Feb 1, 2013
Executives
Gregory Eugene Johnson - Chief Executive Officer, President, Director and Member of Special Equity Awards Committee Kenneth Allan Lewis - Chief Financial Officer, Principal Accounting officer and Executive Vice President
Analysts
Craig Siegenthaler - Crédit Suisse AG, Research Division J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc., Research Division Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division Michael Carrier - BofA Merrill Lynch, Research Division William R.
Katz - Citigroup Inc, Research Division Michael S. Kim - Sandler O'Neill + Partners, L.P., Research Division Kenneth B.
Worthington - JP Morgan Chase & Co, Research Division Matthew Kelley - Morgan Stanley, Research Division Marc S. Irizarry - Goldman Sachs Group Inc., Research Division Greggory Warren - Morningstar Inc., Research Division Christopher Harris - Wells Fargo Securities, LLC, Research Division Daniel Thomas Fannon - Jefferies & Company, Inc., Research Division
Operator
Good afternoon, and welcome to Franklin Resources Earnings Conference Call for the Quarter Ended December 31, 2012. My name is John, and I'll be your conference operator today.
Statements made in this conference call regarding Franklin Resources Incorporated which are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from any future results expressed or implied by such forward-looking statements.
These and other risks, uncertainties and other important factors are described in more detail in Franklin's recent filings with the Securities and Exchange Commission, including the Risk Factors and MD&A sections of Franklin's most recent Form 10-Q filing. [Operator Instructions] Now I'd like to turn the call over to Mr.
Greg Johnson. Mr.
Johnson, you may begin.
Gregory Eugene Johnson
Well, thank you, and good morning, everyone, and thank you for joining us this morning, especially accommodating our earlier call. Hopefully, you've all had a chance to listen to our recorded commentary on first quarter results.
And as a reminder, our 10-Q was also filed this morning, and you can access that form from our website as well. We are pleased to report solid first quarter results, starting our fiscal year on a positive note, led by a strong investment performance and asset growth.
Operating results were also solid with record revenue and the best quarter for operating income in over a year. I'd now like to open it up for your questions.
Operator
[Operator Instructions] Our first question comes from Craig Siegenthaler from Credit Suisse.
Craig Siegenthaler - Crédit Suisse AG, Research Division
Just looking at operating revenue growth versus comp growth over last year, they were actually quite a similar, looks like around 12%, despite the fact that revenue growth is very strong. I was wondering if you could maybe provide some details why there hasn't been more operating leverage between comp and revs?
Kenneth Allan Lewis
Sure. And yes, and it has been -- looking back 4 years, maybe with the exception of 2009 and the global financial crisis, it has been pretty stable.
It's not a metric that we target or manage to. But it's just an outcome of our process.
It has been pretty stable. I think the answer is a lot of -- there is some -- it is based on operating income.
So that's going to keep things relatively in line. There is a component of compensation that is related to sales activity and commissions.
So as the business grows, that tends to grow, too. So I think that's the main factors why that has stayed the same.
Most of the -- if you look at our increase in headcount, much of that has been in low-cost jurisdictions. So the cost per capita has been actually decreasing I would say.
Craig Siegenthaler - Crédit Suisse AG, Research Division
Got it. And then just you mentioned Riva a lot in the prepared commentary.
What's the current EBITDA or income contribution from this business? And actually, how large could it get to?
Gregory Eugene Johnson
Yes. It's -- well, it's basically nil.
And up until this point, it's probably -- it's been an investment that we've been making. The question is, we have a 51% ownership in the entity, so if -- when people see the functionality of the product, we think that there's a pretty good opportunity to grow that business.
Craig Siegenthaler - Crédit Suisse AG, Research Division
So that's consolidated on the income statement. I guess it's up in other net revenues?
Gregory Eugene Johnson
It's -- it could be in nonoperating income. It could be in G&A, bits of it.
Operator
Our next question comes from Jeff Hopson from Stifel.
J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc., Research Division
So obviously, the U.S. has seen a big pickup in flow activity in January.
And Europe and other areas, I guess, did not fall off as much. Any sense that you could give us on European overall industry activity in January and how you think you're positioned there?
Gregory Eugene Johnson
Well, I would just -- Jeff, we try not to talk about the next quarter. I think, just speaking generally, January tends to be a very strong month for flows with retirement contributions.
And with the strength of the markets and momentum, we expect to see that to carry through and are seeing that for us. Europe continues to be strong and also was one of our improving areas, certainly over the last quarter where we had pretty good net inflows in many of our countries throughout Europe.
So that trend is continuing as well.
J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc., Research Division
Okay. And on the global fixed side, can you give us some updates on the institutional, I guess, pipelines and interest level?
And particularly, have you had much success in introducing that product to -- on 401(k) platforms where there doesn't appear to be much embedded penetration, I guess?
Gregory Eugene Johnson
Yes. I think there continues to be strong interest institutionally.
We have had a very significant win that we expect to fund this quarter in emerging markets debt. I think the 401(k) side continues to grow.
It's still not a big portion. But looking at the overall flows of over $5 billion of international bonds last quarter, it's safe to say that the momentum that we had back over a year ago has certainly returned on the strength of the performance, and we expect that to continue.
Operator
Our next question comes from Robert Lee from KBW.
Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division
I guess my first question is, in the prepared remarks and looking at the balance sheet, I'm just curious, the -- I think, Ken, you mentioned that most of the $5.9 billion or so of cash and investments is offshore. So, I mean, between the special dividend and continued share buybacks, I mean, is there a need to build kind of U.S.
liquidity to some degree? And should we think that maybe even for a period of time, there could be kind of a moderation in the rate -- the slow -- of buyback, at least for a couple of quarters as you build liquidity in the U.S.?
Kenneth Allan Lewis
Yes, I do think that that's a fair comment. Both the percentage of cash and equivalents and investments is about 40% in the U.S.
When -- obviously, when things like the Global Bond Fund grows quickly and all that, we can replenish that pretty quick. So I think, generally speaking, you could see a moderation in the short term for share buybacks.
But if there was an opportunity, we certainly have the flexibility internally and externally to raise capital to take advantage of that in terms of the stock price.
Robert Lee - Keefe, Bruyette, & Woods, Inc., Research Division
Right, great. And maybe I guess my second question is with K2, I mean, you closed on it.
I know there's about a month or so in there. But can you maybe just update us strategically on kind of how you're thinking of maybe incorporating it more broadly into the business, where you see the opportunity to really use their skill set?
And maybe some color on things you may even be working on right now would be, I think, helpful.
Gregory Eugene Johnson
Yes. I think the first step -- I mean, it's still very early in coming up with a definitive plan how to leverage it.
But I think the first step was to get our own distribution system very familiar and then look at whatever areas of overlap we have around the globe and where we can get their message out. So we've done that.
That seems to be working well. We're getting RFPs where we -- where they wouldn't have gotten RFPs without the relationships we have around the globe.
So that's the first step. And then we're studying the retail.
There has been a movement towards having a '40 Act fund to funds and a more liquid kind of strategy there, and that's something certainly we're looking at as well. But really, it's educating our force first and taking their traditional business and trying to leverage that, and then start to figure out where we can help out on the solution side and in the high-net worth space as well as the retail space.
Operator
Our next question comes from Mike Carrier from Bank of America Merrill Lynch.
Michael Carrier - BofA Merrill Lynch, Research Division
Greg, I think, on your prerecorded call, you mentioned on the international equity side just some redemptions on the institutional side. When we look at the industry trend, it seems like the interest in international equities continues to be there.
And it seems like just given the Templeton brand, that you guys should be a beneficiary of that trend. Yet the flows seem like that it's not there.
So I was just wondering, like on the institutional redemptions, is that masking some of the more favorable trends that are happening on the retail? Or is there something on the retail side that you're not quite getting those net flows into that channel?
Or is there a reason for that driver?
Gregory Eugene Johnson
Yes. I think it's a good question and one that if I had to look at any area and say where we underperformed as far as distribution, it'd certainly be in that category, and a lot of that on the retail side.
I mean, Templeton had underperformed for a while, had made an early bet on Europe and financials. And fortunately, that's paid off considerably.
If you look out how quickly the long-term records that were lagging are now back in the top 2 quartiles, 1-, 3-, 5-year, 10-year even pulling back. So it just takes time.
Once you fall out of favor with advisors, it just takes -- it just doesn't snap back as fast as, say, the institutional world that looks more real time at performance. We did have a couple of large redemptions in Canada with global equity in the last quarter, which totaled about $2 billion between Canada and Asia.
There were a couple of redemptions in that category. So that certainly contributed to your net outflow number.
But I think we feel confident that -- and we've been very focused on getting the message out on the retail side over the last year, and we have a pretty strong story to tell with good performance. So I hope and we expect that to snap back.
But on retail flows, it just takes a little bit more time.
Kenneth Allan Lewis
Right. And this is Ken.
I'll just add that in January, we are seeing an improvement in global equity, the global equity group's flow, both on a gross and net basis. It's early days, but it's positive.
Michael Carrier - BofA Merrill Lynch, Research Division
And just as a follow-up, on the fee rate and just how we try to calculate it, it just seems like it was roughly flat, maybe even down a slight amount. And there's always moving pieces there, so it's always hard to gauge exactly.
But I think the performance fees were pretty similar this quarter and last quarter. The only thing that was new would have been K2 coming in, and I guess assets will probably end the full quarter and then the revenues really 2 months.
But other than that, was there anything else from a mix standpoint? It just seems like international market is strong, global bond flow is strong.
All should be higher fees, but it just seemed like it came in a little bit shy where many expectations were.
Gregory Eugene Johnson
Yes. Yes, that's fair.
I think the answer lies in the mix, both in terms of the products and the channels. So as we see more of a trend relative mix towards fixed income and hybrid products, I mean, also some of the institutional business, which a year ago was 20% but now it's 23% of assets under management, so they tend to be lower fees.
So we're seeing maybe a slight erosion of the effective fee rate.
Operator
Our next question comes from Bill Katz from Citi.
William R. Katz - Citigroup Inc, Research Division
I just want to come at the Riva opportunity from a different angle. Given these synergies that you're getting from this platform expansion, is there a chance to pass along those synergies to shareholders in the form of lower expenses to further drive volume growth?
Gregory Eugene Johnson
We think so. We think it improves Riva.
And things like Riva improves our scalability globally, faster time-to-market without the incremental increase in expenses. And we're able to handle multiple share classes, multiple currencies.
Everything that you need in a global -- to be a global investment manager is automated now. And so that and the combination of us continuing to use low-cost jurisdictions, I think that we will -- I'm not saying reduce expenses, but we certainly won't have to increase them at perhaps the rates that our competitors would have to do.
William R. Katz - Citigroup Inc, Research Division
Helpful. And the second question.
You've spent a fair amount of time on your prepared remarks and the prerecorded call so highlighting at least Switzerland and Germany, I believe. And are there specific initiatives there at the margin that you're focused on and that could accelerate growth on top of what we've already seen?
Kenneth Allan Lewis
Well, I think each one -- those markets, generally, is global bond. I mean, that's been a driver in Europe.
So you look at the last quarter, that's where flows really turned around, and so that's going to affect those specific markets more than most. I think the initiatives have been to diversify while we have had one of the top-selling funds in those markets to sell more of the multi-sector approach, which we've been pretty successful with in Italy, which continues to be our top -- one of our top net markets and still a tough environment there.
So our goal is always to try to build a more diversified base there. And because global bonds have been so big, we try to introduce other funds.
But there's nothing really specific to call out other than that.
Operator
Our next question comes from Michael Kim from Sandler O'Neill.
Michael S. Kim - Sandler O'Neill + Partners, L.P., Research Division
First, just a follow-up on the Global Bond Fund performances. It has obviously been very strong more recently, and now the 3-year numbers are quite strong as well.
And so you've seen a rebound in flows, but it's still sort of below prior levels. So I'm just wondering if there are any catalysts out there to maybe jump-start flows even more so going forward.
Kenneth Allan Lewis
Well, the question of whether you get back, I think the volatility that we expect, but sometimes maybe the market or investors don't expect, is somewhat of a good thing going forward. Now we've called that out on prior calls that you want to make sure people understand that this type of strategy, that it's somewhat fairly aggressive, alpha oriented, that you can have periods of underperformance.
So that may turn away some investors. But I think, again, like I stated earlier, January tends to be strong flows and the momentum that, that fund has built coming off of fourth quarter where it had significant flows.
And I'd also point to Global Total Return Fund, which outsold the Global Bond Fund last quarter. That's another positive trend.
Michael S. Kim - Sandler O'Neill + Partners, L.P., Research Division
Okay. And then you highlighted the success you've had selling the Franklin Growth products on the prerecorded call.
So just wondering how you think those strategies are positioned, assuming retail investors do you continue to get more comfortable sort of moving up the risk curve, if you will?
Gregory Eugene Johnson
Yes, I think it positions much better that it has been in the past. So we've said, I mean, the Franklin Growth Fund now is on many of the different of the retirement plan platforms, so you would expect to see that flows and flows over the last quarter in the Franklin Growth Fund.
It was one of our top-selling U.S. equity funds.
Also, Franklin Balanced Fund has been a new fund that we offered that has kind of both an income piece as well as an equity growth piece, and that's had excellent performance. And we've seen decent momentum there, certainly, and we think that's going to continue to build.
So I think the -- we're much better positioned as U.S. equity flows come back, and we would expect to see, like many, a stronger number this quarter.
Operator
Our next question comes from Ken Worthington from JPMorgan.
Kenneth B. Worthington - JP Morgan Chase & Co, Research Division
First, on marketing. Can you talk about the approach that you're thinking about for the year?
What are you doing similar to years past? And maybe anything that you're contemplating doing differently in '13 versus what you've done in '11 or '12?
Gregory Eugene Johnson
No, I think the message is pretty consistent versus '11 and '12, and that's that we want to continue to focus on the importance of equity investing and make sure that we're recognized as a leader in that area. So that message will continue.
But I don't think there's any big changes of strategy other than that, that will continue to be a focus for us. We also have our tactical asset allocation funds, things like that, that have been out there, continue to develop our solutions as far as product development.
But I don't really, right now, expect to see a big shift in our strategy and our spend and really our flows from what we've seen over the last year or 2.
Kenneth B. Worthington - JP Morgan Chase & Co, Research Division
Okay. So even if we are seeing engagement, we're seeing better sales activity in your equity products, you think the positioning is just -- it's going to be consistent with what you've been doing?
Gregory Eugene Johnson
Right. I think it moves the needle on the margin.
But, I mean, the strength of hybrid Franklin Income, global bonds, munis are going to continue to be the major drivers. And performance is good in all those areas, so I would expect to see a continuation unless you have changes in the market.
But for now, fixed income is still driving equities picking up, but I don't think there is going to be a huge shift unless rates back up or something happens.
Kenneth B. Worthington - JP Morgan Chase & Co, Research Division
Okay. And then just on Global Bond and sort of this ongoing capacity question.
So Hasenstab is talking about the lack of attractiveness of safe sovereign debt, and it's been driving them into some of the other markets like Ireland, where I think he's now 10% of that market. So I know in the past you said that there's plenty of capacity in the areas that he looks at, but now it seems like there's been at least a recent shift in his strategy.
So based on that, is the business now too big for what he is trying to accomplish? And then as managers, what do you do about it?
Gregory Eugene Johnson
Well, it's something we monitor very closely and look at defining and measuring liquidity as an art itself, and we spend a lot of time doing that in these markets. And I would also point, too, that this fund carries a cash position because we know there will be shocks in the market and liquidity dries up when you need it.
But you look at the demand in the last offering of Irish debt that I think was 3x oversubscribed, you can argue liquidity is pretty high right now. But we know that's not there when things turn the other way.
So I think we're sensitive to that issue. We spend a lot of time with the team and with our risk group measuring that, but we feel very comfortable today that it is the appropriate level of liquidity.
But for those that want to be more aggressive, we have other type products available in the less liquid markets with more of a -- restrictions around what you can do with redemption. So I don't think for now.
I think the good news is that we are diversifying with the Global Total Return Fund, which again has a much -- is a much larger overall market. And we still feel comfortable, as Michael does, with the liquidity in the global bond side.
Operator
Our next question comes from Matt Kelley from Morgan Stanley.
Matthew Kelley - Morgan Stanley, Research Division
Just wanted to expand upon the K2 acquisition a little bit and just broadening the scope a little bit towards just the alternatives platform in general and the fact that you've gotten more traction with institutional clients. What other sorts of asset classes outside of the fund to funds business might make sense for you?
Would you consider more kind of global real estate, private equity or anything else that you're thinking about?
Gregory Eugene Johnson
I think we're in both of those, private equity and global real estate. And whether there's an opportunity to expand that platform, that's certainly something that we're always open to doing if it makes sense.
So as we've said before, there's no hard rule one way or another. If something makes sense and we can build scale and build a stronger group, we'll do that.
But we do have that capability today certainly with Darby and our Franklin real estate group.
Matthew Kelley - Morgan Stanley, Research Division
Okay. I guess just to follow up on that, I was asking -- I was trying to get more along the lines of there's obviously increased retail penetration or demand, at least, for some alternative products here in the U.S.
But do you see more potential growth in the retail channels or in institutional for the alternative asset class as a whole?
Gregory Eugene Johnson
Yes, I think it's hard. I mean, I think, again, and as you define what -- alternative covers a lot of ground, whether you call it a solutions and a target date and is that really an alternative.
So the answer is that there's an appetite to -- always to do things a little bit differently, and we're going to continue to build. But whether or not -- the liquidity concern in retail, I think, is something we're sensitive to and are going to be careful about less liquid-type private equity investments vehicles like that, even fund to funds, hedge fund to funds.
Whether or not you can really do that in '40 Act form, I think, is a question that we're still analyzing.
Operator
Our next question comes from Marc Irizarry from Goldman Sachs.
Marc S. Irizarry - Goldman Sachs Group Inc., Research Division
I just want to get some perspective on your growth outside the U.S. versus inside the U.S.
relative to margins. Is there -- if you -- if your growth accelerates outside the U.S., how should we think about sort of the near-term margin potential?
And then maybe I don't know if you have a view on sort of long-term trajectory there as well?
Kenneth Allan Lewis
Yes, I'll start with -- I'll talk a little bit about the margins. To the extent that the growth occurs in our -- the -- I would call it a retail product even though sometimes that's sold on the institutional channel.
The -- our CCAB funds, I think the margins -- I don't think we'll have incremental expenses, so you could see some margin expansion. To the extent that the growth would come from maybe our local asset management groups, the in-country funds, they are more expensive, but, on the other hand, they're such a smaller part of our business that they shouldn't really have a big impact.
So I would say that if we did overall have international growth, that it would -- you could see some margin expansion, or at least flat or at least stable, but not compression.
Marc S. Irizarry - Goldman Sachs Group Inc., Research Division
Okay. And then, Greg, can you just comment on your appetite for deals given all the capabilities that you've added already and what you're building, what you currently have in the product lineup, how the sort of acquisitions fit into your thinking there?
Gregory Eugene Johnson
We have a lot of styles. We feel like we've addressed most of the needs out there.
And -- but if something pops up that, again, we think can be accretive over time, we're going to look at that. But I wouldn't put any -- if I had to -- if we had to put a wish list together, I don't -- I think it'd be difficult for us to say 1, 2 and 3, what do we need right now.
I think we've got a lot of pieces that we can actually build new products with some of the capabilities that we've introduced. And we've also haven't fully leveraged the distribution that we have with many of these newer acquisitions.
So we're going to continue to look. But again, the breadth of what we offer, you do get diminishing returns at some point through distribution channels.
And what we're looking at today is whether or not things like -- we are investing and building out our alternatives distribution as a separate platform, and we think we're going to continue down that road. So that enables us to potentially add more products and styles to that.
And so that would be the one area that we're going to continue to be open to.
Operator
Our next question comes from the Greggory Warren from Morningstar.
Greggory Warren - Morningstar Inc., Research Division
Looking at the fixed-income flows you saw during the quarter, how much of that do you attribute to the positive flows you saw from Global Bond and from Global Total Return? And I guess sort of a follow-on to that, do you think that this is kind of an appropriate quarterly run rate to assume as the year progresses?
Kenneth Allan Lewis
I think it -- again, January tends to be a little stronger, so -- to extrapolate or to take this quarter, and we all know how difficult forecasting where rates are going to be. So you look at the strength of muni bonds.
Even in a period where you had some questions about tax changes that could have affected them and probably contributed to some redemptions but still had relatively strong flows, you would expect that to increase if, with the increase in tax rates, it just makes that much more attractive. So I think it's a fair, certainly, run rate if rates don't change or maybe higher, hopefully.
Greggory Warren - Morningstar Inc., Research Division
Okay. Okay, that's good.
And then just a quick follow-on. Looking at equity flows overall, I'm sure you guys have seen the same sort of data and you look at what's been happening within your own funds in January, It seems like a lot of the money is flowing more into international equity funds, and I would assume more in the active side.
Has that been the case where you guys? Are you seeing more activity on that side of the business and less on the domestic?
Gregory Eugene Johnson
Well, again, I mean, I -- we really don't like to talk about this -- the current quarter as far as flows. But, as Ken mentioned, certainly for us, a drag has been the net global equity flows, and we have seen a significant improvement.
I don't really have an answer whether it's passive or active, but you certainly have more active in retirement plans, and that's going to generally drive more of the immediate flows in January.
Operator
Our next question comes from Chris Harris from Wells Fargo Securities.
Christopher Harris - Wells Fargo Securities, LLC, Research Division
Want to come back to this point about global equity flows not really catching up with the better performance you've had. Curious, do you think enough time has passed here where advisors will actually start coming back to this product in a more material way?
And I guess maybe to help us frame up the answer to this question, in prior periods we've had some performance issues. How long did it take for the advisors to come back?
Gregory Eugene Johnson
Well, a couple of points. I mean, one, we are seeing an increase in certainly the gross level, and much of that was masked by some of those big institutional redemptions.
But it -- I don't have any answer to tell you how quickly. I think I'm a little disappointed it hasn't come back faster.
But we tend to focus on it more than -- and it's even getting our own channel. And that's been a big focus of ours, is getting our own people to talk about it more than kind of ignoring it, which could have been the case in the past.
So we have to get that message out. That's been our focus certainly for the last 6 to 9 months.
And we are seeing a turnaround. We're seeing interest on the gross sale level.
We're seeing a turnaround in net numbers more recently. So I -- we are seeing that turnaround, and I couldn't tell you what the -- what a number is because there are so many different factors in timing and when flows come back.
Christopher Harris - Wells Fargo Securities, LLC, Research Division
Okay, that's helpful. And then a real quick follow-up on performance.
Clearly, Templeton doing great. But Mutual a bit less so.
Can give us a little color on what's driving the underperformance you're seeing at Mutual?
Gregory Eugene Johnson
Yes, I think it's just the value -- their deep value style, and some of its currency moves as well that can affect the shorter-term numbers. Cash, they generally hold a little bit more in cash than most equity funds, and that tends to create a lag in the kind of markets that we've had.
Much more defensive posture risk that -- and that's been traditional for them versus this kind of risk on market over the last year or 2.
Operator
Our next question comes from Dan Fannon from Jefferies.
Daniel Thomas Fannon - Jefferies & Company, Inc., Research Division
I guess to follow up on that, could you -- for Mutual Series, could you just kind of highlight recent flow trends? And I guess remind us in total what the asset levels are there in that complex.
Gregory Eugene Johnson
Yes, I don't have that -- we'll dig that up or you can call our Investor Relations group. But I don't have the exact numbers in front of me.
Sorry.
Daniel Thomas Fannon - Jefferies & Company, Inc., Research Division
And then I guess just one on the global fixed. You talked about on the prerecorded call some of the geographies that have improved.
Is it some of the same customers coming back or some of the same channels that are resulting in the gross sales improvement? Obviously, the geographies seem to be similar, but is it the same kind of end users as well?
Gregory Eugene Johnson
Yes, I think that's certainly -- I don't think there's been any real shift in distribution. We saw some shift based on volatility that created some lumpier redemptions because of the gatekeeper approach, too many of the big banks in Europe and things that may have just felt it was a little too volatile for what they were -- how they were selling it.
But we're seeing a pretty consistent pickup really across Europe and the U.S. And Ken has some numbers.
Kenneth Allan Lewis
Yes. While Greg was talking, I did a little research there.
We have seen an improvement in Mutual net flows in the month of December. And that's -- and we've even seen some positive flows early days in January.
And their assets at December were around $55 billion.
Operator
We have no further questions at this time.
Gregory Eugene Johnson
Okay. Well, thank you, everybody, for adjusting your schedules to participate on our morning call, and we look forward to speaking next quarter.
Operator
Thank you, ladies and gentlemen. This concludes today's conference.
Thank you for participating. You may now disconnect.