Greetings and welcome to the AMG Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] I would now like to turn the conference over to your host, Mr. Jeff Parker, Vice President, Investor Relations for AMG. Thank you. You may begin.

Thank you for joining AMG to discuss our results for the third quarter of 2018. In this conference call, certain matters discussed will constitute forward-looking statements. Actual results could differ materially from those projected due to a number of factors, including, but not limited to, those referenced in the Company's Form 10-K and other filings we make with the SEC from time to time. We assume no obligation to update any forward-looking statements made during the call. AMG will provide on the Investor Relations section of its website, at www.amg.com, a replay of the call, a copy of our announcement of our results for the quarter, a reconciliation of any non-GAAP financial measures to the most directly comparable GAAP financial measures, including a reconciliation of any estimates of the Company's economic earnings per share for future periods that are announced on this call and an investor presentation. AMG encourages investors to consult the Investor Relations section of its website regularly for updated information. With us on the line to discuss the Company's results for the quarter are Nate Dalton, President and Chief Executive Officer; and Jay Horgen, Chief Financial Officer. With that, I'll turn the call over to Nate.

Thanks, Jeff, and good morning everyone. Against the challenging industry backdrop, AMG generated solid results in the third quarter of 2018, including positive net client cash flows of approximately $1 billion and economic earnings per share of $3.45. Our results reflect the diversity of our global business and our strategic position in attractive, return-oriented products, where we continue to see significant client demand for our affiliate strategies and the distinctive investment return streams they create. In terms of third quarter flow, we saw continued strong demand for alternatives, which included another quarter of very significant illiquid product fundraising from institutional clients, partially offset by softness in liquid alternatives in the retail channel, where investors tend to be more sensitive to short-term performance. The ongoing strength of our alternative products was partially offset by net outflows from equity strategies, driven primarily by emerging markets products and U.S. equity retail outflows. At the highest level, we were pleased with our positive organic growth in the third quarter, despite industry headwinds. We benefited from having built a diverse global business and we're pleased to see a very broad array of product types. Affiliates and geographies contributed significantly to our flow composition, as we saw strong sales across Baring Asia, BlueMountain, Capula, EIG, Pantheon, and PFM within our alternative category. [Indiscernible] Frontier and Harding Loevner were notable contributors within our equities category. Now, looking ahead, I want to address the current market environment and how we have built and continue to position our business. Obviously, it's been a volatile period. Global and U.S. equity markets have declined roughly 10% month to date as of Friday. And frankly that understates some of the underlying volatility we've been seeing. Anecdotal evidence points to some de-risking in this environment and you can see that reflected in this…

Thank you, Nate, and good morning. As Nate discussed, we were pleased with our third quarter results, which included positive organic growth against the backdrop of industry headwinds. As we enter the fourth quarter, we believe AMG is well positioned for an evolving macro environment, as heightened volatility and risk aversion creates opportunities for the highest quality active managers, such as our affiliates, to distinguish themselves. The scale and diversity of our business across asset classes, client channels and geographies; the quality of our alpha-oriented product set and the unique structure of our partnerships with affiliates together enhance the stability of our cash flows and given our business strength and resilience, we are able to execute on our growth strategy throughout market cycle. Before turning to the quarter, As Jeff mentioned, we have posted the investor presentation on our website this morning under Investor Relations, quarterly results. Going forward, we will be providing this updated presentation simultaneous with our earnings release, so that we can refer to certain information during our call. I would like to call your attention to the incremental information we have provided this quarter in response to investor feedback. On page 9, we've included aggregate investment performance for global and U.S. equity products, as well as the liquid and illiquid products, which we believe best represents our long-term track records for these categories. I will be referring to this information in just a moment. In addition, on page 17 of the presentation, given that we are including selected composites for each product category through the first three quarters of 2018, I will no longer restate this information in my prepared remarks. Now turning to the details for the quarter. Starting with alternatives, which account for 39% of our AUM, we had a strong quarter of organic…

[Operator Instructions] Our first question comes from the line of Michael Carrier with Bank of America Merrill Lynch. Please proceed with your question.

Thanks guys. Maybe first question, just on the alternatives. So clearly, from a flow standpoint, you guys have been doing well. It seems like on the performance in -- whether it's you guys or the industry, things have been a bit more muted. But yes, just wanted to get your sense of when we think about -- when we see the good growth coming in alternatives, how does that like impact the outlook in terms of like E&I. So whether it's ownership and how that can potentially impact fee rate or even performance fees when you're in an environment where it's obviously weaker and then maybe the long-term trend?

Great. So thanks for the question. It's Nate and I'll start and then ask Jay to pick up the second half. So I think the most important thing when you think about our alternatives business, if you will, is it really breaks into a number of different categories. So in the materials we've posted on the website, we've broken into four groups. So there is a private equity -- and they behave differently and we're having different experiences within them, which I think points to the benefits of the diversification that we've built. So, for example, we have a private equity and real asset, which includes infrastructure and private client and other things. And that business is behaving one way, which is right now there's incredible amount of demand, there is a really good sort of product development going on, the take-up through our distribution and through our affiliates own distribution is fantastic. And so that part of the business, and both Jay and I talked about how that's a part of our flow profile right now. But that's something we also just see continuing to grow and importantly, diversify as well. And when you talk about how that flows through, obviously the performance fee, or carry piece of that is of course growing, but it's certainly something that grows out into the -- kind of starts two, three years out and grows kind of thing. So that's kind of one part of the book. Then in the more -- what we talk about sort of more liquid, we have sort of a fixed income and kind of relative equity, relative value book and that's a business line that generally had -- industrywide has had kind of more muted returns for a while, but I think in these volatile environments that's performing reasonably well. I think the multi-strat business, not an entirely different story, which is, it's been kind of muted returns and clearly how that will perform going forward. And then we've a systematic diversified business, which you've heard us talk about as having kind of more challenged performance for a while now and then -- but in the current environment, again, it's the kind of thing that you would expect, at least has the opportunity, because it contains so many kind of uncorrelated positive expected return streams to have the opportunity to perform. So I think we're very bullish about the fact that we both diversified the equity business, including all these, as you heard us talk about, but then also the diversity we've built within this, which over time should provide stability to a bunch of different long-term business, including the flow profile, as well as earnings profile. I don't know, Jay, if you want to --

I'll just pick up and talk about the E&I impact. And, starting with -- a calendar year -- any one calendar year, it can be hard to predict, in part because of the performance fee, opportunity in that calendar year. But if you think about it just in -- over time, the E&I impact of raising more alternatives is generally good positive thing, the management fee typically is higher. Performance fee opportunity, as Nate said, in the private equity vehicles that tend to build over time, and we're seeing that happen for us. Remember, we are on MiFID I, so we only report that when it crystallizes. So we are seeing the mix shift longer term be a positive E&I benefit to us. But again, in any one period, It's a little harder, because it depends on which one, what's the ownership level and what the performance fee is, but I think the best outlook for us is that this private equity and alternative build will play out in our E&I over time.

Thank you. Our next question comes from the line of Craig Siegenthaler with Credit Suisse. Please proceed with your question.

Hey, good morning, Nate, Jay. I just wanted to start with a big picture question -- business model question, which is actually sort of three parts. So I'll jump back in the queue after this one, but just given the evolving industry backdrop, what do you view as the main benefits now of the multi-boutique model? Also how has AMG's business model evolved over the last five years? And more importantly, can you remind us the different ways you can leverage the benefits of scale for your affiliates?

Good morning. Thank you very much for that question. I'm glad you asked, because I think -- first, I'm going to speak mostly to our business rather than multi-boutiques or maybe wholly to our business as opposed to other multi-boutiques, because I really do think our business is different in some fundamental ways. And so let me start there, which is if you think about AMG today across our affiliates, we have incredible level of diversity and we talked about this in the script -- incredible level of diversity. That diversity is of distinctive return streams. So each of our affiliates is independently producing these return streams. And we believe there is a level of excellence to that and we talked about that in terms of some of the performance thing. So you have diverse, distinct, excellent manufacturing. But then the thing that I think is different about our business is, we've been able to achieve that diversity and the scale without having to combine or compromise affiliate cultures, right? So each of our affiliates is a truly distinct business, which we think is really important from the standpoint of the manufacturing return streams. That is a place where generally, on the active side, scale is not a benefit. So diverse, distinctive, excellent manufacturing, we've achieved that scale without having to combine or compromise cultures. And then again, really important thing to understand is we can continue to add to that scale significantly without having to compromise cultures. So it's not just, we have a business model that allows us to manage that diversity today, but because of the way we've built it we're able to continue to add to that scale without, again, combining or compromising cultures. And I don't think there is another business that manages that level…

Thank you. Our next question comes from the line of Alex Blostein with Goldman Sachs. Please proceed with your question.

Thanks. Hey, good morning guys. I was wondering if you could comment on the buyback and capital return priorities here. So, it's a bit light, I guess relative to the pace you guys have bought back stock in the first part of the year. Why the pullback? Jay, I think I heard you say another $100-ish-million in Q4. Given the valuation of the stock and no near-term deals, it feels like we would expect a little more from you guys. So, just some color on that would be helpful.

Thanks, Alex. So, yes, you characterize it as a pullback, but I don't think it's a pullback at all. In fact, the last eight quarters, I think we've probably averaged about $100 million. So it seems right in the zone of where we've been. In fact, it's a little more than -- the $113 million is a little more than $100 million. But just taking a step back, just making a couple of comments here, we're mindful of the market volatility, right -- market for our stock, but also market volatility. We also -- as you heard Nate say, we're investing in both new initiatives, but also we're optimistic about our new investment pipeline, and that was in my prepared remarks, I think we're being mindful of that. We are committed to -- always committed to a disciplined allocation of capital, which really includes balancing these growth initiatives with capital return. And again, it's against the backdrop of an appropriate leverage ratio, so that we can invest through a cycle. So I don't think anything is different, but we have always been committed to a capital return strategy that balances all of those initiatives.

Thank you. Our next question comes from the line of Bill Katz with Citigroup. Please proceed with your question.

Okay, thank you very much for taking the question. And just staying on that capital management theme for a second as well. I just maybe broaden it out. Can you step back a little bit and talk a little bit about how your capital management is evolving against a couple of things. Number one, just sort of the shifting of the sort of asset management ecosystem, and is it still sort of credible to continue to go after sort of mid-sized players at this point in time? Number one. And then just sort of given the -- what looks to be pretty elevated multiples in the private market, how are you thinking about that versus buyback right here? Thank you.

Maybe I'll start just on the part of both this question and a little bit the prior, which is how we're thinking about the M&A environment, because I do think -- I don't disagree with some of the dynamics, but implicit in your question was both just what kinds of firms we are looking at and then also how we are thinking about the pricing. So maybe it would be useful to just level-set on that one. And so, look, we've been running this basic model and approach for now almost exactly 25 years, which is being -- try to build a business where we are the best institutional partner to these excellent boutique firms and I don't think that strategy changes. And I also think, generally, the firms we are partnering with are not trying to do a trade or whatever, but the firms are trying to partner with the ones that are really trying to pick a permanent institutional partner, right. So that's -- I don't think that's changing at all. Now, of course, we're being disciplined and here I agree with part of what was in your question, which is -- your commentary on some prices that have been paid. And, look, when we're looking at new investments, we are disciplined across a bunch of different dimensions, right. We're very -- we're disciplined across the quality of the business and we talked a little bit about that last quarter, but that has a bunch of different component parts to it, but we're very disciplined about the quality of the business that we're looking at. We're very disciplined about can we get the right long-term alignment with the principles of the business. And, of course, we're very disciplined on pricing. And so -- and also implicit in both…

Thank you. Our next question comes from the line of Chris Shutler with William Blair. Please proceed with your question.

Hey guys, good morning. I think Nate in the prepared remarks, as well as in the press release you continue to use the word proprietary a lot when talking about the pipeline, but we've seen a number of deals, particularly in the oil space and others are using the -- I think the phrase permanent capital partner as well in talking about their strategy. So would love to get any comments there and confidence in how proprietary the pipeline really is.

Yes. So, look, I think I'd say a couple of things there. So, first, we do have a proprietary effort. I think you should also assume we're looking at all of the transactions that are in the marketplace as they go and I'd probably just refer to my prior answer, which is, look, some of those businesses don't make any sense for us as they are predicated, for example, on bringing together overlapping capabilities or whatever in that kind of one category, sort of the cost cutting consolidation kinds of things. But the other -- we are remaining disciplined across all of those dimensions I talked about and there may be or have been firms where you look at them and you say, well, that meets that discipline on one of those dimensions, but not on other of the dimensions. And so, we are staying disciplined. On the permanence point, I think -- and I don't want to comment specifically about any one model here or there, but on the permanence point, I think it's on -- they are unproven models, and I think here I would point you to the fact we've been running effectively this business of being permanent institutional partners to great boutiques for 25 years through full cycles. And I think some of those models may not have thought through all the different elements of that. And so, again -- but again, I'm not commenting on any one here or there, but I think that is certainly something we see.

Thank you. Our next question comes from the line of Dan Fannon with Jefferies. Please proceed with your question.

Thanks, good morning. My question is around flows and just kind of the outlook. First off, appreciate the increased disclosure around performance. But I guess, as we think about October, the de-risking I think you mentioned, can you talk about any change in client behavior and in particular, if you could address AQR, which is I think a focus for a lot of investors, given its size and contribution to you in terms of -- we've seen a slowdown in retail and how we should think about that for larger component of institutional and whether you as a firm in aggregate can still post -- you can still post inflows if AQR is in fact in a bit of a struggling period?

Yes, so let me start here. And then maybe I'll ask Jay to pick up some of the pieces of it. But, look, on your specific question, I would just say, look at the diversity of the business that we've built and AQR is certainly an important part of our business, a very important part of our business, but it's a part of our business. And so, yes, I'll just point to the quarter we just had, but let me address specifically your fourth quarter comment, which is I'll make a couple observations. So, first, at a high level, the trends remain intact, right. So we continue to see good illiquid fundraising, especially in institutional, some retail and we do see continuing challenging retail liquid outflows. I think those trends will remain intact. As I said, I do think the volatility that we're experiencing and have recently experienced will have -- is having a short-term effect on some clients, so slower decision processes. I think that stands to reason, it shouldn't be surprising. And then I would just remind folks, I think that kind of Q4 is just generally a seasonally weak quarter. With tax [law selling] any of the kind of Q4, Q1 effects we've talked about before on single-year and multi-lock vehicles. But in terms of the overall positioning and I'll come back to the first point on AQR, in terms of overall positioning, the affiliate performance, and Jay talked about, this is good. The pace of innovation is really good, both new strategies and extensions of existing strategies. The pace of activity in distribution, packaging, geographies, channels is really good. And I think we're increasingly effective at bringing affiliates into the markets, channels and into places that are looking for more efficient ways to get access to all this manufacturing. So I think all of those trends remain in play. I don't know if Jay –

I was just going to pick up on the one component of the conversation, which is just how does it translate into earnings and in contribution. And I think here, Nate already said it, diversity is really important. It's always been important to us and I want to make sure we're not confusing a period of time where we have a little bit of soft performance fee outlook in the calendar year that we're in, as opposed to the long term. So as it relates to the earnings profile, we do see AQR, but a number of other large affiliates continuing to contribute at a really high level to us and in any one year, where we have a lower performance fee contribution, it really in no way diminishes the long-term value of that performance fee stream. So I think on an earnings basis, it might get conflated, but really AQR is strong, so are our number of other larger affiliates. and, of course, we're in this period of time where we're seeing a lot of follow through from the illiquid private equity style and that's just building a future sort of pipeline of carry and additional earnings into the future.

Thank you. Our next question comes from the line of Robert Lee with KBW. Please proceed with your question.

Thanks, good morning. Thanks for taking my questions. Maybe Nate, Jay, I'd like to go back to the M&A topic a little bit. So as you think about the investment landscape, what's maybe changed, whether it's in terms of size or scope or capabilities of the prospective affiliates you are looking at, maybe over the last couple of years. I mean, not to pick on, say, Ivory, but a relatively small firm, came as part of, I guess, a multi-boutique acquisition, in a way. But, how do you think about kind of the size or type or scalability of the affiliates you're interested in versus maybe what you used to look at or would be willing to do several years ago?

Thanks for the question. So we talked a little bit, I think, on our last call about this. How do we -- what do we mean by when we say high quality and I think you've captured many of the elements, which are, we're looking for firms that we think have the ability to grow in this environment and the environments we expect to come. Some of that is the orientation of the principles of the firm, right, what are they trying to achieve. Some of it is, what can they achieve on their own, and some of it is what can we do together. And so, I think it is, we are looking for more complete firms, I'll say it that way, in terms of orientation to grow and evolve the capability set that allow them to grow and evolve. But we're also still attracted to firms that are really doing one thing, they're doing it very, very well, but we have the opportunity, and this is the part that I think has evolved a bit over the past couple of years. We have the ability to work with that firm in ways that are additive to the whole. And so, I think we talk about high quality as either that kind of more complete firm or something that together we can grow and evolve and it's additive to the whole, whether it's client dialog or what have you as well. And so, I think this also relates a bit to the prior question, which is, well, how does that manifest, or what does that mean. And so we have a set of proprietary relationships. Our pipeline includes conversations that we've been having. In some cases, the better part of a quarter century. And we're building relationships, maintaining relationships, evaluating these firms, and we're looking at them through the screen of the evolving landscape that we're seeing. One other point that I'll make here is, as we've been growing our distribution platforms, as we've been having dialogs with intermediaries and clients who are already, or might use multiple affiliates, we're getting better and better at certainly the near side of the demand characteristics we should be looking for. But we think also strategically understanding what these intermediaries, or what these end-users are looking for as they're trying to solve their evolving challenges over time, and that just makes us better as we're looking on the front end for prospective new affiliates and this is something that we're still in the early stages of, but we are getting better and better at all the time. Thank you. Our next question comes from the line of Brian Bedell with Deutsche Bank. Please proceed with your question.

Great, thanks, good morning folks. Maybe, Jay, just to circle back on the coming quarter, in the fourth quarter, can you talk a little bit about the performance to-date? I know the [alternatives] are doing relatively well, we're measuring about negative 7% on the mutual fund side and I know that's overstating the downside, given your own mix, but maybe if you could talk about it on a firmwide basis. And then on the fee rate, I think your guidance included the $40 million -- I'm sorry, $0.40 of performance fees. Is that -- if I'm calculating it right, is that about a stable fee rate ex the performance fees around [$11 million -- $11.4 million, $11.5 million].

Thanks, Brian. So I'll take your last one first, because that's an easy one. Yes it's $11.3 million, [$11.4 million] , so that's stable to the last quarter's, that's an easy one. Maybe I'll take a step back and kind of wrap altogether the guidance that we gave and also include kind of where we are on marks through last Friday. So I mentioned in my prepared remarks there are -- the portion -- the market deposit for the portion that's our alternative book is down about 2%. For equities, it's approaching [10%]. That blend with multi-asset in there as well is about 5.5%. So, yes, it's much better than the 7%, and I think it speaks to the diversity and I suspect we're doing better than some of our peers or maybe most of our peers in that regard. Obviously that will have an impact on the fourth quarter, but it has more of an impact on a full year basis, as we've already begun the fourth quarter. The guidance specifically on performance fees, maybe I'll step back for a moment and just talk about guidance from our last call to this call on performance fees, which has changed a bit. And specifically, it's around the beta-sensitive products, they were tracking to a much higher potential contribution for the year for us. And in the last call, we also mentioned that certain of our less correlated products, including many of the systematic products, were at or below high watermark and were not expected to give us a contribution in 2018. Interestingly, given the significant equity market pullback and the increased volatility in October, we've seen a sharp reversal of these trends, affecting our fourth quarter performance fee opportunity. On the one hand, we've reduced our expectation for the beta sensitive performance fees. But on the other hand, we are more optimistic about the improvement in investment performance at our less correlated products. So we may be too conservative here with the $0.40. This all happened in the last two weeks, but I think we are seeing those trends, it will take a little more time for our less correlated products to -- now that they've improved significantly, it will take some time for them to really generate more performance fee. So we see the outlook for 2019 much improved in that regard. And there may be enough performance in the fourth quarter where this number is conservative.

Thank you. Our next question comes from the line of Patrick Davitt with Autonomous Research. Please proceed with your question.

Hey, good morning. Some other managers have been highlighting still very strong institutional demand for global and emerging market strategies through the [ROW] we saw and even into October. Curious if you're seeing a similar trend, and within that vein, as value has started to outperform, are you seeing increased demand for value equity in the U.S.?

Yes, let me take that. So I do think we've been seeing good demand trends generally. So the sort of the high level point of the dimension is, generally our impression is sort of remaining intact, which includes demand trends for global equities. I think on the EM side, I don't know, I mean, it's hard for me to see that we have a narrower product set there, but -- and so I think our judgment is much more [U.S.] and correct to us. I think the point you make on value is a really good one and I'm glad you raised it, which is included among our affiliates are some just world-class value equity managers. And so -- and again, it's been a long time, right, that value growth disparity and we can talk of course about the various reasons for it, but we really believe that if we get to, or if we are in a more fundamentally driven market that the value measure we have, we'll have the opportunity to outperform significantly and also open up and take on new flow, because I think the challenge -- I am just generalizing it, but the challenge for many of them was finding enough good opportunities to put capital to work. And so, we've had, either actually closed or just -- people who are not really marketing the product, the challenge was they had to put their existing client assets to work first and had reasonable high cash levels as well. And so, whether you look at like a Yacktman, who I think is the Number 1 performing -- I think two of their funds are, [one and two] years, I think is Number 1, Number 2 performing funds in that category, or the Tweedy, Browne funds that are now top quartile. I mean like we have just great value managers there. And so if that market evolution -- we're much more value heavy certainly on our U.S. equity side, but even including our global category. And so if that evolution is happening that absolutely plays well for us and we've seen it in -- certainly -- and these are all just early days and all that -- been seen it in flowing outflows in a little bit elevated sales. And so, yes, absolutely that will be a very positive trend for us.

Thank you. Our next question comes from the line of Michael Carrier with Bank of America Merrill Lynch. Please proceed with your question.

Thanks guys. Just one other one, and this is more just on the modeling, when you think about the outlook. When I think about the industry trends, mostly on the organic growth, obviously it's been more of a headwind. You guys, from an asset mix are relatively well positioned. But when you think about some of the things that you can offer to the affiliates, are there other maybe big areas to focus on to maybe improve the scale or improve the efficiencies, but still maintain the independence of the investment teams in the investment strategies. Just wanted to hear your take, just given that the -- maybe the top line or the flow growth is different than it has been over the last, say, 20 years.

Yes. So, look, I think there is absolutely more we can do to bring our affiliate -- the excellent distinctive return streams managed by our affiliates that kind of diversity at scale without interfering with culture that I was talking about before. There's absolutely more we can be doing, I would say a lot more we can be doing in partnership with them to bring those return streams to market. But I also don't think it's like a switch. I think this is an evolution that we've been on for more than -- as I said, it's more than a decade, it's 12 or 13 years now, kind of deliberately building out, paying attention to the pace of change, the level of investment, the returns we get on those investments, but deliberately building out the -- we've called them global distribution platforms, but it's institutional distribution platforms, they can be retail distribution platforms. Again, we opened Japan, which I think we are very optimistic about, we opened in partnership with another one of our affiliates, Pantheon. Other affiliates are going to that market together with us. And each market is different, each market has its own characteristics and we need to be doing it in a way that again, in your question and what I said before, in a way that doesn't interfere with the thing that makes these firms special in the first place, which is their ability to produce these distinctive return streams. Now we're having an ever-increasing pace of conversations with our affiliates on how do they use the capacity of those return streams, how do they use the capacity of their investment processes, and at the same time, we are having more and more of those conversations with large pools of capital and large intermediaries. I…

Thank you. Our next question comes from the line of Alex Blostein with Goldman Sachs. Please proceed with your question.

Hey guys, just a quick follow-up on performance fees. Jay, can you remind us what percentage of AUM is subject to high watermark, kind of where that bucket stands today as we start thinking about next year? And then when it comes to the illiquids, understand the timing difference, but since you guys have been realizing quite a bit in the last couple of quarters, obviously it shows up in your AUM. When should we expect the strategies to contribute to performance fees?

Yes, so let me take the last one first. So we have been in a kind of an 18 month pretty significant fundraise cycle for us. A number of our affiliates, not all, but a number of them, we've partnered with in the last, say, five years. And when we made those partnerships, we had a lower share of the prior funds contribution. So when you look forward this 18 month period, it usually takes three, four, in some cases five years, but three and four years to get through the investment period. At that time you'll see additional performance fees come through that., I mean, I think for now it looks to be in that 2020 range, maybe before for some of the bespoke and more single strategy or single separate account type mandate. So starting to see some next year, see it building into 2020 and certainly 2021 and it's going to be pretty significant, just given the fund raises that we just gone through and frankly, looking forward, we see that fundraising cycle continue and we way undershot the amount and the duration of that. So we continue to see that very strong. Going to the performance fee question that you had asked. Look, I gave you sort of the qualitative answer. I think quantitatively, we don't think the right way to look at it is some percentage of AUM. It really does depend on lots of different factors, including our share of that affiliate, the sort of magnitude of outperformance in certain cases. So when we think about it, we bucket-ize it by categories. Earlier this year the systematic sort of category was under high watermark, I said that in my earlier remarks, that was really the only category that had that issue that has changed. We are going to add around high watermark and that's sort of the case in all categories. So we do see the potential for contribution, especially in '19 from all categories.

Thank you. Ladies and gentlemen, that concludes our time allowed for questions. I will turn the floor back to Mr. Dalton for any final comments.

Thank you again for joining us this morning. We were pleased with our results for the quarter and we're very confident in our ability to create long-term shareholder value. And with that, we look forward to speaking with you again in January. Thank you.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.