TSW has had it, so its sort of – there is some components spread throughout almost all the affiliates.

But as I said it’s almost entirely just your traditional institutional where there's a slight sort of plus or minus to the management fee based on how the product is doing relative to a benchmark..

Great. Thank you for taking the questions..

Your next question comes from Michael Cyprys with Morgan Stanley. Your line is open..

Hi, good morning.

Do you hear me, okay?.

Yes, we hear you. How are you? Thanks..

Great. Thanks. Sorry, for any background noise. I was just wondering if you could flush out little on the RFP activity. Just what are some of the biggest opportunities that you're seeing today that you’re competing for.

And then also if you could flush out little bit about the competitive environment, what you're see happening, we’re hearing a little bit more fee pressure intensifying within the industry, so just curious what you're – what you’re seeing and how you're competitively responding to that?.

Overall I guess if he had – I mean as we sort of have said consistently, our pipeline tends to be in focus on large accounts all the time because we're dealing with building out unintentionally institutional business, so the opportunities we tend to encounter franchise wide tend to be big and lumpy, the question is which ones do you win.

What I can’t share with you is I did notice in look at the pipeline. There are couple of interesting and very large sub-advisory relationships where you have the opportunity to be hired by a large platform to take over a very big product that tends to stand out as a big number.

What’s tougher to tell is, but its very much a part of our strategy is when you get hired by a platform to be the advisor to a new product they are launching that they're going to distribute and support, how that product itself might grow very efficiently and very effectively over time it becomes very large, but we have clearly seen that in some sub-advisory, advisory mandates we put in place that started small and have grown into multibillion dollar product offering.

So we look at both of those very hard. Overall on the fee pressure question, really realistically we're not seeing it as I think we said earlier in the call, our weighted average fee has actually gone up, and I think the reason for that is, our business already manages very large institutional accounts.

We are hired for very specific and sophisticated mandates. The fee framework for that mandate is not something that's really subject to lot of negotiation because it's already a well-developed product relationship. And to the extent we are thinking about that issue.

I think it also is reflecting the fact that the business that we’re trying to grow and it's reflected in the Landmark acquisition is to continue to build the business into those asset classes on the institutional level that really are going to be driven by active management by alpha generation where you just don't have that kind of commoditization fee pressure issue.

I think the fee pressure issue really is real in the retail world and in the commoditize world and we are working very consciously to build an institutional non-commoditized business.

Lot of it really comes down to mix issues for us and look if someone buys a managed volatility product that's a lower fee than a you know one does not manage volatility but there's no indication that sort of clients are intentionally moving towards that to say fees or something, right. So what we really find is you're competing for big accounts.

Our average weighed fee rates are already quite low relative to the competitors and as they shift there’s really more function of what clients are buying as opposed to people coming back and trying to sort of push down feed..

Okay, great.

And then just if I could ask a follow-up, shifting gears to different topic multi-asset, just curious what you're seeing in the channel institutional and sub-advisory in terms of demand for multi-asset and how you’re able to fee set together across your different affiliates?.

Yes. That’s actually a pretty timely question, but I’m going to separate it Michael because we look at this very hard. I would characterize your question about sort of doing things across multi-affiliates that in our view falls more into the solutions world. That to me is a retail offering.

And we are not going to hire bunch of people and lock them in a windowless room and have them develop these solutions involving all our affiliates because the reality is that’s what the platforms are already doing. We're not going to go in competition with them on that front.

These are our business partners who are providing solutions and so to a large degree our sub-advisory strategy is designed to be our participation in that direction in the market where we're providing the Alpha Sleeve to someone else's big platform solution, so that sort of segment one.

Segment two on the other hand is something that we consider to be true institutional multi-asset class capability.

We think there is demand for that and we actually are actively working on that with one of our affiliate who is best positioned to we believe deliver that and our goal is to be in a position to begin having conversations on that topic kind of later this year. So that piece we are active on and we think there's an opportunity..

Great. Thank you..

Okay..

Great. Thanks..

This concludes our question and answer session. I’d like to turn the conference call back to Peter Bain..

Thanks everyone. Certainly thank you for the time. We hope the hour was worth it even though it was a little earlier, for those of you on East Coast than we normally do it. And we appreciate your engagement. We look forward to speaking with a number of you going forward in the next few weeks. Take care, and have a great day everyone. Thank you..