Janus Henderson Group - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 delivered a clean beat on both EPS and revenue: adjusted diluted EPS $0.90 vs $0.835* consensus (GAAP diluted EPS $0.95) and revenue $633.2M vs $618.1M*; positive flows and market/FX drove record AUM $457.3B. Results were aided by improved investment performance and the Guardian partnership onboarding $46.5B of general account assets.
• Net inflows were $46.7B (fifth consecutive positive quarter), including $46.5B from Guardian; ex‑Guardian, flows were still positive; AUM rose 23% QoQ and 27% YoY to $457.3B.
• Mix shift will weigh on fee rate: net management fee margin was 47.5 bps in Q2; with Guardian’s portfolio, management expects aggregate net fee rate to be ~4.5 bps lower than Q2’s average (better than prior 5–6 bps dilution guidance).
• Capital return remained robust: $50M buybacks (1.3M shares) and a $0.40 dividend declared for Q2; $113M returned to shareholders in the quarter.

Note: Consensus values marked with * are from S&P Global Market Intelligence.

What Went Well and What Went Wrong

What Went Well

• Guardian partnership executed and upsized: JHG is “now managing $46.5B” of Guardian’s largely IG fixed income general account (above the prior ~$45B plan), plus Guardian seeded $100M into newly launched JABS ETF.
• Flows breadth beyond Guardian: ex‑Guardian, net flows were positive; 15 strategies (incl. four ETFs) had ≥$100M net inflows; institutional gross sales ex‑Guardian were the best in over two years.
• Investment performance improved: 72%/76%/67%/72% of AUM beat benchmarks over 1/3/5/10 yrs; Morningstar top‑half quartile share 75%/74%/72%/88%; CEO: “Our investment performance is solid…net flows are positive”.

What Went Wrong

• Retail/Equities still soft: Intermediary channel net flows were -$1.2B; equity flows -$2.6B amid a challenging active equities backdrop.
• Fee rate dilution ahead: With Guardian’s low‑fee assets, aggregate net management fee rate expected to be ~4.5 bps lower than Q2’s 47.5 bps average; mix shift is a structural headwind to revenue yield.
• Non‑comp expenses trending higher: Management now expects high single‑digit non‑comp growth in 2025 (vs prior guidance’s high end of mid‑to‑high), driven solely by FX from a weaker USD.

Transcript

Operator (participant)

Good morning. My name is Lucy and I will be your conference facilitator today. Thank you for standing by and welcome to the Janus Henderson Group second quarter 2025 results briefing. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. In the interest of time, questions will be limited to one initial and one follow up question. In today's conference call, certain matters discussed may constitute forward looking statements. Actual results could differ materially from those projected in the forward looking statements due to a number of factors including but not limited to those described in the Forward Looking Statements and Risk Factors sections of the Company's most recent Form 10-K and other more recent filings made with the SEC. Janus Henderson assumes no obligation to update any forward looking statements made during the call.

Thank you. Now it is my pleasure to introduce Ali Dibadj, Chief Executive Officer of Janus Henderson. Mr. Dibadj, you may begin your conference.

Ali Dibadj (CEO)

Welcome everyone and thank you for joining us today on Janus Henderson's second quarter 2025 earnings call. I'm Ali Dibadj and I'm joined by our CFO Roger Thompson in today's call. I'll start with some thoughts on the quarter before handing it over to Roger to run through the quarterly results in more detail. After Roger's comments, I'll provide an update on our strategic progress and how our client approach has evolved leading to deeper collaborative relationships which has become the foundation of our new brand efforts. We'll then take your questions following our prepared remarks. Turning to Slide 2, despite a tumultuous few months and the incredible market volatility we saw through much of April, business trends appear to have stabilized for now and strong alpha generation provided by world class investment teams.

The exceptional service provided by our client teams and the productivity and execution of our operations, technology, and support teams enable Janus Henderson to deliver a good set of quarterly results. In investment performance, there was meaningful improvement in the one year number and investment performance is consistently solid with at least 2/3 of assets beating respective benchmarks on a 1, 3, 5, and 10 year basis. Against peers, investment performance is even stronger with over 70% of AUM in the top two Morningstar quartiles across all time periods. At the end of June, we completed the previously announced transaction with Guardian. We are extremely excited for this multifaceted strategic partnership.

This significant milestone further expands our insurance presence and institutional reach and we are pleased to bring to bear our strengths in fixed income, multi asset solutions, and model portfolios to achieve mutually beneficial outcomes for clients, policyholders, and shareholders alike. Janus Henderson is now managing $46.5 billion of largely but not exclusively investment grade public fixed income assets for Guardian's General Account which is even more than the previously communicated $45 billion, demonstrating Guardian's growth trajectory and the potential of our partnership. This expands Janus Henderson fixed income AUM to $142 billion which is now over 30% of company wide AUM. In addition, Guardian is committing up to $400 million of seed capital to help accelerate our continued innovation in securitized credit and high quality active fixed income products including ETFs. Pleasingly, a portion of this seed commitment has recently been utilized, demonstrating quick progress from our partnership.

Guardian has provided $100 million of seed to our asset-backed securities ETF, JABS, which was launched last week. JABS is intended to provide investors access to short duration, high quality, predominantly fixed rate securitized assets and complements Janus Henderson's industry leading CLO ETF, JAAA, which is predominantly floating rate. JABS expands Janus Henderson's offerings to meet client demand, including and especially insurance companies. Switching to AUM, the addition of the Guardian AUM, coupled with market gains and favorable currency adjustments due to a weakening U.S. dollar, enabled assets under management to increase 23% to $457.3 billion, which is our highest quarterly AUM ever. Turning to flows, the second quarter marked our fifth consecutive quarter of positive net flows. While Guardian contributed to our strong quarterly net flow results, we're pleased that net flows excluding the Guardian General Account were also positive.

Even in the difficult flow environment created by April's drawdown, the positive net flow results demonstrate our truly global distribution footprint and the broad range of strategies and vehicles we offer. Said another way, all our businesses may not fire on all cylinders at the same time. However, our strategically developed broad breadth of businesses are capable of delivering more and more consistent growth for us over time, and this quarter was an instance of that. I want to quickly highlight a few examples of our diversified breadth of flows. In the second quarter, there were 15 strategies, including four ETFs, that each had at least $100 million of net inflows. The fully tokenized Janus Henderson Animoi Treasury Fund had over $400 million of net inflows.

Net flows into our CIT and hedge fund strategies were positive, and finally, Privicor has advised on several hundred million dollars raised for CO2 CTAC funds in the Wealth Channel, which you might have read about in the media. Additionally, our institutional channel performed very well, offsetting retail net outflows, which were impacted by market volatility, especially during a few weeks in April. As we stated previously, delivering positive active flows is a key differentiator for Janus Henderson in an industry with well-documented active flow headwinds, including during the second quarter for many of our peers. Moving to our financial results, which remain solid, adjusted diluted EPS of $0.90 is a 6% increase compared to the same period a year ago. Our financial performance and strong balance sheet continue to provide us the flexibility to invest in the business both organically and inorganically and return cash to shareholders.

In summary, our investment performance is solid, our net flows are positive, we continue to execute our strategy including the Guardian partnership. Financial results are good, we continue to be disciplined and ROI focused on expenses, we have strong and stable balance sheet, and our truly global footprint and expanding breadth of product positions us well for the future. I'll now turn the call over to Roger to run you through the detail of the financial results.

Roger Thompson (CFO)

Thanks Ali and thank you for joining us on today's call. Starting on slide 3 and investment performance, as Ali mentioned, we saw a significant improvement in our short-term investment performance versus benchmark during the quarter and now have at least 2/3 of AUM meeting their respective benchmarks over the 1, 3, 5, and 10 year time periods. Looking in further detail, at least half of each of the capabilities AUM is ahead of benchmarks over all time periods, reflecting consistent investment performance across time periods and capabilities. Overall investment performance compared to peers continues to be competitively strong with at least 72% of AUM in the top two Morningstar quartiles over all time periods presented. Slide 4 shows total company flows by quarter. Net inflows for the quarter were $46.7 billion, which includes the $46.5 billion from Guardian's General Account.

While the Guardian mandate will quite rightly take the headlines, we're pleased with positive net flows ex Guardian's General Account from a quarter of extreme market volatility and it highlights our truly global footprint and the breadth of product solutions we bring to clients. Excluding the Guardian General Account, our gross sales increased for the third consecutive quarter and improved by 40% compared to the second quarter of last year. All three channels saw an increase in gross sales compared to the prior year across a broad range of capabilities including ETFs, U.S. concentrated growth, our tokenized treasury fund, U.S. mid cap growth, U.S. buy and maintain credit and asset-backed opportunistic credit from Victory Park Capital. Turning to slide 5 and flows by client type, as a reminder, beginning with the first quarter of 2025, ETF gross flow activity is reflected in the applicable client type that generated the activity.

Access to improved data transparency enabled us to make this change. For periods prior to 2025, all ETF flow activity is shown in the Intermediary Channel. Intermediary Channel net flows were negative $1.2 billion, reflecting the challenging flow environment during the April drawdown. In the second quarter, net flows were positive in the U.S. with net outflows in EMEA, LATAM, and Asia Pacific. In the U.S., the net flows were positive for the eighth consecutive quarter despite a challenging April for our active ETFs. Once the extreme market dislocation abated and markets stabilized, JAAA quickly returned to net inflows resulting in positive net flows for our active ETFs in the quarter. In addition to our active ETFs, other areas contributing net flows in the second quarter included U.S. mid cap growth, International Alpha Equity, our biotech hedge fund, and the Privicor revised assets raised for CO2. U.S.

intermediary is a key initiative under our Protect and Grow strategic pillar, and we're pleased that we continue to gain market share against a volatile market backdrop. Under our Amplify strategic pillar, we've talked about amplifying our investment and client service strengths using various means, including vehicles through which we deliver our products. In addition to active ETFs, flows into CITs, SMAs, and hedge funds in this channel were positive in the second quarter. In EMEA, Continental Europe delivered net inflows, while the UK had net outflows primarily driven by investment trusts and the Global Strategic Total Bond Strategy. Institutional net inflows were $4.9 billion compared to net inflows of $800 million in the prior quarter, marking the third consecutive quarter of positive flows.

During the quarter, we were pleased to see our broad distribution footprint demonstrated as our institutional channel performed well, while retail was adversely impacted by the market uncertainty in the early part of the quarter. Excluding the Guardian General Account, institutional gross sales were the best result in over two years and reflect fundings in fixed income and equities across corporates, pensions, and insurance clients. We're continuing to work to create a sustainable pipeline, and we're encouraged by the second quarter results, leading indicators, and the increasing number of opportunities across our regions. Net outflows for the self-directed channel, which includes direct and supermarket investors, were $1.1 billion. The second quarter includes approximately $100 million of ETF net outflows from our supermarket clients. Excluding ETFs, self-directed net outflows were roughly flat to the prior quarter and the prior year. Slide 6 shows our flows in the quarter.

By capability, equity flows were negative $2.6 billion compared to $4.2 billion of net outflows in the prior quarter. The environment remains challenging for active equities across all regions. Whilst negative in net flows, our equity capability had its best gross sale quarter in two years, demonstrating increased client demand for equities. Second quarter net inflows for fixed income were $49.7 billion compared to $5.6 billion of net inflows in the prior quarter outside of the Guardian General Account. Net flows from several strategies contributed to positive fixed income flows. Active fixed income ETFs delivered net inflows of $1 billion in the quarter and as Ali mentioned, included four active ETFs with at least $100 million of net inflows including JAAA, JMBS, Vanilla, and JSI. Other strategies contributing to positive flows were U.S. Buy and Maintain Credit, our tokenized Treasury Fund, Core Plus, and Australian Sustainable Credit.

Net outflows for the multi-asset capability were $1.1 billion, primarily due to net outflows in the balance strategy, and finally, net inflows in the alternatives capability were $700 million, driven primarily by the biotech hedge fund, Victory Park Capital's asset-backed opportunistic credit strategy, and Privicor. Moving on to the financials, slide 7 is our U.S. GAAP statement of income and on slide 8 we explain the adjusted financial results. Adjusted operating results improved compared to the prior quarter and the prior year. The improvement is primarily from higher performance fees versus the same period a year ago. The improvement was primarily from strong investment performance delivering higher performance fees and higher average AUM. These were partially offset by increased expenses from acquisitions, strategic investments in the business, and a weaker U.S. dollar.

Looking at the detail, adjusted revenue increased 2% compared to the prior quarter, primarily due to higher seasonal performance fees, and increased 9% compared to the prior year, primarily due to higher management fees on higher average AUM and the improved U.S. mutual fund performance fees. Net management fee margin was 47.5 basis points in the second quarter. The decline in the prior quarter was primarily a result of mix shift caused by the April drawdown as well as some one-time adjustments which will not repeat. With the $46.5 billion predominantly investment grade fixed income portfolio we now manage for Guardian's General Account, we expect that our aggregate net management fee rate will be approximately 4.5 basis points lower than the second quarter average net fee rate of 47.5 basis points, which compares to our previous guidance of 5 to 6 basis points.

Lower second quarter performance fees of positive $15 million primarily consist of seasonal CCAV, UK OIK, and investment trust performance fees. Our U.S. mutual fund performance fees were also positive this quarter at $1 million, which is the first positive result in over 10 years. U.S. mutual fund performance fees have continued to improve, reflected by the positive $1 million this quarter compared to negative $11 million a year ago. Continuing on to expenses, adjusted operating expenses for the second quarter were $331 million compared to $330 million in the prior quarter. Adjusted LTI decreased 12% compared to the prior quarter, largely due to seasonal payroll taxes triggered by annual vestings in the prior quarter. In the appendix, we've provided the usual table on the expected future amortization of existing grants for you to use in your models.

The second quarter adjusted comp to revenue ratio declined to 43.2% from 45.8% in the seasonally higher first quarter. Adjusted non-comp operating expenses increased 8% compared to the first quarter, primarily from higher marketing and G&A expenses. With respect to full year 2025 expense expectations, our previously stated expected compensation ratio in 2025 remains unchanged at 43% to 44%, assuming 30 June AUM and a zero market assumption for the second half of the year. For non-compensation guidance, we expect high single-digit percentage growth in non-comp expenses compared to 2024, reflecting investments supporting our ongoing strategic initiatives and operational efficiencies, inflation, and the full year impact of the consolidation of Victory Park Capital, NBK Capital Partners, Tabula, and Guardian. This update to the high end of our previous range is solely as a result of the FX impact from a further weakening U.S. dollar in the first half of 2025.

We remain committed to strong cost discipline, ensuring that we manage our cost base while continuing to support the long-term growth objectives of the business. Finally, our expectation of the firm's tax rate on adjusted net income attributable to JHG remains unchanged in the range of 23% to 25%. Our second quarter adjusted operating margin was 33.5%, and finally, adjusted diluted EPS was $0.90, up 6% from the comparable second quarter 2024 period. Skipping over Slide 9 and moving to Slide 10 and look at our liquidity profile. Our balance sheet remains strong and stable. Cash and cash equivalents were $900 million as at 30 June, which is lower from the end of the first quarter, primarily due to share buybacks related to our corporate and compensation repurchase schemes, as well as net investments made in seed capital.

During the quarter, we funded our quarterly dividend and repurchased 1.3 million shares as part of our corporate buyback program for $50 million. The board has also declared a $0.40 per share dividend to be paid on 28 August to shareholders of record as at 11 August. Slide 11 looks in more detail at our consistent return of capital to shareholders. We've maintained a healthy quarterly dividend and have reduced shares outstanding by over 22% since 2018. During the first half of 2025, we returned $202 million, including $76 million via share repurchases. The buyback program and dividends do not alter our ability to invest in the business organically or inorganically, as well as return cash to shareholders. Currently, our liquidity profile allows us to do both.

Our return of excess cash is consistent with our capital allocation framework and we'll continue to look to return capital to shareholders where there isn't an immediately more compelling investment in the business. With that, I'd like to turn it back over to Ali to give an update on our strategic progress.

Ali Dibadj (CEO)

Thanks, Roger. Turning to slide 12 and a reminder of our three strategic pillars of Protect and Grow our core businesses, Amplify our strengths not fully leveraged, and Diversify where clients give us the right to win. We are in the execution phase, and we believe this strategic vision has us on the path to, over time, deliver organic growth consistently in Protect and Grow. We've talked previously about the importance of protecting and growing our U.S. Intermediary business and the progress we've made in capturing market share. We also delivered another quarter of positive net flows in U.S. Intermediary despite a challenging flow environment, marking eight straight quarters of net flows. Within Amplify, we've talked about our institutional business and our product development and expansion efforts, such as our build out of active ETFs in the U.S. and now outside the U.S. with the acquisition of Tabula.

Year to date, we've launched eight ETFs globally, with more planned in the second half of the year. Janus Henderson is now the eighth largest provider of active ETFs in the world and second largest provider of active fixed income ETFs in the world. Our partnership with Animoi and Centrifuge reflects the firm's commitment to digital assets and our desire to embrace disruptive financial technologies. The partnership has already begun to demonstrate success. As I mentioned earlier, the fully on-chain Janus Henderson Animoi Treasury Fund delivered over $400 million of net inflows in the second quarter.

Finally, the recently completed strategic partnership with Guardian will amplify our insurance, institutional, and fixed income businesses through the management of their general account, mostly investment grade public fixed income portfolio, acceleration of product innovation with Guardian's commitment of seed capital, and the strategic initiative to co-develop proprietary multi-asset solution model portfolios for Guardian's duly registered broker dealer and registered investment advisor Park Avenue Securities. Under Diversify, we've addressed both the public and private market and emerging market debt with NBK Capital Partners. In the private capital space and on the public side, we brought on a well-respected emerging market debt team. We expanded its differentiated private market capabilities for clients with the acquisition of pioneering asset-backed lending firm Victory Park Capital. We established our joint venture Privicor focused on the democratization of alternatives in partnership with the Wealth Channel, which is starting to bear fruit.

As I mentioned earlier, in addition to implementing and executing on a new strategic direction, Janus Henderson has gone through many other changes over the last several years. These changes are all being done with the explicit objective of improving the client experience. This includes how we have evolved our client approach. Now moving to slide 13, we've been intentional about how we interact and, importantly, partner with our clients. We strongly believe that strategically partnering with clients delivers better outcomes for all parties. The first and most important of our five firm values is Clients come first always. We are humbled and honored that approximately 60 million people globally rely directly or indirectly on Janus Henderson for their financial well-being. That is at our core, and clients coming first will not change. In fact, we're trying to push that further forward with elevating partnerships with clients.

What that means for us tactically and thoughtfully is working to deepen client relationships. The client relationship is no longer transactional. It's not about sales relationships. It's about peer-to-peer relationships and really working to increase nodes of connectivity between Janus Henderson and our clients. It's evolving from regional accountability to global accountability. Again, it's not about sales accounts, it's about having franchise partnerships and franchise clients. That's what we want to continue to do, and we believe our clients are seeing those intentional actions and improvements from us already. There are several ways we can elevate partnerships with clients and increase those nodes of connectivity. Of course, those ways include delivering investment performance in the right vehicles with world-class client service. It also means leading with insight and sharing our knowledge base with clients. For example, we've had Janus Henderson colleagues lead strategic off-sites for some of our clients.

Our Chief Technology Officer has had discussions with clients on AI, and we've held educational sessions with U.S. financial advisors on investor psychology, behavioral finance, and succession planning. Those are just a few of the many examples of bringing the whole firm to our clients. Elsewhere, we've conducted several client conferences in the U.S., the UK, Continental Europe, Asia, and Australia where clients give their scarce time to hear from us. With several trillion dollars of AUM and millions of people's retirement and savings represented at these conferences, the intent of these events is to bring the whole firm to our clients and develop shared experiences. Slide 14 looks at how this evolved approach to client partnerships is now embedded in our updated branding.

First, I'm pleased to report that a few recent external surveys seem to confirm that Janus Henderson is making progress in strengthening its brand profile and brand matters. Clients who start off knowing a brand new are much more likely to partner with it than if they don't know the brand. The Broadridge Fund Brand 50 is a global survey of asset manager brand strength in the intermediary channel. Over the last two years we've seen both our U.S. and European intermediary brand strength improve. Next, specific to our institutional business is the Global Institutional NMG Consulting Report. Here we moved up 32 spots from two years ago to global brand rank of 37. I want to thank my colleagues from across the firm for their individual and collective efforts around strengthening our brand profile.

Second, our strengthening brand profile and updated global branding reflect our commitment to investing in a brighter future together. Some of you may have noticed the Janus Henderson Ampersand appearing in targeted advertising around you. We believe that our Ampersand symbolizes the deepening connection with clients and captures who we are and the journey we actively choose to go on. Every day with our clients, we surveyed and interview clients, hearing from them that one important thing Janus Henderson does that is unique is connect with them. We want clients to think about Janus Henderson and its connection with them when they see that Ampersand: client goals and our solution, client visions and our mission, client successes and our pride in delivering on our objective of differentiated insights, disciplined investments, and world-class service. This new brand campaign was launched globally in April, including campaigns in North America, Europe, and Asia.

We believe that our new branding, including the Ampersand, uniquely demonstrates our partnership-centered approach and shared connections with clients. Turn to Slide 15 and a reminder that although we are changing and improving as a firm, our mission, values, and purpose or MVP will never change. Indeed, our evolved approach to client partnerships is born out of our MVP, which was first introduced in 2023 and continues to enhance our culture. Since then, Janus Henderson has gone and will continue to go through a lot of positive change and transformation. These changes were made to improve ourselves for our clients. As I mentioned, one thing which will not change is our mission, values, and purpose. That is immutable. Our purpose, remember, is investing in a brighter future together. That's what we do. We're investors. We do together with our clients.

We aim to deliver brighter futures for our clients and their clients, the 60 million people around the world who rely on Janus Henderson directly or indirectly for their financial health. Our goal is to do this in partnership with our clients, a shared connectivity and collaboration with them. Wrapping up on Slide 16, we're making meaningful progress across the business. We are executing against our strategic objectives, including our multifaceted strategic partnership with Guardian, from which we are already starting to see benefits. Investment performance is solid across all time periods versus benchmarks and peers. Net inflows were positive, $46.7 billion, marking our fifth consecutive quarter of net inflows. Even excluding the Guardian general account flow, net flows remain positive and reflect a 40% increase in gross sales compared to the prior year. That is during the quarter.

With heightened market volatility, our financial performance and strong balance sheet allow us to continue returning cash to shareholders through dividends and share buybacks, while reinvesting in the business for future growth. Our focus continues to be helping clients define and achieve superior financial outcomes and to deliver desired results for our clients, shareholders, employees, and all our stakeholders. Let me turn the call back over to the operator to take your questions.

Operator (participant)

Thank you. To ask a question, please press Star followed by one on your telephone keypad. If you change your mind, please press Star followed by two. When preparing to ask your question, please ensure your device is unmuted locally in the interest of time. Questions will be limited to one initial and one follow up question. The first comes from Ken Worthington of J.P. Morgan. Your line is now open. Please go ahead.

Ken Worthington (Analyst)

Hi, good morning. Thank you for taking the question. Maybe first on the institutional channel. As you guys mentioned, the third consecutive quarter of positive net sales, even excluding Guardian, and the results are an indication of the success that your strategy has had thus far. Are there next priorities on the institutional side or do you feel that Janus Henderson is sort of appropriately positioned in the institutional channel at this point?

Ali Dibadj (CEO)

Hey Ken, it's Ali. Thanks for the question. You're right. We're pleased with the three consecutive quarters of institutional net flows again this quarter. About $49 billion of net flows in the quarter, of which $46.5 billion is from the Guardian General Account. We're also pleased, by the way, that the $46.5 billion from Guardian is better than the $45 billion that we anticipated earlier on, which again is a symbol of their growth.

We've been excited to partner with them. We've seen their growth. We hope that their growth can continue. We also saw flows excluding the Guardian General Account and institutional, quite broadly across equities and fixed income, that was across corporates, across pensions, across insurance. Even if you disaggregate that a little bit further, there were 10 fundings of greater than $100 million in the institutional side of things. It feels like we're broadening. It feels like we are getting on the radar screen of these institutional players. It feels like again, the leading indicators in terms of meetings and everything are looking pretty good. We're not there yet in my mind. Perhaps subtext your question, Ken, to say that we are always going to deliver positive flow from institutional. We have a sustainable outcome, but it certainly feels like we're on the right track.

Part of what we're doing, obviously, with this branding campaign is to make sure that people put us in their consideration set. That is both the client on the institutional side as well as the consultant with whom we're building closer and closer relationships, with whom we're really putting into play, as we mentioned in the prepared remarks, the much more aligned and partnership mindset that we have to bear. We're clearly broadening ourselves, we're pleased with the outcome so far. We certainly have more to go, but the pace is picking up here and we feel okay. Okay, thank you. Just maybe turning to retail equities, it's a good, if not a great environment for retail. Investors are making money in equities, they're putting more money in their brokerage accounts, but active equities remain in outflows and the structure is out of favor.

Ken Worthington (Analyst)

See a solution to the persistent outflows in your retail equity business. You're successfully building around the core, but this part of the core seems to be sort of in persistent redemptions. Is there an eventual fix here or is it something that we should just learn to live with and turn our attention to the success you're having, you know, around this sort of core part of the franchise?

Ali Dibadj (CEO)

We believe very strongly in our equities franchise and franchises around the world, and we very much have put that into our execution of our strategy. If you remember our strategy, it starts first and foremost with protecting and growing our core businesses. Those are disproportionately the equity franchises that we have in whatever vehicle that may be in, in the intermediary channel. Our focus is very much first and foremost, protecting, growing before we amplify and diversify.

We do believe very much as you described it, Ken, that there is a very strong interest right now in active equities, active investing more broadly, but active equities, the world is a very complex place. The second quarter was an example of that. Not just in a three week period, but beyond that. That's probably going to persist. The cost of capital is much higher. Good companies and bad companies will deliver differential performance. Certainly, there are lots of kind of dispersion in stock just from drivers in thematic areas like health care, like innovation, more broadly in technology and other places.

We believe very strongly and our track record shows it, frankly over 91 years, but certainly over the past 1, 3, 5, 10 years, you see it, our track record shows it that we can actually deliver alpha for our client base through equities and of course elsewhere in our business. We look first and foremost to gain market share and we do that by delivering outstanding investment performance with the fantastic equities, for example, investment teams that we have. Even beyond that, to your point of fixed income and in alternatives, business as we grow, that as well.

Ken Worthington (Analyst)

Okay, great.Thank you.

Roger Thompson (CFO)

Ken. If I can just add to that, we have 62 strategies that are now over $1 billion, and within that there is a lot of equity and there are six or seven that are positive in Q2. We have shown that we can do that, and they're both really existing strategies. U.S. Concentrated Growth, U.S. Mid Cap Growth, global equity, international alpha, as well as new things. We talked last time about Global Small Cap, another $170 million, up through $1 billion of Global Small Cap as well.

It is both the existing products that, yes, given the performance we've got and that client relationship that Ali's been talking about, we can grow in what is a tough environment, you're right, but also developing things that are specific from Janus Henderson, like Global Small Cap that we've delivered, that we've built out over the last few years, that now is $1 billion in itself.

Ken Worthington (Analyst)

Great. Thank you, Roger. Thank you, Ali.

Operator (participant)

The next question comes from Bill Katz of TD Securities. Bill, your line is now open. Please go ahead.

Robin Holbein (Analyst)

Good morning, this is Robin holding out. I was wondering if you could take A moment to speak on how you see addressable market for the Janus Henderson Asset-Backed Securities ETF. Enter the products such as JAAA, JCCG. Or any other fixed income product.

Ali Dibadj (CEO)

Sure. Thanks for the question. You're a little muffled, but I think the question was about JABS. Look, it's a great example, JABS is a great example of the client-led innovation that we are creating here now at Janus Henderson. We're just starting to do this more and more as we attempt to build the asset management company of the future for client needs of the future. There's a clear need that we had heard from our clients around short duration, high quality, fixed rate, securitized assets. Very much to complement, as you're describing, the JAAA and other ETFs that we have in the active fixed income area, JAAA's floating rate. We heard that need among a broad range of clients, but particularly around insurance clients like Guardian.

With this partnership that we have with Guardian, which as I mentioned before is going extraordinarily well as well or better than we had planned, we made quick work of that. Given their $400 million commitment to seed things that are right for their general account, they seeded $100 million for JABS and we now have that in the market as of the other day. We have quite high aspirations for that business. Remember, everyone talks about JAAA and certainly it takes a lot of the headlines, but we have four ETFs in Q2 that are above $1 billion. We're second globally in active fixed income ETFs, eighth globally in any active ETF period around the world. We do have high aspirations for JABS because again, we're bringing client-led innovation to deliver for our clients' needs and our skill sets.

Robin Holbein (Analyst)

Thank you. As a follow up on investment performance, could you speak to what's driving the strong improvement in investment performance and how that performance might be translating to sales or maybe some of the leading indicators in the pipeline that you mentioned previously.

Roger Thompson (CFO)

Yeah, hi Bill, it's Roger. We were really pleased to see we've had good, consistent medium and long-term investment performance for a long time. The one-year number was a little bit weaker last quarter. It was really pleasing to see that bounce back so that we now have at least 72% ahead of benchmark overall time periods. The Morningstar quartiles are a little bit stronger than that with up to 88% ahead of or in the top two quartiles. What drove it was a lot of our U.S. and global equity products. U.S. concentrated growth, U.S. research, global technology and innovation, U.S. growth income, global equity income, U.S. opportunistic alpha, which were all slightly behind benchmark on the one-year time period at the end of March, are all now above and in some cases quite strongly above benchmark over one year at the end of the second quarter.

That obviously follows through into the 3, 5, and 10, but to a much more dampened effect. It was just that one-year number that was a little bit weaker at the end of March, which we're really pleased is now back to where we want it to be with consistently strong investment performance.

Robin Holbein (Analyst)

Thank you very much.

Operator (participant)

The next question comes from Dan Fannin of Jefferies. Dan, your line is now open. Please go ahead.

Dan Fannin (Analyst)

Thanks. I guess just sticking with performance, looking at multi asset, the performance on Slide 25, it looks really strong, basically one period over the last several on a 1, 3, 5, 10 year number. The flows just haven't been that consistent. Can you talk about the opportunities you see there given some of the performance you have in that kind of asset class and where the appetite sits within that context?

Ali Dibadj (CEO)

Sure, Dan, thanks for the question. I'll start and Roger can chime in and edit as well. As you know, that asset class, as we reported, is disproportionately related to the balanced fund that we have, one of our largest, most successful, most storied funds out there. We do believe the time for balanced has come in a world of complexity and having to choose good company from bad company.

The equity sleeve balance delivers that and the performance there is very, very strong, as you note. It has consistently done that for decades. At the same time, fixed income actually has a yield now and there too differentiation between a good security and a bad security plays into space. You can actually with balanced, if you are an investor, have the ballast of fixed income and the yield of fixed income plus the growth of the equity sleeve to it. We are big believers in balanced. The flows to your point have not been there at this point as much as we'd like it to be in balanced per se, but we're finding starting interest there, starting interest there certainly in the U.S.

We're finding it in particular in Europe and in Asia and we're expecting to see a little bit more of an improvement on those numbers as well. Now multi asset I said is disproportionately that, but it's not only that, in that sleeve is a lot of solutions as well. We're really picking up the pace on growth from a solutions business as well. This is where clients want outcomes, clients want things that are more sophisticated. I'll give you a few examples. We do a lot of work with large sovereign wealth funds in what we call the adaptive strategy. That's someplace where we go in and they want to use signals to understand when those regime change the markets and so they can adjust their asset allocation. That's been quite successful recently.

These are areas within multi asset that, number one, are well established like Balanced, which we think are coming into people's focus areas, and number two, areas where we're growing, so call that protect and grow, and then areas that we're growing where we have extraordinarily strong skill sets that we want to amplify and bring to them. We would expect improved over time, not overnight growth in that segment. Again, as you point out, all has to be based on performance, which gladly is well established.

Roger Thompson (CFO)

Just adding to that, that's helpful. I was just going to add to it a little bit. Balanced is a $49 billion fund we sell around the world, particularly in the U.S. across a multitude of different client areas. Our direct book, intermediary book as well as institutional, we also sell it around the world and there are new opportunities for us there as well. We're pretty excited about a new launch that we've got for Balanced in the second half of this year. Yes, it's in outflow, it's about 2% if you look at it, of outflow in the second quarter. We've got a lot of plans for that. As Ali said, there are plans outside of Balanced in the multi asset channel with things like adaptive.

Dan Fannin (Analyst)

Great. I guess then just to follow up on that, is the plans more institutional, SMA driven? I guess when you talk about offshoots of it, is that what is that? What are the versions that are coming?

Ali Dibadj (CEO)

Thanks, Roger. On the balance side, it's disproportionately on the intermediary side at this point from the solutions element, that is things like adaptive, that's more an SMA form or overlay form for institutional.

Dan Fannin (Analyst)

Got it. Just as a follow up. Roger, just in terms of the expense guidance and the outlook, knowing that performance fees are very hard to predict, I was hoping you could maybe set the frame for what you're assuming for the comp ratio guidance for performance fees this year or potentially where you sit today with performance fee eligible AUM versus a year ago and how you potentially could bracket the second half opportunity.

Roger Thompson (CFO)

Yeah, thanks Dan. You know it's too early to predict performance fees for the second half of the year. We have a little bit in Q3, but the vast majority of our segregated accounts are Q4. There's obviously still a long way to go in terms of the amount of assets eligible for performance fees. That's pretty broadly similar to where we were this time last year. Second half of last year we had some very strong performance fees as you will remember from our Biotech Innovation Fund. That's a little bit behind as we sit here today. We're unlikely to see those, although those numbers can move very strongly, very quickly. As you predict today, you predict a lower number there, but we're seeing some other stronger numbers. There's a blend of things that come in there that leads into a comp ratio.

We've guided to a comp ratio of 43 to 44% and that includes some performance fees in the second half.

Dan Fannin (Analyst)

Thank you.

Operator (participant)

As a reminder to ask a question, please press star followed by one on your telephone keypad. Now the next question comes from John Dunn of Evercore. John, your line is now open. Please go ahead.

John Dunn (Senior Equity Research Analyst)

Thank you. You talked about your reputation improving for intermediary overseas. Maybe could you just give us kind of some color on the different regions and what strategies and vehicles are in Demand and maybe just outlook for the Back half of the year.

Ali Dibadj (CEO)

Sure. As you anticipate, John, we do not give outlook from a flow perspective because there are so many things that could change in the world and we are only going to control what we can control. To your point, we feel like we are controlling what we control from a delivery of investment performance perspective. You see the numbers that are quite attractive obviously to a client. We are controlling what we control from a client service perspective as well. That includes different vehicles and we will talk about that. We are also controlling what we control from delivering an infrastructure that delivers on clients' expectations. Legal, compliance, technology, operations, everybody that works here pulls all that together for them. We are going to be very focused on delivering on that.

To your point, we are having conversations that I would posit we have never really had before with intermediary clients around the world. I would argue we are well established obviously in the U.S. although there too we continue to grow and develop and eight consecutive quarters of U.S. intermediary growth would suggest we have a lot more room to go. You are starting to see, as we have talked before, the lifting and shifting of the way we sell, the way we build relationships with intermediary clients actually applying outside of the U.S. as well. If you think of EMEA, exclude the UK for a second. If you talk about EMEA, we are seeing a lot of interesting opportunities and growth there that are developing. Intermediary usually starts off slow and then starts to grow.

We are getting preferred mandates, quote unquote, on a lot of intermediary platforms where we never have had those before in EMEA. That is continental Europe, but that is also in the Middle East, where the wealth channel, as you know, is burgeoning quite strongly. We have a big business in the Middle East on the institutional side that has been translating reputationally to the intermediary side as well, on the private wealth channel that, as I mentioned, is just nascent and growing there. Of course in Asia broadly, that includes in Japan, where we are signing up new clients. Just over the past few months, we have signed up new clients that we have never served before in Japan. In Asia, so Hong Kong, Singapore, other areas in Asia, we are for the first time having conversations and launching products with those intermediary partners there.

The same thing in Australia, where we've been present for a number of years. We certainly look to grow with consultant support there. It's a little bit different in the Australian market with consultant support and partnership and then grow. We feel like we're making strides. I will let you know that we don't feel like we're there yet in the U.K. If you think about our overall intermediary business, if you look at APAC plus North America plus EMEA ex-U.K., that would have been a much better result from a growth perspective. If you, on intermediary, if you layer in U.K., including investment trust in the U.K. area, that's what takes us negative. We have more work to do. We're not firing on all cylinders.

Your question was feeling that our reputation, our brand, our performance, the support teams, from a client service and broader perspective, is certainly allowing us to have conversations and grow businesses in areas and with acceleration we've never seen before.

John Dunn (Senior Equity Research Analyst)

Got it. You alluded to institutional investors. Like insurers using ETFs. It seems like you're seeing that utilization increase. How are they using them and what are maybe some of the other types of strategies they're gravitating to. Is it just limited to insurance companies?

Ali Dibadj (CEO)

It's a great question. It is not just limited to insurance companies, but let me just segregate that a little bit and Roger can chime in as well. What we found in our ETF business, which is still predominantly a fixed income active ETF business in the U.S., is that there are a few trendsetters, I guess so to speak, in the institutional side. In fact, one of our large ETFs was seeded by a large state pension plan. That then evolved to go into RIAs who are looking at securitized as an example to put on their platforms and get institutional quality security selection in the securitized world to their clients.

Wirehouses start to take it on board, then models start to take it on board, particularly in the intermediary side of things, and then institutions more broadly start to pick this up because what they were saying to themselves is gosh, I'm big, but your ETF has ETFs now for them over a billion dollars, have liquidity, and they're at a cheaper price than if I were to go to some other means of delivering this return stream. We saw institutional really take off and that's mainly in the U.S. in the past just couple of years on ETFs. They're in all the ETFs from a fixed income segment that you'd see, but disproportionately if you're insurance, you're more in the triple A kind of investment grade stuff.

If you're less insurance and you're more in the kind of pension plans or what have you, want higher returns, you might go to the triple B's in other areas of our portfolio. That's in the U.S. In the rest of the world, the disproportionate users of our ETFs, remember the Tabula acquisition that we brought on board, that's around about $800 million or $900 million right now. Global ETFs that we have, including everywhere, non-U.S., but disproportionately that's already in its institutional channels. Institutions are already using that to get return streams that the ETFs describe. We have AAA CLOs in Europe, for example, that are being used by pension plans, insurance companies as well. You are seeing institutional players catch on in the U.S., but be leaders, I'd say, outside the U.S., particularly in continental Europe. Roger, is there more to add there?

Roger Thompson (CFO)

Yeah, I think again it's just the breadth, which I think is important. You talked a lot about a bit there about the breadth of client type, which was John's question. I think the other thing is the breadth of ETFs. JAAA takes the headlines at the end of June. It's a $23 billion ETF. As of today it's $23 billion. But you know, we have $34 billion of ETFs. We've launched eight this year and we've talked about diversifying both in the U.S. and as Ali mentioned, with Tabula bringing UCITS that we can sell in Europe and around the world. Now we've launched a number of things in Europe and it's still early days, but something like the European AAA CLO, what we call JCL0, is a few hundred million dollars, but that's the fastest growing ETF of all of them so far.

I'm not saying it'll get to $23 billion immediately or perhaps ever, but we're really growing fast and we're seeing a lot of interest in Europe and around the world and we'll continue to launch things in the U.S. with things like JABS launching last week. Yeah, we're excited about the interest there and there's a lot more to do.

John Dunn (Senior Equity Research Analyst)

Thanks very much.

Operator (participant)

The next question comes from Bill Katz of TD Securities. Bill, your line is now open. Please go ahead.

Robin Holbein (Analyst)

Hi, this is Robin Holbein for Bill Katz again and thank you for the follow up. We wanted to ask if you could spend a moment on your tokenized fund strategy. What type of clients are showing interest in these products and why are they interested and how do you see the strategy evolving with other products and client types going forward?

Ali Dibadj (CEO)

Hey Robin, thanks for jumping back in on the follow up. This is another example of us being client led in innovation and thinking about how we can be client led in the way we deliver the asset management company of the future and look in tokenization broadly and disruptive financial technologies broadly, as we call them. We want to be ahead of the vast majority of our peers and I think we are.

The main client base to your core question so far is on token purely on chain clients and we've seen that across the board. If you think about the first tokenized fund that we did, it is with Animoi and Centrifuge, tokenized Treasury JTRSY, so J Treasury, that took in about $400 million in Q2 from on chain clients for the most part. Most part for that one are folks who are sitting in stablecoin and that's fine when there's no yield, but when there is a yield they want to get some yield and not just sit in zero yielding product. On chain tokenized JTRSY is where they've gone and that's the first one that we launched. We then followed up with a tokenized version of JAAA, that's with Animoi, Centrifuge, and also Grove.

I don't know if people know Grove, but Grove is part of the Sky ecosystem, which you may know better by the MakerDAO brand. That was their old brand and it's the owner of or the manager, I guess I should say, of USDs, which is, I think, the second or third largest stablecoin. Similarly, people were in stablecoin not getting all yield. They could go to Treasury and JAAA gives them another opportunity in a tokenized, fully on chain manner to go there. We're seeing again nascent interest from folks outside of the purely on chain clients, but we're in particular seeing a lot of interest for folks who are sitting in stablecoin and want better yields from those. We will continue to evolve as our client base evolves and as our clients' needs are there.

This is something that puts, I think, Janus Henderson ahead of the peer group in terms of being innovative, thinking differently, and delivering on a client need.

Robin Holbein (Analyst)

Thank you very much.

Operator (participant)

We currently have no further questions, so I'll hand back to Ali for any closing remarks.

Ali Dibadj (CEO)

Okay, look, thanks Lucy. Thanks to all our listeners today, of course, including our investors and analysts and also our many colleagues who I know are joining from Janus Henderson. You have all helped deliver another clear step forward this quarter in the transformation of Janus Henderson. On behalf of our clients, thank you all. Thank you all for listening and we'll talk to you next quarter.

Operator (participant)

This concludes today's call. Thank you for joining. You may now disconnect your lines.