Cohen & Steers, Inc.CNSNYSE
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Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Cohen & Steers Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Friday, January 23, 2026. 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: Thank you, and welcome to the Cohen & Steers Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining me are Joe Harvey, our Chief Executive Officer; Mike Donohue, 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 fourth quarter and full year 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 the securities of any fund or other investment vehicles. 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. 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 Mike.
Michael Donohue: Thank you, Brian, and good morning, everyone. My remarks today will focus on the as-adjusted results. Reconciliation of GAAP to as adjusted results can be found in the earnings release and presentation. Yesterday, reported earnings of $0.81 per share, which equaled EPS reported in the prior quarter. Earnings for the full year 2025 was $3.09 per share compared to $2.93 in 2024. Key highlights for the quarter include: solid revenue growth driven by higher average AUM and combined with a stable effective fee rate. We had another quarter of net inflows, which makes 5 out of 6 trailing quarters with net inflows. Operating income was higher than prior quarter and prior year and our one but unfunded pipeline is again near multiyear highs. Now I'll provide some detail on our financial results. Revenue for Q4 increased 2% sequentially to $143.8 million. Revenues for the full year increased 6. 9% versus the prior year to $554 million. The increase in revenue from the prior quarter was driven by higher average AUM and the recognition of $1.7 million in performance fees. Our effective fee rate during the quarter, excluding performance fees, was 59 basis points, which was consistent with the prior quarter. Operating income increased 3% to $52.4 million during the quarter. Operating income for the full year increased 6.3% to $195.1 million. And our operating margin was 36.4% as compared to 36.1% in the prior quarter. Ending AUM in Q4 was $90.5 billion, which was down slightly from the end of Q3. However, as noted earlier, we experienced higher average AUM during Q4 as compared to the prior quarter. Net inflows during Q4 were $1.2 billion, primarily related to advisory and closed-end funds, which was offset by market depreciation and distributions. Joe Harvey will provide additional insights regarding our flows and pipeline. Total expenses were higher compared to the prior quarter, primarily due to increased G&A expense. During the quarter, the increase in compensation and benefits was below the sequential increase in revenue to reflect actual incentive compensation to be paid. As a result, our compensation ratio for the quarter decreased to 39% and was 40% for the full year. This was just below the guidance we provided at the beginning of the year of 40.5%. The decrease in distribution and service fees during the quarter was due to reduced fees paid to intermediaries as investors shifted into lower fee paying share classes. G&A expenses were higher during the quarter primarily related to travel and other business development-related activities as well as increased talent acquisition costs. Regarding taxes, our effective rate was 25.7% for the quarter and 25.3% for the year, which was consistent with 2024. Our earnings material presents liquidity at the end of Q4 and prior quarters. Our liquidity totaled $403 million at year-end, which represents a $39 million increase versus the prior quarter end. As a reminder, our liquidity normally decreases during Q1 of each year due to our compensation cycle as year-end bonuses are paid. Let me now touch on a few items for 2026. With respect to compensation and benefits, we would expect our compensation ratio to remain at 40%. We continue to maintain a disciplined approach to managing talent by balancing our business needs and strategic priorities with revenue growth. We expect annual G&A growth in 2026 to moderate from 2025 and are projecting it to be in the mid-single-digit percentage range. Lastly, regarding 2026 guidance, we expect our effective tax rate to be 25.4% on an as-adjusted basis. I will now turn it over to Jon Cheigh, who will discuss our investment outlook.
John Cheigh: Thank you, Mike, and good morning. Today, I'd like to cover 3 topics: our performance scorecard, the investment environment for the fourth quarter and our 2026 outlook for the economy, markets and the opportunity in our asset classes. Beginning with our performance scorecard. We have maintained a record of consistent long-term outperformance. On a 1-year basis, 95% of our AUM has outperformed its benchmark, while our 3-, 5- and 10-year outperformance rates or all above 95%. 90% of our open-end fund AUM is rated 4- or 5-star by Morningstar, a modest increase from last quarter. Importantly, our nontraded REIT, CNS REIT has enjoyed a 10.3% annualized return since its January 2024 inception, which is more than double the return of the median equity nontraded REIT. In short, we continue to meet our objective of providing long-term alpha for our clients. Transitioning to investment market conditions, equities finished 2025 with double-digit gains for the third consecutive year. Although sentiment in the fourth quarter generally shifted toward value-type stocks as investors trimmed positions in prior AI winners. In this environment, diversified real assets rose about 3% in the quarter, in line with global equities but outperformed equities for the full year, which we believe is significant as market drivers broaden, which I will touch on later. Natural Resource equities were a positive standout in the quarter, up more than 6%, driven by strength in metals and mining stocks amid reduced tariff uncertainty and expectations for stronger economic growth in 2026. Global real estate stocks were flattish overall in the quarter as gains in Asia Pacific markets were countered by weakness elsewhere. While U.S. REIT had a modest decline in the quarter, we continued to see large return disparities by property type. In this case, industrial and hotel REITs had sizable games, while data center and telecommunication landlords remained sluggish. Private real estate meanwhile, had a total return of 0.9% as measured by the preliminary results of NCREIF Odyssey Index. This marked the sixth consecutive quarter that total returns have increased. The clearest private real estate recovery signal we've seen since the 2022 downturn. Within listed infrastructure, airports were a notable winner on strong passenger traffic volumes amid steady air travel demand. Most fixed income classes, including preferred securities, had slightly positive total returns in the quarter with treasury yields ending the period largely unchanged and as credit spreads remained historically tight. Turning to our economic and investment outlook. Last quarter, I noted that economic growth for 2025 was historically narrow, the so-called K-shaped economy. Unsurprisingly, corporate profit growth and market performance have also been narrow. As we enter 2026, we expect economic activity and market returns to broaden after several years of highly concentrated games. Our view is for above consensus global growth inflation and interest rates. We believe the economic and market rotation is well underway. Real assets, which have lagged for some time are evidence of this shift. In 2025, a diversified portfolio of real assets outperformed equities, with virtually all categories generating double-digit returns. Natural resource equities led rising nearly 30%, followed by commodities up 16%, global listed infrastructure at 14% and global real estate just under 10%. We also can't forget about gold, which had a banner year, climbing 64% last year. Gold is an interesting case study. From mid-2020 to mid-2023, gold generally traded around $1,800 per ounce with a range of plus or minus $200. Some argued that maybe gold had become displaced by Bitcoin and secular change or that gold couldn't work in a higher interest rate environment. 2.5 years later, gold is up 250% to 4,800 an ounce. Few people today now argue that gold is obsolete versus Bitcoin. In our experience, claims that this time is different, or that an asset class, like real estate is also obsolete, tend to correct over time. And when the sentiment and fund flows shift, valuations can move meaningfully and quickly. Equities are at historically high valuations. Everyone knows this and has known this. Just because equity valuations were expensive at the start of 2025 and the market still went up doesn't mean relative valuations don't matter or the asset allocations don't need to shift. Instead, it means the case for asset allocation changes is even stronger today with the rotation just starting. Turning to more specific drivers by asset class. Real estate has been a laggard for the last several years because of the rapid rise in long-term interest rates from 2022 to 2023, oversupply in industrial, apartments and self-storage and growth rates that decelerated from double digits down to only 3.3% growth in 2025. But that performance and those drivers are now in the past. Long-term interest rates have essentially been flat now for 2.5 years. Those same higher rates plus construction costs that are up 40% since 2020, have driven new supply materially lower. Our companies are not in the construction business. Lower supply is good for real estate. We expect the combination of lower supply and accelerating economic growth and thus demand to result in accelerating REIT earnings above trend to roughly 8% in 2026 and 2027. In our experience, discounted valuations with accelerating growth drives multiple expansion. Performance drives flows to the asset class. And often, we see the rotation from laggard to leader and investors fear of missing out, take hold. And historically, the recovery in share prices is a sharp rather than measured move. Natural resource equities and global listed infrastructure represent some of the clearest examples of how broadening market leadership can unlock return over a longer time horizon. Capacity discipline, higher borrowing costs and aging infrastructure have constrained the supply of natural resources. Meanwhile, growing populations, AI infrastructure needs, defense growth, and increased electrification or accelerating demand, record metal prices and persistent supply chain disruptions in 2025 highlight this shift. Against this backdrop, natural resource equities led real asset returns last year. And importantly, we believe we're still early in a multiyear commodity super cycle. As market leadership broadens beyond mega cap tech, these companies offer structural growth, yield, diversification, and an attractive complement to richly valued traditional assets. Last, in fixed income markets, lower short-end rates combined with stronger broadening growth bode well for preferred securities. To be sure, overall credit spreads are tight, preferreds represent high income from high-quality issues and generally with tax advantages. In short, we continue to believe that the combination of a broadening economic growth engine along with relative valuation attractiveness will benefit our asset classes in 2026, while secular forces provide an exciting backdrop for many years to come. The stage is set for natural resource equities, along with listed infrastructure and listed real estate play a larger role in portfolios as the next leg of participation unfolds. With that, let me turn the call over to Joe.
Joseph Harvey: Thank you, Jon, and good morning. Today, I will review key business trends in the fourth quarter and then discuss our plans to drive organic growth and realize returns on investments we have made in recent years. We ended 2025 with good momentum across key business metrics. We saw positive flows into nearly all vehicles. Fee rates were stable. Our institutional pipeline continued to strengthen and we are making progress on distribution initiatives. We ended the year with $90.5 billion in AUM compared with the full year average of $88.6 billion. While markets were strong in 2025, our largest strategy by AUM, U.S. REITs returned just 3.2%, ranking 11 out of the 11 gig sectors in the S&P 500. Some of our smaller strategies performed exceptionally well, such as natural resource equities at 30%, real assets multi-strategy at 17% and global listed infrastructure ranging from 14% to 22%, depending on the sub strategy, and that's before our teams generated alpha on top of those benchmarks. In the fourth quarter, we had net inflows of $1.28 billion, bringing full year 2025 flows to $1.5 billion. Major story lines included net inflows in all vehicles, including improved advisory flows, which led at $651 million, flow leadership by strategy in U.S. REITs and global listed infrastructure and an inflow of $513 million from a rights offering and associated leverage for our infrastructure closed-end fund. Open-end funds had a small net inflow at $13 million with large inflows into 2 of our U.S. real estate open-end funds and outflows from our third real estate fund and our core preferred stock fund. Our non-U.S. CCAP funds had inflows of $89 million. Active ETFs had $175 million in net inflows, comprised of $25 million of seed capital and $150 million from clients. Advisory had 4 new mandates totaling $689 million plus existing client inflows of $86 million offset by 1 termination of $124 million. Subadvisory had $30 million of net inflows, framed by significant activity, including 2 new mandates of $532 million, 1 account termination of $330 million and client rebalancing outflows of $172 million. Our one unfunded pipeline continued to strengthen at $1.72 billion at year-end across 20 mandates compared with $1.75 billion last quarter and a 3-year average of $970 million. We were awarded $660 million of new mandates in the quarter and an additional $385 million was one and funded within the quarter and therefore, did not hit the pipeline. The largest percentage of the pipeline at 54% is U.S. REIT strategies with another 23% in global listed infrastructure and 16% in global real estate. The factors driving improved activity are similar to last quarter. More confidence by allocators in the macro environment and interest rate cycle additional flexibility in portfolios due to listed equity outperformance, increased interest in more inflation-sensitive allocations and takeaways from underperforming competitors. Over the past several quarters, we have disclosed known terminations and last quarter, that AUM was $500 million to $600 million. As before, those terminations were principally driven by client allocation and investment vehicle changes rather than performance. We have transitioned to a more typical low level of termination activity now that those outflows are complete. Other full year highlights include record net inflows of $1.6 billion into global listed infrastructure, record inflows into our 6 CCAP vehicles of $291 million and the doubling of our AUM in Australia over the past 2 years to $1.2 billion. All of these areas deserve continued focus in 2026. Since the Fed began easing in September 2024, we have had 6 -- 5 of 6 quarters of net inflows averaging $612 million. This contrasts with 9 prior quarters of outflows during the interest rate tightening period. While on the surface that may seem to reflect a business that is interest rate sensitive, I believe the right depiction is more muted especially considering that interest rates have normalized and that will likely be in a more inflation persistent environment. The need for diversification amidst top decile valuations alongside persistent inflation backdrop is helping to drive more listed real asset allocations. During 2026, we expect to focus on harvesting ROI or return on investment for investments we've made over the past several years in new strategies, vehicles and talents. In November, we announced Dan Noonan's promotion to Head of Global Distribution after watching him implement his strategic plan for wealth that is well underway. Key goals include increasing coverage of the RIA channel, while maintaining our presence in the wirehouses, putting greater resources on global sub-advisory and growing our institutional presence outside of the U.S. with focuses on Japan, the Middle East and Asia. We believe our largest AUM strategy, real estate, is entering a favorable return cycle. Looked at through REITs, real estate has been among the worst S&P sectors for multiyear periods driven by asset pricing adjustments as well as earnings deceleration. But we expect earnings to inflect positively, as Jon discussed. REITs are statistically cheap versus equities in our view, but fairly priced versus bonds. And reflecting inflation, REIT prices are 18% below trend versus replacement cost. In our view, at this time, real estate should garner 15% of the 60-40 medium risk portfolio with 9% allocated to listed real estate and 6% to private. Our U.S. REIT performance is outstanding, and global strategies are seeing increasing interest. Meantime, our private business is gaining momentum with strong investment performance by our non-traded REIT while distribution is expanding through an increasing number of independent and enterprise RIA firms. What's more, last year, we launched an institutional vehicle that combines a listed real estate strategy with an indexed approach to core private property funds through our partner, IDR. We have commenced fundraising and are excited about this vehicle's prospects. My favorite investment strategy, the one to allocate to and forget about, so to speak, is natural resource equities. These companies produce critical real assets, which are connected to the economy survival, national security and capital investment. Their supply-demand profiles are attractive because of depleting resources in many cases and result in strong pricing power. As Jon articulated, resource equities are in a multiyear return cycle in our view. Following record flows in global listed infrastructure in 2025, we expect the allocation momentum to continue. The investment case remains compelling, centered around critical themes such as deglobalization and evolving supply chains, digitalization and power demand and decarbonization. We successfully completed a rights offering for our closed-end fund and are excited about our recently launched active ETF. Interestingly, several of the institutional wins in 2025 include open-end vehicles which provide opportunities for organic growth. Our core preferred strategy has been in outflows in spite of yields normalizing and fixed income allocations being reestablished potentially the result of competition from private credit strategies. Nevertheless, preferreds had very strong returns on '25, and we delivered alpha. We are prepared for allocations to return to preferred with open-end fund, ETF and CCAP vehicles in both our core and short duration preferred strategies. We are very pleased with the launch of active ETFs, we closed the year with 5 ETFs and total AUM of $378 million, of which our seed capital is $90 million. We are pleased with their trading spreads, performance and flows. Our first launches in February were REITs, preferreds and natural resource equities. In December, we launched short duration preferreds and the global infrastructure strategy, which is more concentrated and opportunistic in nature than our open-end fund. We are working toward threshold AUM milestones for allocators while continuing to deliver performance. Next milestone is to achieve profitability. Efforts to grow our offshore CCAP vehicles are paying off with record net inflows in 2025 and in 24 of the past 26 quarters. The leading flow CCAP is our real assets multi-strategy a reflection of the inflation environment. These vehicles are seeing flows in over 8 countries, led by the U.K. and South Africa. We expect to achieve profitability in 2026, and the next milestone is to scale AUM. Turning to our investment initiatives. We have invested significantly in the business the past few years across vehicles and strategies. As these businesses scale, we will add more distribution resources calibrated to organic growth. At this point, we expect that we're reaching the peak of balance sheet funding for new vehicles and strategies. In closing, Cohen & Steers will celebrate its 40th anniversary in 2026. We'll be celebrating both our evolution from a single strategy manager to a global real assets manager as well as the role of the listed markets. What Martin Cohen and Bob Steers, our founders, created in 1986 is truly remarkable. First, in terms of pioneering a better way to invest in core real estate through the listed REIT market. Second was to lead the way in evolving the traditional 60-40 portfolio construction to include real asset allocations and the 20% context to enhance returns with better inflation sensitivity and diversification. Our founders backed their belief in the listed markets by bringing Cohen & Steers public in 2004. It has been a spectacular way for us to organize for our clients, our employees and the business, particularly now with the speed of change in asset management. Part of the 40-year celebration will be to extol the virtues of the listed markets. Too many companies have false impressions about the costs and risks of being public. To us, it's easy. It's like waking up in the morning. and being public provides discipline, governance, brand awareness and resources to continually innovate and improve our business. Going public also provided a strong balance sheet to support seeding strategies and funding co-investments. Our active ETF launches and the nontraded REIT are prominent recent examples. We will continue to do our part to promote capital formation in the listed markets in 2026. Now I will turn the call back to Abby to facilitate Q&A.
Operator: [Operator Instructions] And our first question comes from the line of John Dunn with Evercore ISI.
John Dunn: I wanted to ask a little more on the private real estate. It seems like we're seeing signs of some improving demand for that asset class. First of all, are you seeing that? And then also, do you think it can be a more significant contributor in 2026?
Joseph Harvey: Well, I think we're early in the process of investor interest coming back to private real estate, but we're seeing some good early phase signs. The level of interest is increasing, particularly with some cracks showing up in the private credit markets and the vehicles in the wealth channel that have raised a lot of money. So when you just follow the chain of factors that are starting to drive that private credit is wrestling with interest rates coming down some, some potential credit problems and the fact that there's been a lot of money raised. So the recent articles that have followed the outflows that are coming from those vehicles, and we believe that some of that capital will find its way into the real estate market because the factors driving what's going on in private credit will help the private real estate market, namely, reduction in the interest rates and the fact that prices have adjusted in the commercial real estate and the capital flows have really slowed. So as with all these types of transitions, it will take -- it will unfold over a period of time. But we're -- as I said, we're seeing more shoppers, more lookers and we're really well positioned with our nontraded REIT because we believe we have the right investment strategy. We've delivered performance. We're gaining critical mass and we're starting to broaden the number of platforms that we're on. So we're ready in case that transition does follow through.
John Dunn: Got it. And then on the active ETFs, other vehicle launches take time for the market to kind of accept. But because these are based on established strategies. Do you think active ETFs can scale more quickly for you guys?
Joseph Harvey: Absolutely. And there are a lot of factors behind that. You named one of them, there are core strategies. They're just delivered in a different vehicle and the market has voted that active ETFs are the way to go for the future. Of course, there's nothing wrong with open-end funds, and there will be a lot of advisers and individual investors that continue to hold them. But at the margin, the new business models are using active ETFs more. So because we've got proven strategies or strategies that close cousins and based on our core strategies. Investors know what they're getting is just happening through a different vehicle. So I think that, as I said in my remarks, we've got our milestones. We want to get the vehicles as we launch them to scale so that allocators know they can come in and have efficient trading spreads on them. They'll -- because of the strategies, in some cases, they're a little bit different. They'll get comfortable with those differences and the performance that we're delivering. And once we get to critical mass so that model-based users and other allocators are comfortable. I think they have the potential to scale up very rapidly. And that stands in contrast to some of the private strategies you're seeing in nontraded REITs or interval funds, et cetera, where it is a new allocation for the wealth market and some of the strategies are less tested. And because they have a private element to them, there's more risk for the gatekeepers and they want to see more performance. So I think it's very different, and it makes us very excited because we can see how for the new capital going into active ETFs, it can help these vehicles scale very rapidly.
John Cheigh: John, this is Jon Cheigh. I would just add one thing. I think our REIT ETF is a really good example of that. So this is a CSRE. So as an example, it took us 159 days to get to $50 million of AUM in that ETF. And with each proceeding $50 million, it's -- we're achieving that faster and faster and faster, meaning it took us almost half a year to get the first $50 million at this stage. It's taken us a little bit more than a month to get the last $50 million. So clearly, adoption is accelerating and has continued to accelerate.
Operator: And our next question comes from the line of Rodrigo Ferreira with Bank of America.
Rodrigo Ferreira: Can you talk a little bit about the recent progress in the institutional channel? Just what have conversations looked like and maybe contrast it to what it had looked a year ago? And then if you also can maybe expand like based on the conversations you're having right now, where do you think it can go from here?
Joseph Harvey: Sure, Rodrigo. Yes, I think that's one of the critical inflections in our business, and we've been talking about this for the past year or so. And again, like a lot of these transitions, it takes time. But we've now had a very strong pipeline for 2 quarters in a row. This quarter, I'd say that, that pipeline has broadened a little bit. It's deepened a little bit with the number of mandates, the location of the domicile of the allocator and the range of strategies. So I think it's a combination of our team just being very steadfast and sticking with the process and the program. but also the environment changing, as I said, I think the environment is improved for allocators with more liquidity in the portfolios. It's not totally in the free and clear because there's still illiquidity and private allocations. But with -- going back a couple of years, allocators were reestablishing fixed income allocations, okay. Now with equities, it's created more flexibility. And so -- and then with the backdrop of persistent inflation, we just see more allocators coming back to the strategies we manage. And so it's a better environment. Our teams are very focused and there's disciplined about pursuing the process. So I would expect as these things go for this to continue to unfold. And as we've talked about also in prior calls, we're working on investing in the institutional side of our business and with adding sales professionals, adding consultants to help us in different markets. So becoming more bullish on this segment of the market and can't wait to report in future quarters.
Rodrigo Ferreira: Got it. And then maybe for my follow-up. On the one but unfunded pipeline, it seems like the amount that you're winning and funding intra-quarter has been going up. Is that a fair observation? And then also, can you comment on any dynamics driving that?
Joseph Harvey: I think over the longer history, what happens in the one and unfunded or the intra-quarter is pretty consistent. So the fact that it's turned up in the recent quarters is just a reflection of the broader dynamic that I described. I don't think there's anything unique to that. But over the longer term, it's been pretty consistent.
Operator: [Operator Instructions] And we will take a follow-up question from John Dunn with Evercore ISI.
John Dunn: So just thinking about like regional demand. You mentioned on the wealth management side, where there's demand for the CCAP. But on the institutional side, could you just kind of give us a flavor of any pockets of demand around the world for both advisory and subadvisory.
Joseph Harvey: But again, if you go back a couple of years in a more challenging environment for advisory and it's also been a period when the U.S. has really performed well market-wise. More of the activity got concentrated in the U.S. I would say we're starting to see that expanding now with -- now with the non-U.S. international markets performing better. A little bit of concern on the geopolitical front and non-U.S. allocators not wanting to be so concentrated in the U.S. But just to give you a flavor for the domiciles of our allocators, it's Belgium, it's Canada, it's Japan, it's Philippines, it's the U.K. So it's starting to expand. And I would hope to see that continue as we are allocating more resources, more sales talent in the non-U.S. markets.
John Dunn: Got it. And then maybe just one more quick one. On the global real estate side, what do you think some of the dynamics that could change that would move that to become more of a tailwind?
John Cheigh: Well, I think there -- this is Jon. I think there's 2 factors. So the first is, generally speaking, global real estate is more favored by global institutions. So as we've talked about, there have been lower interest in real estate overall in 2022, 2023, 2024. So I think as we see a reacceleration in demand for real estate from global institutions. I think generally, they're going to have a preference for global real estate. So that's the first thing. I think the second thing is that for U.S.-based investors, and so that's both for wealth and institutional, the reality is that international underperformed for the last 10, 11, 12 years, not every year, but a majority of those years. And so it's like the comments I talked about sometimes when something underperforms, people say, oh, there's something structurally wrong. It's never going to perform. And there's elements of that, but the realities are more that growth had slowed in China. That growth was slow in Europe and that places like Europe and Japan had to go through interest rate resetting cycle. Again, a majority of those factors are more in the rearview mirror. And we've seen last year, international real estate did meaningfully better than U.S. real estate. And that's probably a harbinger of what we're likely to see over the next few years. So I think we're seeing changes in behavior, both from global institutions and thinking about the U.S. versus global as well as U.S. institutions.
Operator: And our next question comes from the line of Macrae Sykes with Gabelli.
Macrae Sykes: Just on -- going back to the ETFs, the active ETFs, could you perhaps break down some of the areas of demand that you're seeing? And any surprises there. So retail platforms, RIAs, Institutional?
Joseph Harvey: I wouldn't say there's been too many surprises. But when you see it actually happen, it gives you more conviction about the strategy but we're seeing examples of RIAs who only use ETFs in their practice. So this is money that we never would have seen had we not launched active ETFs. We're seeing existing holders of our open-end funds who are converting their practices to using ETFs. And so there's some swapping going on. In our business projections for the ETFs, we've factored in some the cannibalization, so to speak. And to the extent that you can measure that, we'd say that it's kind of in line with what we've expected. But in the -- if there's money that would be going away for us, net-net, better off for having launched the active ETF. So there are model builders who only use ETFs, and so that's a dynamic. So far, the activity has been with the independent RIAs because for the wire houses, we need to go through the process of getting onboarded. We're in that process for several of our ETFs. So as that happens, we're going to be able to see other dimensions to how this transition from open-end funds to ETFs is going to unfold. And as we talk about these launches, we talk about it in phases, so we've launched 5. We're going to continue to create vehicles that we have all of our core strategies in ETF. But then over time, there's going to be a longer-term exercise of figuring out how to create vehicles for other of our open-end fund AUM which we haven't been able to address with what we currently have. So it's -- there's to be a process that unfolds over multiple years.
Operator: And that concludes our question-and-answer session. I will now turn the conference back over to Mr. Joe Harvey for closing remarks.
Joseph Harvey: Well, thank you, Abby, and thank you, everyone, for taking the time to listen to our outlook and look forward to reporting our first quarter in April. See you then.
Operator: And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.