Good morning. My name is Carmen, and I will be your conference operator today. I would like to welcome everyone to the Virtus Investment Partners Quarterly Conference Call. The slide presentation for this call is available in the Investor Relations section of the Virtus website, www.virtus.com. This call is being recorded and will be available for replay on the Virtus website. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer period and instructions will follow at that time.I will now turn the conference to your host, Sean Rourke.

Thank you, Carmen, and good morning, everyone. On behalf of Virtus Investment Partners, I would like to welcome you to the discussion of our operating and financial results for the second quarter of 2019. Our speakers today are George Aylward, President and CEO of Virtus; and Mike Angerthal, Chief Financial Officer. Following the prepared remarks we will have a Q&A period.Before we begin, I direct your attention to the important disclosures on Page 2 of the slide presentation that accompanies this webcast. Certain matters discussed on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and as such, are subject to known and unknown risks and uncertainties, including, but not limited to, those factors set forth in today's new release and discussed in our SEC filings. These risks and uncertainties may cause actual results to differ materially from those discussed in the statements.In addition to results presented on a GAAP basis, we use certain non-GAAP measures to evaluate its financial results. Our non-GAAP financial measures are not substitutes for GAAP financial results and should be read in conjunction with the GAAP results. Reconciliations of these non-GAAP financial measures to the applicable GAAP measures are included in today’s new release, which is available on our website.Now I would like to turn the call over to George. George?

Thank you, Sean. Good morning everyone.I’ll start today with an overview of the quarter before turning it over to Mike to provide more detail on the financial results. We’re pleased with our second quarter results which included a return to positive net flows supported by net inflows at institutional, retail separate accounts and ETFs. A higher operating margin, average fee rate and continued strong free cash flow, our highest level of institutional sales in many years, investment performance that continues to be excellent, and while mutual fund flows remain negative they improved sequentially and the negative flow will primarily do, to one out of favor strategy.So turning to our results for the quarter, long-term assets under management increased 3% sequentially to $103.3 billion as a result of market appreciation and modest deposit of net flows. Total assets which include liquidity strategies ended the period at a $105 billion. Total sales of $5.1 billion decreased 7% from the prior quarter which included $0.8 billion related to a CLO issuance and initial model allocation for two new ETFs.Excluding those flows, sales were up 8% due to strong institutional inflows which included the funding of a $0.9 billion global real estate mandated Duff & Phelps partially offset by lower sales of open-end funds. Net flows were positive $0.1 billion improving from the modest and outflows in the prior quarter led by positive flows in institutional, retail separate accounts and ETFs, partially offset by the open-end fund net outflows.Institutional net flows were positive $0.5 billion in the second quarter compared with outflows of $0.2 billion in the prior quarter due to the higher level of sales. Retail separate accounts had positive net flows of $0.3 billion from both the intermediary resold and private client channel. Kayne's mid-cap strategies continue to be key contributors to…

Thank you, George. Good morning everyone.Starting with our results on Slide 7 assets under management, at June 30 long-term assets were $103.3 billion up $3.4 billion or 3.3% from March 31 and $13.4 billion or 15% from the prior year quarter. The sequential increase was primarily due to $3.7 billion of market appreciation, as well as modestly positive net flows of $0.1 billion. The market appreciation was reflective of strong domestic equity performance as well as an improvement in credit markets.The change in assets from the prior year primarily reflected the addition of SGA's assets of $11.3 billion and market appreciation of $7.8 billion partially offset by net outflows of $4.3 billion primarily in the fourth quarter.AUM continues to be well diversified by product type, asset class and channel. The relative size of mutual funds within our long-term AUM mix have declined to 40% from 49% in the prior year period. We've also continued to see strong growth in mid-cap AUM this year with assets up 36% since year-end to $9.1 billion.Turning to Slide 8 asset flows, the $0.1 billion of positive net flows this quarter were up from modest net outflows in the first quarter with positive contributions from institutional retail separate accounts and ETFs, which were offset by net outflows in mutual funds.Total sales were $5.1 billion, a sequential decline of 7% as higher institutional sales, which included the $0.9 billion global real estate subadvisory mandate were more than offset by lower sales in mutual funds, structured products and ETFs. As a reminder, the first quarter included $0.8 billion of sales related to a CLO issuance and an initial model allocation into newly launched ETFs.Looking at open-end mutual fund flows by asset class. Domestic equity funds had positive net flows of $0.1 billion, an improvement from $0.1 billion…

Thanks Mike. So we’ll now take your questions, Carmen, can you open the lines please.

[Operator Instructions] Our first question is from Alex Blostein with Goldman Sachs. Your line is open.

Hi this is [Sheriq] filling in for Alex. What are your update thoughts around M&A for the industry and Virtus. I mean valuation seems to have moved higher this year and do you think that this is creating any sort of hurdles for M&A within the industry. And any color on the pipeline that you're seeing for Virtus which asset class are you more focused on and do you think that there are enough opportunities out there for you to consider? Thank you.

Sure, yes I mean M&A is always going to be taking place throughout the industry and it will be - the volume of it is usually impacted by people views of their own valuation and targeted valuations. As we sort of said before while our long-term growth strategy is not predicated upon M&A we’ve consistently used M&A as a successful tool for us to enhance and expand the business.And so generally we think there's a lot of activity out there. We’re very disciplined about what we consider the last transaction we closed on would have been by a year ago now I guess for SGA. And as we sort of look at things like everyone we certainly have a good cross-section of the traditional asset classes we would consider other things, but our primary focus continues to be growing our existing managers as you noted in my early remarks.I highlighted the fact that our goal is to create the organic growth once you have the partner by launching them in other channels. But from the M&A perspective we actually think we're in a very good position being at the lower end of the leverage in the industry having a very attractive value proposition but we will only do it if we’re very comfortable it either has strategic value and financial accretive value to our shareholders.

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

Hi this is Stephanie filling in for Mike, thanks for taking our question. Maybe just one on ETFs in model portfolios. Can you talk about some of the distribution initiatives around trying to increase model portfolios penetration and how much of the ETFs are in model today. And then looking ahead what products do you think will have the greatest opportunity or potential model portfolio inclusion?

Sure well I think about model portfolio is more broadly because I don’t think it’s limited to just ETF. So, the first quarter we had two newly issued ETFs which were very pleased, received initial model allocations from an intermediary’s model where they wanted exposure to certain asset classes, and we continue to see that as a good opportunity to sort of leverage very specialized ETF products into models created by some of our partners.And then, in terms of the July outlook I gave you some color around model wins and model reallocation was actually really relate more to the mutual funds, and that crossed a number of our affiliates actually about three. So we're very pleased with that because as you know, our goal is to provide either the building blocks for the individual pieces of a well-diversified portfolio, so you know we think focusing in on those models and where we can have the appropriate product to fit the waitings that someone is looking for to achieve for their client is a great opportunity, but by Ceredex plus ETFs mutual funds as well as retail separate account. So I continue to see that as an area of great opportunity.

Thank you. And this concludes our Q&A session. I would like to turn the conference back to Mr. Aylward.

Great. I just want to thank everyone today for joining us and we obviously certainly encourage you to call us if you have any questions or any further questions. Thank you very much.

And that concludes today's call. Thank you for participating. You may now disconnect.