Cohen & Steers - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 was operationally sound but slightly below Street on both EPS and revenue: as-adjusted EPS $0.73 vs $0.755 consensus (miss), GAAP revenue $136.1M vs $136.9M consensus (miss); GAAP operating margin compressed 180 bps sequentially to 31.8% (as-adjusted 33.6%). EPS and revenue estimates from S&P Global: $0.755 and $136.9226M, respectively*.
• AUM rose 1.5% sequentially to $88.9B on $2.3B market appreciation, partly offset by net outflows of $131M; open-end funds saw a fourth straight quarter of positive net inflows (+$285M) while institutional accounts posted net outflows (-$519M).
• 2025 expense outlook edged higher: management now expects G&A +7% to +8% y/y (prior +6% to +7%), comp ratio held at 40.5%, and tax rate 25.3% (as-adjusted) for 2025; post-2025, G&A growth expected to moderate to mid‑single digits.
• Strategic initiatives progressed: active ETFs gathered $54M of Q2 inflows and $133M total AUM, and the listed/private real estate strategy with IDR launched in mid‑May; management highlighted a rebuilt awarded‑but‑unfunded pipeline to $776M (net ~$275M after known redemptions) as a forward catalyst.

What Went Well and What Went Wrong

• What Went Well

  • Investment performance remained strong: 89% of AUM outperformed in Q2; on 1‑year, 94% outperformed; 3/5/10‑year outperformance rates above 95% with 99% over 10 years; fee rate steady at 59 bps.
  • Open‑end funds delivered a fourth consecutive quarter of net inflows (+$285M), with U.S. real estate (+$349M) and global listed infrastructure flows in the mix; active ETFs posted $54M net inflows in the first full quarter.
  • As-adjusted operating margin stayed resilient at 33.6% despite higher G&A; liquidity improved to $323M vs $295M in Q1.

• What Went Wrong

  • Slight misses vs Street: as‑adjusted EPS $0.73 vs $0.755 consensus* and revenue $136.1M vs $136.9M consensus*, reflecting expense growth and modest net outflows.
  • Institutional outflows (-$519M) weighed on total flows; preferred securities saw $489M outflows (including model removal at a large allocator), and advisory rebalancings drove $412M of outflows.
  • G&A rose on talent acquisition, travel, business development, and ETF launch costs; non‑operating FX losses also reduced as‑adjusted EPS by ~$0.05.

Transcript

Operator (participant)

Ladies and gentlemen, thank you for standing by. Welcome to the Cohen & Steers Second Quarter 2025 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press the star followed by the one on your telephone. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, this conference is being recorded Friday, July 18, 2025. I would now like to turn the conference over to Brian Heller, Senior Vice President and Deputy General Counsel of Cohen & Steers. Please go ahead.

Brian Heller (SVP and Deputy General Counsel)

Thank you and welcome to Cohen & Steers Second Quarter 2025 Earnings Conference Call. Joining me are Joe Harvey, our Chief Executive Officer, Raja Dakkuri, our Chief Financial Officer, and Jon Cheigh, our President and Chief Investment Officer. I want to remind you that some of our comments and answers to your questions may include forward-looking statements. We believe these statements are reasonable based on information currently available to us, but actual outcomes could differ materially due to a number of factors including those described in our accompanying second quarter earnings release and presentation, our most recent annual report on Form 10-K, and our other SEC filings. We assume no duty to update any forward-looking statement. Further, none of our statements constitute an offer to sell or the solicitation of an offer to buy securities of any fund or other investment vehicle.

Our presentation also contains non-GAAP financial measures referred to as adjusted financial measures that we believe are meaningful in evaluating our performance. These non-GAAP financial measures should be read in conjunction with our GAAP results. A reconciliation of these non-GAAP financial measures is included in the earnings release and presentation to the extent reasonably available. The earnings release and presentation, as well as links to our SEC filings, are available in the Investor Relations section of our website at www.cohenandsteers.com. With that, I'll turn the call over to Raja.

Raja Dakkuri (CFO)

Thank you, Brian, and good morning, everyone. My remarks today will focus on our as adjusted results. A reconciliation of GAAP to as adjusted results can be found in the earnings material. Yesterday we reported earnings of $0.73 per share compared to $0.75 per share sequentially. Revenue for Q2 increased 1.1% from the prior quarter to $135 million. The change in revenue from the prior quarter was driven by a few items, including higher average AUM and day count. Our effective fee rate was 59 basis points, which was in line with the prior quarter. Our operating margin was 33.6% compared to 34.7% in the prior quarter. As noted, we experienced higher average AUM compared to the prior quarter. In addition, ending AUM increased compared to Q1. Ending AUM was $88.9 billion as of Q2 compared to $87.6 billion at prior quarter end.

End-of-period AUM was positively impacted by market appreciation during the quarter. It is worth noting that the market events of April negatively impacted our average AUM during the quarter. However, AUM more than recovered by the end of Q2. Net inflows into our open-end funds were offset by institutional net outflows. Our open-end funds have experienced positive net flows in the last four consecutive quarters. Joe Harvey will provide additional insights regarding our flows and pipeline. Total expenses during Q2 were 2.9% higher than the prior quarter due to a number of drivers. Compensation and benefits increased during the quarter. The change in comp and benefits was in line with the sequential increase in our revenue. As a result, the compensation ratio for the quarter remained at 40.5%. Distribution and service fees were impacted by higher average AUM in our open-end funds. G&A expense levels increased versus the prior quarter.

G&A was impacted by travel and other business development activities, including, for example, the launch of our active ETFs. This activity is consistent with our focus on sales and distribution. As a result of our efforts, we generated a meaningful increase in our one but unfunded pipeline as of quarter end. We will detail this later in the call. In addition, regarding expenses, we experienced higher levels of talent acquisition costs during the quarter. The primary driver was recruiting for our sales and distribution functions. Regarding taxes, our effective rate was 25.3% for the quarter. Our earnings material presents liquidity at the end of Q2 and prior quarters. Our liquidity totaled $323 million at quarter end, which compares positively to $295 million in the prior quarter. Let me now touch on a few items regarding 2025 guidance.

With respect to comp and benefits for 2025, we expect our compensation ratio to remain at 40.5% in line with our prior guidelines. We expect full year G&A to increase in the 7%-8% range as compared to full year 2024. The change in G&A is primarily driven by talent acquisition costs during 2025 as well as travel and other business development activities. Also impacting G&A are expenses related to our active ETF launch. Other drivers of G&A include infrastructure investments such as our foreign office upgrades. During Q2, we moved into our new Hong Kong office. This relocation represents the last of our planned foreign office upgrades. We remain focused on expense management and will be disciplined while continuing to make selective investments in our business.

After this year, we expect annual G&A changes to moderate from 2025 growth levels to being in the mid-single-digit percentage range. Lastly, we expect our effective tax rate to remain at 25.3% on an as adjusted basis for 2025. I'll now turn it over to Jon Cheigh who will discuss investment performance.

Jon Cheigh (President and CIO)

Thank you, Raja. Today I will first review our performance scorecard. Second, I'll share our views on the market environment, the importance of diversification, and the state of the real estate market. Last, I'll highlight our recently launched tactical listed and private real estate strategy. Beginning with our performance scorecard, the second quarter saw 89% of our AUM outperform its benchmark. On a one-year basis, 94% of our AUM has outperformed its benchmark while our three, five, and 10-year outperformance rates are all above 95%, highlighted by 99% of AUM outperforming over 10 years. Our one, three, and five-year excess returns are all well in excess of 200 basis points and above our targets. From a competitive standpoint, 90% of our open-end fund AUM is rated 4 or 5 star by Morningstar.

In short, our investment franchise remains as strong as ever and as our asset classes continue to gain favor, we remain well positioned to take advantage of new opportunities. Transitioning to the market environment, in the first days of the quarter, markets were rattled by escalating trade tensions and geopolitical uncertainty, leading to sharp declines in equities and heightened bond market volatility. However, some backtracking and a pause on tariffs helped restore investor confidence, driving a sharp risk-on rally with mega cap tech stocks leading the recovery as the S&P 500 and the MSCI All Country World indices returned 10.9% and 11.7% respectively in the quarter. For our asset classes, absolute performance was generally positive for the quarter but underperformed broader equity and fixed income markets. As we talk with our investors about the current environment and outlook, we have focused on two critical points.

One, the importance of a disciplined approach to diversification and valuation, and second, that real estate values have bottomed and valuations are attractive, representing an increasingly compelling risk-reward opportunity for new investors. On diversification, a topic we've spoken about throughout the year, it's worth noting that having a properly diversified portfolio continues to serve investors well. Indeed, despite the robust gains in the S&P 500 in Q2, global equities still outperformed the U.S., and similarly, global real estate outperformed U.S. real estate. While it may seem like cap-weighted U.S. equities have regained the spotlight, in fact, real assets outperformed broader markets over the first half of 2025. Taking a closer look at year-to-date returns, global equities, global listed infrastructure, and natural resource equities with gains near or greater than 10% each have all substantially outperformed the S&P 500 6.2% gain.

Year-to-date, global real estate and commodity returns have trailed only slightly. Six months ago all the talk was about U.S. exceptionalism, but only three months later investors began to question and take action on their major overweights to U.S. assets. Our high conviction advice to investors is that they need to strategically allocate to listed real assets prospectively and not after the fact before the inflation risks in their portfolios become apparent. We believe the outlook remains favorable for real assets where valuations are at more attractive starting points than equities. The era of ultra-low interest rates is gone, inflation is stickier, fixed income allocations have been reestablished given higher yields, and there is a greater need for true diversification in portfolios that is not solved by stocks, bonds, and private assets alone.

Moving specifically to real estate, after a nearly two-year downturn, private real estate prices have reached a clear turning point. Seven consecutive quarters of negative returns that started in 2022 have now given way to four consecutive positive quarters. We believe prices across several property types have bottomed and are beginning to appreciate with a leader being open-air necessity-driven shopping centers which have been the focus of our private real estate strategies. While the broader private market has bottomed, some existing private real estate funds must still work through portfolios built at peak valuations and in sectors concentrated in last cycles. Winners of multifamily and industrial forward real estate performance will be heavily driven by property type and geographic exposure and we expect those last cycle winners to be this cycle's laggards.

The reason for real estate bottoming is twofold and relates both to the listed and private markets: one. stable long-term interest rates even if at a higher level than several years ago, and two. improving rental growth with the magnitude depending upon the property type. Many observers focus solely on interest rates and I believe that's an incomplete assessment of what's happened the last few years. Lower interest rates may help valuations in the short run, but over time they encourage new supply which can lead to lower rents. The 2021 cycle perfectly demonstrates this as low interest rates helped valuations, but also drove fund flows into the sector and encouraged development and excess industrial and apartment supply in 2023 that still exists today.

REITs have underperformed equities the last few years partially because of interest rates, but just as much because new supply led to slowing earnings growth versus tech-led equities delivering double-digit earnings growth.

Today.

Supply has slowed down, and the 4+% interest rate regime of the last three years has directly led to supply and demand coming back into balance. We strongly believe that too much is made of the higher for longer story impact on valuations, and not enough is being made of the positive impact higher rates has on discouraging new supply and the normalization and return of rental growth, which we project in 2025 and beyond. I'd like to finish by highlighting the mid-May announcement regarding our launch of a tactical listed and private real estate strategy. We believe this strategy can be a compelling solution for both large and small institutional real estate investors who tend to focus the majority of their real estate investment on the core and core plus part of the risk-return spectrum.

Historically, investors viewed their listed and core real estate allocations in separate silos, but there are several key benefits to combining listed and private real estate allocations into one integrated strategy. This recognition of the power of an integrated strategy is what prompted Cohen & Steers to partner with IDR Investment Management to launch a real estate strategy designed to tactically allocate to both listed real estate securities and core private real estate in a single portfolio. IDR has a patented process to replicate the NCREIF ODCE Fund Index. We believe that such an integrated strategy has several advantages over legacy strategies. First, this blend has historically led you to higher returns, reduced risk, and lower drawdowns over a full cycle when compared to core private real estate alone. Second is improved liquidity. By definition, private allocations constrain liquidity more than listed REITs.

The additional challenge is that those conditions often tighten when liquidity needs are greatest. Our strategy in partnership with IDR should create significantly more liquidity than stand-alone private allocations. Third, an allocation to an active listed REIT strategy has strong potential for Alpha, as our historical performance demonstrates. Finally, a blended listed and private real estate strategy gives us as manager the ability to tactically allocate between the strategies. While listed REITs and private real estate generally move together over long periods of time, REITs historically lead private real estate repricing in both downturns and recoveries, particularly at market turning points. This lead lag dynamic in real estate is important because it creates timing-based windows of opportunity for knowledgeable investors with the governance and structure to take advantage.

Our early discussions with investors confirm that this combination of returns, reduced drawdowns, and enhanced liquidity may be very compelling for large and smaller institutions, and we expect to provide regular updates on the strategy over time. I strongly believe that we have innovated something that didn't exist before that is complicated, but that the industry desperately needs. Any innovation is hard work, and I want to thank our partners at IDR and our team members across our legal, tax, accounting, product distribution, and investments for being entrepreneurs and creating something we believe will be impactful. With that, let me turn the call over to Joe.

Joe Harvey (CEO)

Thank you, Jon, and good morning. I'll begin by apologizing for the fire alarm in the background.

I can assure you we're all safe.

We're back on track today. I will review our key business trends in the second quarter and then provide.

An update on our strategic priorities, starting.

With a top-down recap of the quarter, our relative investment performance is strong, fee rates are stable, our asset classes' market performance ranged from slightly negative for U.S. REITs to in line with market for international REITs and infrastructure strategies. Our flows turned slightly negative after three quarters of inflows. Our one unfunded pipeline has built back.

Up, and we made good progress with our growth initiatives.

The market provided a strong quarter of financial returns after April's Liberation Day drawdowns. Stocks outperformed bonds and real assets, and global strategies outperformed U.S. strategies. The resiliency in the economy and markets has been impressive and reflects, in my opinion, a combination of demographics, high productivity, strong private sector balance sheets with broad liquidity, as well as hope on the policy front. Now let's dive into some details. In the second quarter, we had net outflows of $131 million after three consecutive quarters of inflows starting in the third quarter of last year when the Fed began to cut interest rates. Year-to-date, our overall flows are positive, which stands out in light of the fact that Morningstar flows in our categories for both active and passive have been modestly negative.

Except for infrastructure.

Our largest flows for the quarter by strategy include $349 million in net inflows into U.S. real estate and $489 million in outflows from preferred securities. About 2/3 of the preferred outflows was attributable to one of our preferred open-end funds being removed from a model run by a large private wealth allocator. We continue to see good activity in global listed infrastructure, yet those flows were partially offset by some account rebalancing. Open-end funds had net inflows of $285 million, the fourth consecutive quarter of inflows. Closed-end funds had inflows of $103 million as we drew on our line of credit to make additional investments in our infrastructure. Closed-end fund UTF Advisory had net outflows of $412 million and sub-advisory.

Had outflows of $107 million.

Breaking down open-end fund flows, the $285 million of inflows in the quarter results in a 12-month inflow total of $3.2 billion. U.S. open-end funds had $124 million in net inflows. Our offshore CCAVs had net inflows of $121 million, the second highest flow quarter ever and continuing a positive trend for 19 of the past 20 quarters, and active ETFs had inflows of $54 million in U.S. open-end funds. Our market share continues to expand in U.S. and global real estate and infrastructure categories and is holding steady in preferreds in advisory. The $412 million of outflows were attributable to account rebalancing for various reasons including selling down to strategic allocation targets, taking gains to offset losses elsewhere, and the restructuring of a defined contribution plan. These outflows were partially offset by three new mandates totaling $69 million.

Sub-advisory was relatively quiet with $77 million of rebalancings out and $30 million in net outflows from Japan. None of the redemptions were related to our investment performance. Last quarter we noted that our one unfunded pipeline was $61 million, a low watermark historically. I'm pleased to report the pipeline has since built back up and stands at $776 million, which compares with the three-year average of $845 million. We also had one awarded and funded mandate of $135 million in the quarter. 52% of the pipeline is in U.S. real estate, 26% is in global listed infrastructure, 15% is U.S. real estate, and the balance is in various real asset strategies.

Two of the largest mandates were so-called takeaways from competitors, in one case for the sleeve of an open-end real assets vehicle in Canada and the other for a corporate defined contribution plan that transformed a global allocation into a U.S. REIT allocation. Last quarter we indicated that we had approximately $290 million of impending redemptions. Of that, $200 million occurred in the quarter. We have been apprised of another $400 million to be redeemed, resulting in total prospective redemptions of approximately $500 million. Therefore, with the one unfunded pipeline at $776 million and taking into account these known redemptions, the net pipeline is $275 million. We flagged these known redemptions for several quarters now and the main reasons for them have been tactical adjustments to get allocations down to target weights and outflows from sleeves of what I call old architecture strategies or vehicles which are less competitive.

None of these prospective redemptions are performance related. Turning to Strategic Initiatives, as you know, in February we launched our first three active ETFs. We are very pleased with the launch. As a reminder, our business strategy is to offer our core strategies through active ETFs, with the first three being real estate, preferred securities, and resource equities. Most importantly, investment performance is off to a strong start with attractive alpha and peer rankings in all three ETFs, consistent with our investment results broadly in these strategies. In our first full quarter, we recorded $54 million in net inflows. Total AUM is now $133 million, inclusive of our original seed of $55 million. In a survey by Broadridge, 43% of investment advisors expect that ETFs will replace most or all of their open-end fund mutual fund allocations.

Based on our early success with the launch and the trends underlying the Broadridge survey, we plan to launch more active ETFs in the coming months. We have not filed for ETFs as a share class of open-end funds, and for now we believe we can execute our plans with stand-alone launches. We continue to make progress with our private real estate initiative, Cohen & Steers' Income Opportunities. REIT continues to be the best-performing non-traded REIT as measured by total return. For the year ended May, CNS REIT returned 12.2% for that period compared with 5% for the average non-traded REIT. Our strategy of investing in open-air shopping centers has been differentiated and alpha generating.

We believe our listed real estate franchise will continue to provide investment connections to our private strategies in that the listed market leads the private market and provides clues as to where the private market is headed fundamentally and valuation-wise. Among private wealth alternative strategies, private credit continues to be the most popular while real estate moves through its fundamental and valuation cycles. As Jon articulated, we believe that commercial real estate prices generally have bottomed on the capital raising front while private credit has outpaced real estate by a large margin. We believe the more real estate price trends demonstrate that a trough has been performed, the closer we'll be to a capital shift towards real estate. We continue to identify additional seed capital investors while ramping our engagement with RIAs.

We are live on the Schwab, Pershing, and Fidelity platforms, which provides access to the majority of the RIA market. We have also been recently approved for distribution at a regional broker-dealer and at a significant enterprise wealth platform, both important milestones as we move to broader distribution. Jon talked about our new listed private core real estate strategy designed for institutional investors. There's not a lot to report at this point on capital raising, but as we have begun investing, we're in discussions with several institutions. More to come, but the strategy's rationale as an improvement to core investing and to better integrate listed and private is resonating. We would like to find a similar partnership arrangement for infrastructure and are in discussions with several managers. This is driven by our passion for building better portfolios with listed and private allocations.

Last quarter, we also discussed investing in our distribution capabilities as a strategic priority for this year and next. This includes not only additional talent in areas that support growth, but also investments in data and data analysis. With regard to talent, we have made additions to expand our wealth channel presence, particularly in the RIA and multifamily office segments for the ETF launch and for our offshore funds and for the institutional team both in the U.S and internationally. We continue to see opportunities for asset owners to add real asset allocations to their portfolios, and we believe additional resources will help us gain market share with those investors. The vehicles we are launching, along with the extensions of our investment capabilities, are designed to reach these growing investor segments. We have more work to do here, but our objectives are clear.

We look forward to reporting our third quarter results in October. Meantime, please call us with any questions. Now, I'll turn the call back to Operator Abby to facilitate Q&A.

Operator (participant)

Thank you. Pardon me. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, it is star one if you would like to join the queue. Our first question comes from John Dunn with Evercore ISI. Your line is open.

John Dunn (Analyst)

Hi, maybe just on what you were kind of wrapping up with, could you give some color on the temperature of the wealth management channel? You know, like how's the appetite for gross sales and which strategies are in and out of favor. You know, looking forward to the second half, do you expect any seasonality to play out over the course of the next six months?

Joe Harvey (CEO)

Thanks, John. You know, the wealth channel is.

Very important for us and as a percentage of our AUM and as we've talked about with the growth in the RIA segment and the growth in wealth overall, we're continuing to invest to reach more broadly, particularly into the independent RIA segment of it. On that front, I'd say we are making good progress at gaining some allocations with some very sophisticated RIAs. That's happened in real estate, it's happened in multi-strategy real assets, and it's happened in infrastructure. We talked about the flows. We've continued to be positive in wealth. They've been a little bit less in the second quarter. If you look at our gross sales in the second quarter.

They're.

Been lower, about 10% lower than what they've recently been. I do think there's some seasonality to that. We've had a dip in the second quarter in the past three to four years. I wouldn't call that statistically significant, but particularly in the second quarter with the Liberation Day volatility early in the quarter, it dampened some overall activity. We feel very good about our team and what we're doing and the potential to continue to drive real asset.

Allocations, just to expand a little bit more on that.

We continue to have more vehicles to offer to this channel, particularly with the active ETFs, and increasingly as we gain platformings with our non-traded REIT, our team has a lot more to talk about with these investment advisors.

John Dunn (Analyst)

Gotcha. Yeah.

Maybe on active ETFs, some have really taken off and been material drivers. Maybe you just talk a little more about how you're finding the early days of marketing and selling your suite. Is it being looked at by new investors or existing ones? What's kind of the profile of where you're seeing the best results, like which segments of the channel?

Joe Harvey (CEO)

This is really exciting because we feel like we're off to a very good start and we can see the flows starting to build. They're still relatively small, but the people that we have brought in from other firms who have done these launches before are very excited about what we have. Based on the anecdotes that we've seen so far, we've had RIAs who only allocate to ETFs make some allocations. This is money that we wouldn't otherwise have touched. We also have heard stories about advisors in wire houses who are converting their books of business from open-end 40 Act funds to ETFs. When I hear stories like that, it really motivates us to continue to launch new active ETFs in our core strategies so that we can retain and grow assets as wealth grows with these types of advisors.

John Dunn (Analyst)

Thanks very much.

Operator (participant)

As a reminder, it is star one if you would like to ask a question. Our next question comes from the line of Rodrigo Ferreira with Bank of America. Your line is open.

Rodrigo Ferreira (Analyst)

Good morning.

Thank you for taking my questions. Global listed infrastructure saw strong flows in the first quarter, and that seemed to have weakened a little bit in the second quarter with a higher level of outflows. Can you talk about what drove that and your early views on the strategy.

In the third quarter?

Joe Harvey (CEO)

Sure.

Thank you for joining the call, Rodrigo.

You know, our GLI strategy was positive.

In the quarter, it was at the lower end as compared with what it's been trending at. We've had some good additions to the strategy, but we had two relatively large redemptions from institutional investors who have had very large allocations to infrastructure, and they pared back some of those weightings closer to their target levels. In one case, it was an international institution which wanted to take some.

Gains to offset some losses in another.

Part of their portfolio.

This is good news, bad news.

The good news is we really did our job in performing for this client. The bad news is that they need to create some liquidity, but longer term they're still a client and we'll be looking forward to them reallocating at some point. We really don't comment on early trends in the next quarter, but I would.

Broadly, infrastructure is one of the.

Most popular asset classes, particularly in the private markets, and that's helping to generate.

Interest in the listed markets as well.

Because there is a very good case.

For putting listed and private together.

This is a strategy that we're.

Going to continue to invest in.

In terms of additional vehicles, I talked about active ETFs with infrastructure being a core strategy. We certainly should have an active ETF for infrastructure. As I referred to in my remarks, we think there's opportunities to create other vehicles that could combine private infrastructure along with listed. We're very bullish on the strategy and as a business driver for Cohen & Steers.

Rodrigo Ferreira (Analyst)

Thank you.

For my follow-up, flows in.

Global real estate were stronger than U.S. real estate in second quarter. Can you talk about if that demand is from U.S. or international investors? Have you seen any shift away from U.S. real estate after Liberation Day?

Joe Harvey (CEO)

That's a very astute observation. We have had some flows into global strategies, and the global real estate strategy has been less active. Going back a little bit further, one of the reasons is that the international components of the markets have not performed as well as the U.S. have. There's certainly been an American exceptionalism dynamic in the allocations to those real estate strategies.

I would expect there to be more interest in global.

When you look at our pipeline that we're working on, there are more global allocators in that pipeline. I guess the last comment I would make is that we've seen very little reverberations from all of the policy questions around things like the revenge tax. We recently had one European institution redeem partly a U.S. strategy due to concerns about and questions about U.S. policy. That is not a broad trend at all. Fortunately, the revenge tax was taken out of the tax regulation and that should help clear things up a little bit.

Rodrigo Ferreira (Analyst)

Understood, thank you very much.

Operator (participant)

We will take follow-up questions from John Dunn with Evercore ISI. Your line is open.

John Dunn (Analyst)

Thanks.

Maybe taking that last question a little further. Any differences to call out in terms of geographical demand from the different regions, particularly on the advisory side? If you can give us an update on the dynamics of the U.S. advisory effort in particular.

Joe Harvey (CEO)

In terms of size and activity.

U.S. continues to be the largest and most active market. We have burgeoning activity in Asia. Europe is a little bit slower, and the Middle East, while very active three to four years ago, is.

Less active right now.

There are still opportunities in the Middle East.

John Dunn (Analyst)

Great, thanks.

Operator (participant)

That concludes our question and answer session. I will now turn the conference back over to Mr. Joe Harvey for closing remarks.

Joe Harvey (CEO)

Thank you, Abby, and thank you all for participating.

We look forward to reporting a third quarter in October, and have a great day.

Operator (participant)

Ladies and gentlemen, this concludes today's call and we thank you for your participation. You may now disconnect.