Greetings and welcome to the Federated Investors fourth quarter 2018 analyst call and webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star, zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Raymond Hanley, President, Federated Investors Management Company. Thank you, you may begin.

Good morning and welcome. Leading today’s call will be Chris Donahue, Federated’s CEO and President, and Tom Donahue, Chief Financial Officer; and joining us for the Q&A are Saker Nusseibeh and Debbie Cunningham. Saker is CEO of Hermes and Debbie is our Chief Investment Officer for the money markets. During today’s call, we may make forward-looking statements, and we want to note that Federated’s actual results may be materially different from the results implied by such statements. We invite you to review the risk disclosures in our SEC filings. No assurance can be given as to future results and Federated assumes no duty to update any of these forward-looking statements. Chris?

Thank you, Ray. Good morning. I will briefly review Federated’s business performance and Tom will comment on our financial results. Looking first at equities, we closed the year with $72.5 billion of assets, down from $84 billion at the end of the third quarter with market-related losses leading to nearly 80% of the decrease. For the full year, equity assets increased by about $10 billion with the gain from Hermes partially offset by net redemptions and market-related losses. We had 15 equity funds with positive net sales in the fourth quarter. The MDT Small Cap Growth and Core funds and the Kaufmann Small Cap fund had inflows, as well as the MDT All Cap Core and Large Cap Growth funds. Several Hermes equity funds achieved positive net sales in the fourth quarter, including the SDG Engagement fund, the Global Equity ESG fund, the newly launched Emerging Markets SMID fund, and the Asia ex-Japan fund. Using Morningstar data for the trailing three years at the end of the year, nearly half of our equity funds were in the top quartile and about two-thirds were in the top half. Five-star equity funds include MDT Midcap Growth, Kaufmann Small Cap, Hermes Asia ex-Japan, and Hermes Global Emerging Markets. We also had 10 four-star equity funds, including multiple MDT funds, Kaufmann, and Hermes strategies. Looking at the Strategic Value Dividend strategy, its objective is to provide a high and growing dividend income stream from high quality companies. The fund’s 12-month distribution yield, a little over 4%, ranked it in the first percentile of its category in Morningstar at the end of the year. The fund had a return of minus 7.8% in the fourth quarter. It ranked in the top fourth percentile of its Morningstar-assigned large cap value category for the fourth quarter, and…

Thank you, Chris. Total revenue was down slightly from the prior quarter due mainly to a decrease in revenue from lower average equity assets of $12.7 million, partially offset by higher revenue from higher average money market assets of $9.2 million and higher performance fees. Performance fees were $5.8 million in Q4 compared to $1.7 million in Q3. Revenue was up about $29 million compared to Q4 of last year due mainly to the consolidation of Hermes revenue of $51.1 million, including $5.8 million of performance fees, and higher money market revenue of $8.1 million. These revenue increases were partially offset by lower equity related revenue of $11.5 million, a decrease from the impact of the adoption of the new revenue recognition accounting standard, which was $8.3 million, and a decrease from higher waivers from money market funds of $4.8 million. The decrease in operating expenses from the prior quarter was mainly due to lower transaction-related costs from the Hermes acquisition. The increase from Q4 2017 was due mainly to the consolidation of Hermes expenses of $44.2 million partially offset by a decrease in expense due to the adoption of the previously mentioned accounting standard, which was $9 million. Comp and related was lower than our Q3 estimate primarily due to lower bonus accrual related to the equity market decline in the fourth quarter. Because of the volatility in the markets and the significant variability in our bonus accrual throughout the year, we are not planning to estimate comp expense going forward. We incurred Hermes transaction-related operating expenses of approximately $13.3 million in 2018 with about $600,000 recorded in Q4. We continue to invest in the growth of Hermes with an emphasis on U.S. distribution of Hermes strategies. We repurchased 95,000 shares in Q4 and we have been able to pay down about $60 million of our revolver balance from the highest borrowing point after the Hermes transaction in Q3. At year-end, our outstanding balance was $135 million and our cash and investments were $190 million, of which about $145 million was available to us. Melissa, we would now like to open the call up to questions.

[Operator instructions] Our first question comes from the line of Ari Ghosh with Credit Suisse. Please proceed with your question.

Hey, good morning everyone. Maybe just starting with the money market business, maybe for Debbie, excluding the broader industry tailwinds that you’ve talked about, can you talk about anything specific to internal initiatives that are driving the recent market share gains? Is it more on the pricing changes that you’ve made or a new distribution strategy, winning new client relationships? Any color here would be really helpful.

What it really represents is repeating the sound and joy of many, many decades in the money market fund business and a long-term, steady commitment to it, and over the years we really don’t lose clients, we just have clients move money. When you’re set up this way and you get a confluence of factors in the marketplace, like for example increased volatility, like for example risk off, like for example banks aggressively managing their betas on their deposits, you have a situation where money market fund flows come in, but if you haven’t developed the relationships and the products in advance, it doesn’t come to the home team like it did here. Debbie?

I would just emphasize three specific reasons. Chris hit on all of them - rates are above inflation at this point, so interest rates are something that are earning something for the underlying client; volatility in the longer term, fixed income and equity markets is a great place to have a safety point in the liquidity markets, and the preponderance of bank products that are now paying something that’s grossly under what is being earned in money market funds.

Got it, that’s helpful. Then just a quick one maybe on overall pricing trends, do you see any future pressure to your expense ratio, and that includes distribution expenses that you’re incurring right now? Just trying to get a sense of the current pricing that you see on a net basis across both money markets as well as your long-term segments. Is that a good starting point, or are you seeing some pressure longer term to that?

My answer to that would be that it is relentless, and there will always be, quote-unquote, pricing pressure as you describe it, and we see it as the competitive lay of the land in this business. It has been a part of this business since [indiscernible] to the contrary and will continue to be, and those are the factors we have to evaluate in how we play in the marketplace.

Got it, thank you very much.

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

Thanks for taking the question. Tom, maybe first one for you. You mentioned not wanting to give new guidance on the comp. Just broader, how should we be thinking about expenses for ’19, ’20, just given maybe the lower revenues that you’re getting from the equity side, some of the initiatives with Hermes but then the offset of obviously robust flows in the money market funds. When you put that all together, how are you thinking about expenses overall in future?

Sure, Mike. Remember I mentioned that we’re continuing to invest in Hermes distribution in the U.S., and Hermes is going to invest in some distribution of Federated funds over in their marketplace, so that’s going to bring additional costs. We’ve sent a big team of sales people over to Hermes in the beginning of the year, so that’s sales cost, and we’re going to start funds. We’ve already started one. We’ve started the process of filing and registering a number of other funds, so those are all costs that are going to continue to grow, and we expect them to grow and then to grow revenue right along with it. In terms of not talking about the comp, you know how the first quarter is with less days and the other various things that drive the comp up, but we saw that--you know, missing a number that we gave out by $6 million or $7 million is a pretty big number, so we’re not really too comfortable in doing that in the future with the volatility that’s going on. The margin took a jump down with incorporating Hermes into it, and we will still--Hermes is absolutely a growth engine and we’re going to continue to invest in growth. We will still pay attention to the margin.

Okay, thanks. Maybe a follow-up either for Chris or Debbie. Obviously a huge quarter for the money market business. Debbie, you mentioned some of the attractive aspects given the yields relative to some of the bank products out there. I’m just trying to understand what maybe was more either seasonal or environmental versus the core blocking and tackling in Federated, you know, kind of winning in this environment given the history and given the competitiveness of products. Just maybe any color on what you saw during the quarter that was more unusual given the environment versus the outlook.

Sure, I’ll start with that. I think to some degree, the volatility in the longer term fixed income and the equity markets drove a substantial amount of the sales that occurred in the fourth quarter, and the allocations that customers were making to liquidity products were higher than necessarily they had historically been. Add to the fact that they were now comfortable two-plus years post the reforms that took place to the money market funds in 2016, and I think that they were happy to have that additional allocation in these products. Having said that, there was substantial amounts of what I’d call recurring types of sales also, but definitely the volatility in the marketplace is something that was driving certain clients to increase those allocations.

Okay, thanks. This is a small one, but if the Fed decides to either change their balance sheet strategy, any view on how that would maybe change some of the dynamics in the market?

Sure. The balance sheet strategy has definitely added to supply in the marketplace in 2018. We expect it to continue in 2019; however, if they decide to cut it back from the current $50 billion per month that is being undertaken to something less than that, it’s not a huge issue with the market given the supply that is needed from a treasury perspective to continue to fund the deficit. With the expectation of continued issuance once we’re kind of past the issue with the debt ceiling in the end of the first quarter, early parts of second quarter, it’s something that we’ll continue to see supply increase in the treasury sector, and obviously that is impacting then not only the treasury sector but commercial paper or other types of credit sectors. What would potentially change the equation a little bit more than the balance sheet would be if treasury decided to change their funding model. The additional funding that they’ve done in 2018 was substantially in the money market sector, treasury bills. They added a new bill, they increased settlement, two settlements per week in the treasury bill market, and ultimately if they change that strategy and go back to something that’s longer term issuance, that may have some impact, although still that could be used as collateral in the repo market, which has also been growing in 2018 and ’19. So the outlook is still pretty good even if the Fed cuts back their balance sheet, not as attractive but still pretty good.

Okay, thanks a lot.

Thank you. Our next question comes from the line of Ken Worthington with JP Morgan. Please proceed with your question.

Hi, good morning, and thank you for taking my questions. Maybe first on the money market SMA business, it continues to show very big growth. Can you talk a little bit about what municipalities are doing with cash? There have been reports about cash building, and you guys seem to be a beneficiary, so what are you seeing and what is the outlook from here for that SMA business?

Sure. I think Chris mentioned our 2A7 assets are a little over $200 million, our total liquidity assets are a little over $300 million, a substantial portion of that is the--I’m sorry, billion, yes. A substantial portion of that is in the local government investment pool sector, separate accounts, and in the end of the fourth quarter and during the first quarter, generally speaking, those types of accounts are gathering assets, so they are collecting taxes, they are collecting receipts from the various constituents within their pools, and it’s not until late in the first quarter, into the second quarter and third quarter that they actually start to pay those out. It’s a very seasonal business, and if you look historically, that seasonality has been there since we started our first government investment pool management, which was back in early 2002 with Texas. What has basically changed over the course of the last several years has been with interest rates now above zero in that sector, you’ve got more municipalities, more school districts participating in those pools, and even though the seasonality is identical as it’s been historically, the overall base and the volume has actually increased because of the higher rate environment.

Great. Thank you very much. Can you give us an update on the BT pension scheme withdrawals that you were expecting? What have we seen, if any thus far, and what’s the outlook for 2019 there?

Saker, that’s your turn.

Sorry, can you repeat the question - the BT withdrawals?

Yes, what is the status--

The BT withdrawals that we saw were part of a process that’s been agreed when the purchase was made, and this is part of reducing some of their exposure to particularly our global equity fund, and that carried on as normal. I mean, I hesitate to--we can take this offline because obviously they’re a client and I’m not going to say how much a client withdrew, but what I can say to you is it’s within the bounds of what was expected. Including the BT withdrawals, I can also say to you that for the year as a whole, we had net new assets of about $2 billion, which gives you an idea of how much we’re growing our third party business.

Okay, great. Thank you very much.

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

Great, thanks. Good morning, thanks for taking my question. Maybe Tom, sorry to do this, but maybe to go back to the comp question. Understanding the reluctance to give specific guidance, but just given that the Hermes acquisition is still new so trying to get level-set a bit, is it fair if we try to think of a run rate, so to speak, if we were to simply kind of average the last two quarters? I know 2016, for example, you had a similar kind of step down versus what expectations had been in Q4, so it’s not uncommon to have these reversals in Q4 given the environment that you face, so just trying to level-set where you think we should be.

Yes, and I feel your pain, Rob, because we don’t like giving a number out that then is pretty far off. Of course, we didn’t particularly enjoy the market in Q4 either. The first quarter, we kind of recalibrate all the incentive pools and look at it, and we generally view things in an optimistic fashion, and that would generally lead you to say you’re going to have higher payouts. Reality comes each quarter, and then particularly in the fourth quarter when you actually have a pretty good idea of what you’re going to pay, and change the numbers around. There are definitely higher numbers because of the payroll and other things that happen in the first quarter. I don’t want to go through and guess at a number by saying this number and that number and divide it up, because we’ve seen the changes - you know, millions and millions of dollars.

Okay, well maybe Chris, a question for you on capital management. Clearly there’s a lot of focus on leveraging the acquisition here and in Europe, spending time and effort on that, so how are you prioritizing capital management at this point, including appetite for additional transactions? Is this kind of, at least for the intermediate term, this is it, and where is dividends versus share repurchase? Any changes, subtle or otherwise, in where you’re leaning?

Okay, the first position on capital management revolves around leveraging the acquisitions. We always said that the acquisitions were the highest and best use of that capital, not to diminish dividends and share repurchase, so we are going to be looking at that because we think that the Hermes deal is a transformational deal for both entities and a great growth opportunity for the combined enterprise. In addition, in terms of acquisitions, we will continually be looking at what we call roll-ups, you guys call bolt-ons, etc. without any pause in our giddy-up. But you should not expect that we would be doing any larger type deals such the size of Hermes or something like that - that’s simply not on the agenda because we spent, as I’ve told you all before, five to six years working on this particular deal and have discovered the beauty of a six-year, five-year cultural due diligence process in addition to all of the factors that you’re well aware of. We want to do the best we can to make this successful into the marketplace. As you noted on our dividend policy, we love dividends around here and have since our whole time being public, and so we are very happy with the dividend that we just declared yesterday, and then we are also active on share repurchases and they remain within a range, obviously, because of the monies we spent on the Hermes acquisition, but we still remain active there.

Thanks for taking my questions.

Thank you. Our next question comes from the line of Kenneth Lee with RBC Capital Markets. Please proceed with your question.

Hi, thanks for taking my question. Just a follow-up on the sovereign wealth fund money market fund mandate. Wondering does this represent a new market opportunity and how much current exposure do you have to that kind of client type. Thanks.

We have been calling on these types of entities for many years, so this is just one of a number of those that we have as clients. It’s not exactly a whole brand-new thing. What was the second part of your question?

Just the relative exposure you have to sovereign wealth funds in general.

I think it’s around $10 billion.

Got you. Just in terms of the alternative product set within Hermes, could you comment on what you’re seeing in terms of recent client demand for these kind of products, especially in this kind of environment, and which product sets represent the greatest growth opportunities going forward? Thanks.

Saker?

Thank you. The answer is we are seeing opportunities across the board. We continue to see demand for some of our real estate investments, and they continue to return very good returns. This is particularly for larger clients who come on co-investment deals or club deals with us. We have seen demand for our direct lending product which is part of our private markets business and also for infrastructure, so the answer is it’s varied and we see growth in all of them. We will continue to see strong growth from this area, as from other areas. I would say that in general, despite the difficulty of last year, the general flow within Hermes, as I just said, was positive for the whole year, which is very strong and it’s well dispersed amongst most products.

Got you, thank you.

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 my question this morning. First one, actually a set of ones, is in the money market business. Debbie, if the Fed is on hold here potentially for the rest of this year and potentially moving to more of an easing backdrop, as the forward curves are suggesting, how do you think that sort of plays through for the money markets in terms of volume? Then related, Tom, I think you mentioned--I missed it, I apologize, there was some fee waivers in the quarter. Could you compare them to last quarter and then how you think about that as sort of a net yield impact on the growth?

From the Fed’s perspective, we’re actually not in the camp of them being on hold at this point. We think their processes may be a little bit more scrutinous as to the data that’s released, although that’s somewhat tenuous given the government shutdown currently; but we are still of the thinking that they are likely to see--they are likely to add two more moves to their tightening schedule, bringing them to what we think would be clearly in their neutral rate zone for 2019. We don’t think it will happen in the first quarter. We probably think it’s more second, maybe third or fourth quarter related, and for that reason we’re not real excited with what the yield curve is giving us right now. We’re keeping our weighted average maturities a little bit shorter, we have generally our longer end of our barbell situated in the shorter end, not all the way out at 12 and 13 months sector, which is as far out as we can go. Quite honestly, though, I think if you translate that into volumes, it continues--you know, the volume in the fourth quarter was exceptional, I think, because of what we were talking about with market volatility and the other sectors of the market, but I don’t think that what would be sort of the traditional volume will have any problems, even if rates do stay on hold. They’re still at inflation or above inflation, and a good place to capture some incremental income while they’re waiting for whatever purpose they’re liquidity is being allocated. I don’t think it has a huge impact on volume. Generally the first quarter is, from an industry perspective, one that is a negative volume quarter. I don’t know whether we’ll see that this year or not. We didn’t last year, but traditionally it is a negative volume quarter, not necessarily related to rates or what’s happening on an expectation basis. I don’t know that we see anything different, though, based on the Fed moving two times in 2019 or being on hold.

On the waivers, what I said was compared to last year’s fourth quarter, the waivers were $4.8 million change, and basically the assets are going up and so as assets go up and we’re waiving, the waivers increase. The difference between Q3 and Q4 is not--and I didn’t mention anything because it’s not a big enough difference to really call out.

Okay, then my second follow-up question - thanks for taking the questions this morning. Just going back to Hermes, just in terms of the performance fee in the quarter, maybe provide a little color on where you generated the performance fees, and how should we be thinking about that line item specifically for ’19, either in absolute sense or the timing and pacing of potential performance fees.

Saker?

Thank you. I’m not going to comment about timing, but I can comment about regularity, and that’s to say that where we do take performance fees, and it’s primarily in two areas, one is in our property business and one is in our global equity business. Where we do take them over the last several years, these have been consistent and coming every single year, and why? Because we in some cases sell a business on very low performance fees, for example in some equity product, with a--sorry, very low base fees with a performance fee on top, and in terms of the property, it’s to do with how we manage them and harvest the fees back, and we consider them in this case to be part of our normal management fee. They are reasonably repeatable, as evidenced in the past few years. As for timing during the year, if you don’t mind, we can take that offline.

Okay. I’d be curious about that. Then maybe just one last one - thanks for taking all of these questions. Tom, going back to expenses, if you look at the non-comp line and you strip out, I think, some of the deal costs and adjust for the amortization, it looks like non-comp is about flattish quarter on quarter, third to fourth quarter. How do you think about collectively non-comp and non-distribution, how do you think about that for next year in the construct of trying to build out Hermes? Is there a natural pace of growth against that, or is there enough things you can to do offset that so that’s more of a flattish construct?

Well Bill, we went through our budget process and we’re trying to [indiscernible] the marketplace, and you’ve seen what others have done which we have not done, but we’re trying to manage the variable things as well as we can. Of course, the flexibility with the comp number--I know you asked about non-comp, but the flexibility in the comp number shows the company’s flexibility in how we manage given what’s going on in the marketplace, so comp is actually somewhat easier to manage than the other more fixed costs. We’re just doing the best we can, and I don’t really think I can go further than that.

Thank you.

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. Chris, I think, and Saker also, you talked earlier about developing Hermes products in the U.S. from duplicate products. Can you talk a little bit more about what structures you’re doing those in, whether those are mutual funds, SMAs, or both? In terms of just the ramping of that product, I know it’s always hard to predict what the sales are going to be, but if we look at the potential of what you think you can launch, if I look at Hermes third party AUM ex-North America - tell me if I’m right on this - it’s about $25 billion. Do you think you can launch duplicate product for maybe how much of that asset base, I guess?

Well, let’s deal with the first part in terms of the products that are being offered or being filed right now, that we mentioned. There were four of them, and they involve two equities and two fixed income, including the Unconstrained Credit. Those four funds are marching through the registration process, which causes me to be less effusive in discussing them specifically than otherwise I might be inclined to do. We expect to offer those products to the investing public here in the United States and our clientele through our distribution here in the U.S., so that would not be a function of whatever other numbers Hermes has on the international side. In addition, we are in discussions with people about the possibility of creating some SMA vehicles with those types of mandates and perhaps others, funds that will be ahead of that. Of course on the institutional side, we have already done the road shows with our major clients where we had individuals from Federated and Hermes going on big picture discussions with our major clients, and we would expect to be starting to offer the exact products sometime in the beginning of the second quarter or so on various mandates, which I’m not going to articulate exactly which ones at this point. It would be an all points effort on expanding those things here in the U.S. Now as to your second question, which I’m going to let Saker comment on, related to the $25 billion that you ascribed to them on the international side, I’ll let Saker comment on that.

I’m trying to calculate it. Do you mean that $25 billion is from international clients, meaning outside of the United Kingdom?

Yes. What I’m just doing is taking the third party assets of $29 billion and subtracting out the North America distributed products, which I think are $4 billion of your total $42 billion or so, so getting to 25 based on that. Is that--?

Our third party clients would include some in North America, some in Europe, and some in Asia and some in the U.K., and obviously BT as a client is a U.K.-based client, so it’s hard to untangle the two. In terms of what we distribute, we already distribute some clients in the United States, which is why it’s not an easy untangling. As I say, we give less information about this because then one can work out some more information about one client, which is not correct. Does that help you?

Well, I’m taking the--on Slide 16, I’m taking the 11% of North America and multiplying that by the $42 billion, you get $4 billion or so, and then subtracting that from the $29 billion third party to get to that 25.

So like I’m saying to you, we have a mixed bag of third party clients and they’re distributed equally around the world, as is actually some of our BT assets, so I’m sorry, I can’t help you more on that.

So maybe just to tie it back, Chris, in terms of the product launches, just to get a feel of the products that you mentioned that are in registration and maybe what you’re thinking about for the pipeline for this year, what is the duplicate assets that are currently managed by Hermes that we’re talking about? I’m just trying to get a sense of the size of the potential ramp-up of that.

If what you’re talking about is we’re starting funds and the funds are similar, Hermes is starting funds that are going to run in the U.S. that are similar to other funds that they run.

Yes, yes. I’m trying to get those--the assets, similar to--I’m trying to get the asset level of that similarity at Hermes right now.

Brian, I don’t think we have that number at hand, so that’s something we could follow up.

Okay, great. Maybe just to follow up, going back to the comp, maybe just the structures as you--do you ramp this up and you’re investing--I think Tom, you mentioned earlier about the need to ramp up on the growth initiatives, including in comp. Is the comp structure based on gross sales for these new product launches, or is there a deferral that is somewhat based on asset retention?

Our comp structure is that the investment management is primarily based on performance, and then--this is Federated I’m talking, and then I’ll go through Hermes in a second. The sales is primarily based on sales, and then the operation, executive and everything else is based on how the company does. Hermes has more of a thought process from where they come from in their history of a percentage of revenue, of how they’ve used that as a guideline in the past, and so all the things are variable and we have to--I have to put down, and Chris and I have to sign a SEC document that says, here’s what we think is our best estimate each quarter, and that’s what we do.

Okay. Maybe if I could just squeeze in one more clarification, the institutional mandates, Chris, you mentioned the $2.3 billion that’s going to get funded this quarter. The $2 billion of the long-term mandates in equity and fixed income, do you think those are going to get funded this quarter as well?

Brian, it’s Ray. That’s kind of hard to say, because that involves working out contracts and getting to the finish line and actual funding, so I would not put all of that into Q1. It’s like to extend into the year.

Got it, okay. Thanks very much.

Thank you. Our next question comes from the line of Mac Sykes with G.Research. Please proceed with your question.

Good morning everyone, and congratulations - I think you may be the only asset manager to have increased AUM last quarter.

Thank you.

Given that we’re kind of in a new environment for higher rates, can you just talk about how you’re adjusting your advertising or marketing, both individually as a firm and maybe working with clients to raise more awareness about this higher rate environment, and are you using different sources of technology [indiscernible] engagement to do that?

We have a couple things there. We have a PR effort where our friend Debbie here spends a pretty significant amount of time on the airwaves, and then we have a lot of other portfolio managers and client portfolio managers out and about, talking about rates and talking about the market and talking about whatever else is going on, so that’s from a PR standpoint. From advertising, that’s which products are we advertising and what’s going on there. I don’t know, Chris, if you have more, and Hermes, Saker may want to follow up with that, too.

Well over time, there have been dramatic shifts from what would be regular advertising to digital and social media advertising. It’s been a dramatic shift inside of how we’re allocating those dollars. The next thing I would say is that we are going to be coming up with some ideas on how to do a joint branding/marketing effort with our friends at Hermes, and that’s being worked on as we speak, so I can’t get into more detail on that.

Then the last thing, Mac, it’s not exactly on your question of advertising, but we have maintained and expanded a sales force dedicated to the growth of that business, and so a lot of that promotion and contact and growth happens due to the good efforts of the sales force.

Great, thank you very much.

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

Great, thanks for taking my follow-up. Just real quickly, I just wanted to see if there were--in the expense line and other were maybe some still lingering deal costs or things, but was there anything in the other expense lines worth calling out that would suggest that maybe this quarter wasn’t a good starting point for next year?

We’ve said about $600,000 of transaction costs in Q4, and we’re viewing the rest of the investments with growing Hermes as regular business going forward.

Okay, great. Maybe just one other quick follow-up on pipelines - pretty healthy. I assume you probably would have called out, just want to double-check that there’s no known large redemptions that you’re expecting over the next--that you’ve been notified of over the next quarter or two.

Rob, those were--the numbers that Chris gave were net numbers, so there are some redemptions factored into that, but we’ve--both of the numbers, fixed income and equity, are on a net basis.

Okay, great. Very helpful, thank you.

Thank you. Our next question is a follow-up from the line of Bill Katz with Citigroup. Please proceed with your question.

Okay, hard to believe that I have one, but I do. You had given out some flows for the first part of the year in both equity and fixed income, and I’m just trying to triangulate some of the other disclosure around alts and the multi-asset. Do you have a sense of what the volume has been quarter to date in those two buckets of assets, or is that embedded in the mutual fund and fixed income? If it is, I apologize for asking.

The fund portion is embedded - we have both fund and separate account in both on multi-asset. The bulk of the assets are in funds, and so that would have been included in the numbers that--in our overall flow numbers. On the alternatives, they’re a mixture of fund and separate account, so less of that would have been included. We wouldn’t consider three weeks of activity on the alternative side to be a significant time period.

Got you. Okay, thanks.

Thank you. Ladies and gentlemen, that concludes our question and answer session. I’ll turn the floor back to Mr. Hanley for any final comments.

That would conclude our call then, and we thank you very much for your time today.

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