Macrae Sykes

Macrae Sykes from Gabelli requested a breakdown of the demand areas for Cohen & Steers' active ETFs, including retail, platforms, RIAs, and institutional, and inquired about any unexpected trends.

Answer

Joseph Harvey, CEO of Cohen & Steers, detailed demand for active ETFs from RIAs who exclusively use ETFs, existing open-end fund clients converting, and model builders. He noted current activity is strong with independent RIAs, with wirehouse onboarding underway, and confirmed that expected cannibalization is in line with projections.

Macrae Sykes asked for a breakdown of demand areas for Cohen & Steers' active ETFs, including retail, platforms, RIAs, and institutional clients, and whether there have been any surprises in these trends.

Answer

CEO Joseph Harvey stated there haven't been many surprises, but observed trends reinforce conviction. He noted demand from RIAs who exclusively use ETFs (representing new money), existing open-end fund holders converting, and model builders. He also mentioned that activity has primarily been with independent RIAs, with wirehouse onboarding still in progress, which will provide further insights into the transition from open-end funds to ETFs.

Macrae Sykes inquired about the new ~$1 billion sub-advisory mandate, asking about future flow opportunities and its potential as a sales lever. He also questioned the growth prospects for the MDST ETF after it qualified for national platforms.

Answer

CEO Brian Casey explained that the significant SmallCap Value mandate is for a large, well-recognized firm and that such headline wins aid overall marketing. He noted the institutional pipeline remains robust at over $1 billion. Regarding the MDST ETF, Casey stated that meeting key asset and track record milestones makes it eligible for major national platforms, creating the potential for "exponential growth."

Macrae Sykes of Gabelli Funds inquired about the significant new sub-advisory mandate, asking for details on future opportunities and its potential to leverage further sales. He also asked about the growth prospects for the MDST ETF, particularly regarding its qualification for national platforms.

Answer

CEO Brian Casey confirmed the nearly $1 billion mandate is a sub-advisory role for a large firm, noting such wins boost marketing and that the institutional pipeline remains over $1 billion. Regarding the MDST ETF, Casey explained that meeting various platform requirements (AUM, track record) has led to placement on 4-5 platforms, with discussions underway for major wirehouses, which could drive 'exponential growth'.

Macrae Sykes from Gabelli Funds inquired about the composition of Westwood's $2 billion organic growth pipeline and the expected timing for contributions from new initiatives like Managed Investment Solutions (MIS) and ETFs. He also asked about the seed capital requirements for the new Westwood Engineered Beta (Webs) ETF joint venture.

Answer

Brian Casey, an executive at Westwood, clarified that the pipeline is predominantly driven by U.S. value opportunities in the mid- and small-cap space, with strong traction in Collective Investment Trusts (CITs) and separate accounts. Casey noted that while it's difficult to predict the timing of inflows, they are seeing positive momentum with top-tier consultants. He also assured that seed capital for the new ETF venture is not a concern due to established partner relationships.

Macrae Sykes asked about expected trading dynamics during the current election cycle compared to previous ones, and how a potential recovery in the IPO market next year might impact trading activity and client segments on the platform.

Answer

President and CEO Milan Galik anticipates increased market volatility and higher trading volumes approaching the election, similar to past cycles. On IPOs, Galik noted that a pickup, particularly in Asia, would generate fees and trading volume from high day-one interest. CFO Paul Brody added that a stronger IPO market also typically increases securities lending opportunities.