AGF Management Limited

Blake Goldring - Chairman, CEO Bob Bogart - CFO, EVP Kevin McCreadie - President, CIO, AGF Investments Inc.

Stephen Boland - GMP Securities Gary Ho - Desjardins Capital Management Graham Ryding - TD Securities Geoff Kwan - RBC Capital Markets Paul Holden - CIBC Scott Chan - Canaccord Genuity

Thank you, operator. Good morning, everyone.

I am Bob Bogart, CFO of AGF Management Ltd. Thank you for joining us today for a discussion of our third quarter 2015 financial results.

Please note that the slides supporting today's call and webcast can be found in the Investor Relations section of agf.com. Today, we will discuss our third quarter 2015 financial results.

Also speaking on the call today will be Blake Goldring, Chairman and CEO; and Kevin McCreadie, President and Chief Investment Officer. Turning to Slide 4, I'll provide the agenda for today's call.

We will discuss the highlights of the third quarter. We'll provide a business update on the key segments of our business.

We will review the financial results, discuss our capital and liquidity position and we will finally close by outlining our focus for the remainder of 2015. After the prepared remarks we'll be happy to take questions.

And with that I will turn the call over to Blake.

Thank you, Bob, and thank you, everyone, for joining us on today's earnings call. We continued to make solid progress in the third quarter despite volatile markets and challenged client sentiment.

Firstly, we have sustained our investment performance improvement. Second, we reported our 11th consecutive quarter of improved retail fund flows.

Third, our institutional reported its second consecutive quarter of positive net sales and we have a pipeline of commitments from clients. Fourth, our seed investment in Stream Asset Financial LP was monetized and we realized a 65% IRR on the investment.

Looking forward to the next few months, we are focused on closing the essential infrastructure fund, which will cap off a year where we made steady progress on each of our strategic priorities. As we look forward, we are also mindful of the state of the financial markets.

Global market struggled during the third quarter. This was in part due to the situation in China where equities fell dramatically as a result of the weakening growth and a surprise devaluation of the yuan.

In addition, the U.S. rate environment created some uncertainty.

The instability of the markets has increasingly become a concern for investors, retail and institutional alike. Today, we will describe how we have positioned our business for market volatility and you will also hear general updates on each of our platforms.

We will also walk you through our third quarter 2015 fiscal results. Turning to Slide 6, I will start with retail.

The volatile markets have started to have some influence on mutual fund net sales in Canada. August industry net sales were $2 billion, about half of the $4.1 billion reported in August of 2014.

Market conditions have influenced the mindset of investors who are increasingly risk averse. We see this as an opportunity to deliver solution oriented products.

In 2012, we launched AGF U.S. Sector Class, this fund is now managed by our [Quantamental] [ph] shop Highstreet along with FFCM.

FFCM is a Boston-based firm that manages ETFs and related investment strategies. Their factor driven investment strategies use a proprietary model in order to minimize risk while participating in up markets by using factors such as value, size, momentum and diversification.

The fund employs a combination of FF's and CM's sector model with Highstreet's market risk model to provide U.S. equity market exposure.

It employs risk control strategies in down markets while still participating in up markets. We believe that there will be opportunities to partner with FFCM in the future to launch some very interesting risk oriented solutions in Canada and potentially the United States.

Two weeks ago, in partnership with State Street Global Advisors, we launched AGF Flex Asset Allocation Fund. This is another very good example of a product that's specifically designed as a solution for aversion to risk.

AGF Flex Asset Allocation is a globally diversified portfolio. It uses a strategic, dynamic and tactical asset allocation to help participate in up markets.

The fund invests in defensive assets in challenging market conditions. In addition, the fund uses forward-looking looking signals of market sentiment across equity, credit and currency markets to determine the likely performance of asset classes.

As I mentioned, we have experienced a continuation of a consistent improvement in our retail outflows. In fact, for 11 quarters we have experienced lower net redemptions compared to the same quarter in the previous year.

Last quarter we mentioned that the next focus would be on improving gross sales. And we've had some success here.

Retail fund gross sales improved 12% in Q3 2015 compared with the same quarter last year. We expect the improvement of gross sales will be sustained by focusing on the priorities that we've previously mentioned.

One, continuing to enhance our investment performance. Kevin will provide a progress update.

Number two, working closely with strategic business partners to facilitate distribution. Some of the increasing gross sales is related to increased business in key relationships.

And three, providing innovative products and solutions around specific needs. As mentioned previously, we positioned a number of our products for volatile markets.

Continuing with retail, separate from our retail AUM, we also have large inflows and outflows from segregated accounts we manage for strategic partners. In Q2, we announced approximately $600 million in net outflows from this channel as our partners internalized the management of these mandates.

We also noted the revenue impact will be minimal. During Q3 $400 million of these net outflows occurred and the remainder are expected to transact in Q4.

Before I leave retail I will speak briefly to CRM2 and related regulatory developments. On September 17, the OSC, IIROC and the [MMPA] [ph] issued a joint report regarding their mystery shopping exercise.

The mystery shop was an anonymous assessment of advisors that was carried out in Ontario between July and November of 2014. This report is the latest data point that regulators will use to assess items such as mutual fund commissions, best interest standards and appropriateness of disclosures.

The results from this particular shopping exercise were relatively benign. The industry still awaits additional research on mutual fund fees and whether commissions influence fund sales.

This research is expected within a few weeks. We believe that further changes, if any, will be introduced in a thoughtful manner giving industry participants time to respond.

If one of the regulatory outcomes is due to some bad trailers, AGF, like most other firms in the industry, already has fee disposed products such as high net worth series and our fee-based Series F Class. We are planning further development in the way we structure our product suite to help advisors transition to fee-based solutions.

We are also positioning ourselves to participate on the fee-based platforms. Although not much talked about, we still believe discussion around best interest standard is the most interesting aspect of regulatory reform.

AGF is positioned very well for a market that embraces more open architecture. We will continue to focus on our value proposition as an independent partner to distribution platforms.

Finally, we are pleased that AGF has a diversified business. A portion of our $18 billion of retail funds are already fee disposed.

We also have $10 billion in institutional and sub-advisory AUM and over $4 billion in our high net worth channel. The last two channels already operate on a fully disclosed basis.

That means that of our AUM -- that roughly half of our AUM is fee disclosed assets. Our diversification is one of the strengths in our operating model.

With that, I will now pass the call over to Kevin.

Thanks, Blake. I will start by talking about the investment platform.

As we have made some changes to personnel and products over the course of the last quarter. In Q2, we transferred the management of the AGF dividend income fund to Highstreet.

Highstreet specializes in risk management and low volatility, which, as Blake mentioned, has become increasingly important to investors. Highstreet's performance has been strong, for example, their Canadian equity strategy has outperformed the benchmark by over 700 basis points year-to-date and has exhibited very strong performance over the one, three and five-year periods as well.

We also announced changes to the management of AGF Canadian Asset Allocation Fund and the AGF Canada Class. We will look to optimize the platform on an ongoing basis going forward in order to ensure we sustain the improvement in our investment performance.

This will be necessary to meet the targets we've set for ourselves. Just as a reminder, we have targeted having 60% of our AUM above median over three years and 50% above median over any one year.

And as Blake mentioned, we have sustained our improved performance, 48% of our AUM is now above median over three years, our one-year number stands at 45% and the shorter year-to-date through August, 54% of our AUM is now above median. I view this as positive as we are looking for stable, consistent results that will allow us to build on this positive base going forward.

We often profile the capabilities of our global team, led by Steve Way, particularly the institutional channel. Our global team manages strategies in key categories such as Global Core, emerging markets and global dividends.

Performance and Global Core and Global Dividend is very strong. Over year-to-date one, three and five years both strategies are beating their benchmark in most cases by a significant margin.

The reason this is important is that Global Core is marketed in the institutional channel and is in very high demand and we believe that this trend is still early in the cycle. Plan sponsors and consultants continue to move to reduce home country bias and invest in global oriented strategies.

With our global performance as strong as it is we expect to win new mandates over the coming quarters. The current sales activity is encouraging and we look forward to the next four quarters.

Turning to Slide 8, I'll talk more about our institutional business. In Q3 2015, our Q2 pipeline that we discussed last quarter fully transacted.

In addition to the net flows identified in the Q2 pipeline, we experienced a small redemption of $6 million. Our committed pipeline of $40 million reflects notification of two wins totaling $176 million offset by a redemption notice of $136 million.

Emerging markets have become volatile as the market has become increasingly unsettled. Some clients see this as an opportunity and our pipeline includes an emerging markets win.

However, our pipeline also includes a redemption notice from a client who took the opposite perspective with [MDM] [ph]. This particular client is looking to move money into a lower volatility strategy.

So going forward, if emerging markets as an asset class continue to be volatile we may see similar volatility in our flows in and out of the strategy. So it is apparent that retail investors are not the only ones concerned about risk, diversification of our business away from just long only equities for our institutional clients was one of the reasons we established our alternatives platform.

Back in 2014, our first initiative in the infrastructure space was the seeding of the Stream Asset Financial LP. In September of last year we announced the successful close of a Mid-Stream Energy Fund with $210 million of commitments.

In July, the Stream fund monetized its seed asset in connection with the sale; the LP's recognized a special distribution from the fund. AGF received a distribution of $16 million pretax that was a combination of return of capital and capital gain.

We are also fund-raising for the InstarAGF Essential Infrastructure Fund, which, as you know, is a North American mid-market strategy for infrastructure. As we have stated on previous calls, the Fund's holdings include an interest in the passenger terminal at Billy Bishop Toronto City Airport and a renewable power project in British Columbia.

InstarAGF's deal flow remains robust across our targeted infrastructure categories of power, utility, civil and social infrastructure in both Canada and the United States. InstarAGF has also recently announced two additional senior investment professional hires with deep transaction experience in the infrastructure sector and broad industry relationships, thereby enhancing InstarAGF's strength and sector footprint.

Further, our investment in the Billy Bishop Toronto City Airport is performing well and in line with our expectations. While we will not be providing rolling targets or projections on fund-raising, we have established a broad distribution footprint for the Fund and expect to achieve first close in Q4 of 2015.

With our global team and infrastructure fund our capabilities line up very well with consultant searches and the demand we are seeing in the marketplace. We have optimism about the growth in the institutional business.

And with that, I'll turn the call back over to Bob.

Thank you, Kevin. Slide 9 reflects a summary of our financial results for the current quarter as compared to the previous quarter over the third quarter of 2014.

EBITDA for the quarter was $31.8 million, down 11.7% from $36 million in Q2. Third quarter EPS came in at $0.14 per share compared to $0.17 per share in Q2.

After eliminating the effect of non-recurring items, notably the gain from a monetization event in stream and a restructuring charge, the largest difference from Q2 is the reduced earnings from Smith and Williamson and other fair value income. Smith and Williamson results were impacted by lower revenue due to the lower equity markets and increased reinvestment into its business.

In the fair value line item, we recognized a decline in the value of our mutual fund seed investments because of market-related declines. These assets are mark-to-market on our balance sheet and any changes in the values will impact our P&L.

Turning to Slide 10, I will walk through the basis points yields on our business. This slide shows our investment management revenue, operating expense and EBITDA as a percentage of average AUM in the current quarter as well as a trailing 12-month view.

Note that the results reflect our core investment management business and excludes one-time items and other incomes previously mentioned. With respect to revenue, revenue yield increased slightly versus the previous 12-month period and that is due to an increase in the fee rates we earned on our retail business related to an increased equity weighting across the book which carry higher relative fees.

SG&A for the quarter came in at $50.1 million, which includes a $4.4 million restructuring charge. Excluding this charge SG&A was $45.7 million during the quarter in line with guidance.

The restructuring we are undertaking will span a few quarters and will reduce the cost structure heading into fiscal 2016. We will reinvest a portion of those savings into our growth platforms, namely to add depth and capability to our global investment management platform and institutional distribution footprint, but we expect considerable savings as a result.

We will provide updated expense guidance, as we customarily do, on our year-end conference call. EBITDA basis points were stable at 32 basis points compared to the trailing 12-month view.

And turning to Slide 11, I will discuss free cash flow and capital uses. This slide represents the last five quarters of free cash flow shown by the blue bars on the chart.

The cash flow represented is consolidated free cash flow. Free cash flow was consistent with Q2 2015 and the Q3 dividend payout ratio was within our anticipated range of 38%.

With respect to future capital uses, we have previously mentioned our capital commitment for the alternatives platform is $150 million. $50 million of that amount relates to Stream Asset Financial LP of which only $17 million remains from our existing commitment.

We received $10 million back from our original commitment in connection with the monetization event that Kevin mentioned previously. The remaining $100 million is committed to the essential infrastructure fund.

AGF advanced $103 million to facilitate the acquisition of the Billy Bishop Airport terminal investment in January. When closing of the Fund occurs we will receive a return on the seed capital bringing our investment down to our proportionate share of the total committed capital.

As Kevin mentioned, the expectation is for the Fund to close prior to year-end. We will generate turns from our infrastructure platform in two ways; first, our LP investments will have a total return profile of approximately 12% and generate a cash yield in the 6% to 7% range.

Management fees will emerge as the platform generates scale. But for the next few years we expect most of our management fee revenue will be reinvested to grow the platform.

During the quarter, we recognized earnings of $8.6 million from the LP investments, that includes the $5.7 million gain from the monetization. Year-to-date we have earned approximately $12 million from the platform.

Moving to other capital considerations. During Q3 we repurchased 2.7 million shares for a total consideration of approximately $17 million.

During their current NCIB period, which began in February, we have repurchased 3.2 million shares for total consideration of approximately $20 million. Since the beginning of the fiscal year we have repurchased 5.9 million shares for total consideration of $42 million.

Going forward, we remain committed to returning value to our shareholders through the dividend, reinvesting back in the business along with opportunistic repurchases through the NCIB. Turning to Slide 12, I'll turn it back to Blake to wrap up today's call.

Thanks, Bob. In closing, I would like to remind you of our primary goals for the remainder of 2015, which were clearly laid out on our last conference call.

Firstly, investment performance and process; second, retail product development; and third, closing the essential infrastructure funding. I want to thank everyone on the AGF team for their hard work and I'm proud of the results that we have achieved in Q3 during a difficult market.

I'm very excited to accomplish more in the remainder of 2015. We will now take your questions.

Good morning.

Good morning.

Just couple of questions, guys. First on some of the tax expenses.

On the expense deduction, one, I think in past reports you said that multiple years were kind of under review. And in this quarter, 2005 was specifically mentioned as well as getting the NOR for that year.

Is it reasonable to assume that there is -- it is still -- other years are under review and you could get more NORs for further years or is it just going to be related to that year?

Hey, Steve, it's Bob, let me take that. Just a comment and then I will address your question.

Unfortunately like a lot of other businesses, including our peers, we are having to deal with the -- many issues with respect to the CRA as it looks to protect its revenue base. That said, let me say that our overall exposure to the CRA has been reduced from a quarter ago.

So as reported in our financials, the CRA has withdrawn its assessment that we highlighted last quarter dealing with the foreign accrual property income issue. So as disclosed, that was the $33 million assessment received in Q2.

So we are pleased with that result and we look forward to completely closing the audit out over the next few months. The issue that you mentioned with respect to the denial by the CRA of certain tax-related benefits was indeed highlighted last quarter.

So during the quarter we formally received a tax assessment as expected and we made a deposit to the CRA in the amount of just under $6 million. As the note says, we strongly object to the assessment; we feel very good about our position.

And so, as a result we haven't provided anything for that amount through our tax provisioning. But it relates specifically to a transaction in 2005 and it doesn't have -- there is no exposure in any other year with respect to -- other than 2005.

So a long answer to your question.

No, that is helpful, Bob. Just to make sure that there is no more -- if it was a one-time kind of item.

Secondly more -- if I could just jump to the institutional business a little bit. You did talk about -- Kevin, about redemptions in -- some of the sales or some of the redemptions in this quarter.

What are you seeing in terms of redemptions? It seems -- are institutional committees, or bench committees moving a little bit quicker in terms of changing mandates?

It just seems -- you know what I mean, very quickly that all of a sudden emerging markets is out of favor and you are getting redemption notices. Is it based on the distribution or the distribution of the product or the type of product that is causing that?

Yes, I think we are seeing a couple of things, the industry is seeing, let me underline industry there. So if you saw in the month of -- this last month there was $40 billion that came out of the emerging markets, $20 billion of that was equity, $20 billion of that was debt.

That is the largest single month outflow since I think 2008. So the industry is seeing some pressure as people try to wrestle with the achievement and therefore achieve asset class in an opportunity to reload, which we did see one of those in the quarter as a client moved from another manager to up his allocation.

You are seeing other clients basically get skittish about the fact that if the Fed raises rates that has strategically been bad for EM and EM currencies. And so, I think this is a story that will play out.

And to the extent that volatility starts to dampen in EM that will take some of that away. But, yes, it's something we are watching.

But it is an industry phenom, it is not -- and this is frankly not a performance issue, but more about I think a risk management issue for some of our clients. And that is -- the one redemption was actually through a sub-advised platform that we actually manage for us, so it is, again, an end client of that advisor who got skittish.

Okay. And another question for you, Kevin.

Just you guys did take a charge in the quarter for some personnel changes. Obviously, some PMs were left as well as Gord -- Gord Forrester.

Are you -- you have been there over 12 months now. Are you comfortable with the team on the sales side, on the PM side?

Is it -- are you sort of at where you thought you would be at this point?

Yes. No, we are tracking right on the timeline that I had laid out.

Obviously, the people changes are hard. But as I said early on, we were going to try to do it in a way that was thoughtful and that was respectful of that.

But also have our clients' interest at the fore of this which I think we have done. I said we are probably 80% of the way through that process and we will always look to continually change and optimize for the best process.

And so, it never really ends, but I would say the heavy lifting and the disruptions are probably behind us. There will be some more as we roll through the future, but you can think of the bulk of it being behind us.

In terms of sales side on the institutional front, we were down a few bodies this year consciously. We are looking to re-man there.

And I feel pretty comfortable that we will get some pretty good talent in the seat there from North America in the end of the year or early Q1.

Okay. That's my questions.

Thanks.

Good morning. Just one question, the pace of net redemptions has slowed.

I think that's roughly 5% to 6% year-over-year versus the mid to high teens early in the year. I guess part of it is driven by market sentiment and your comments and the volatility that we have seen.

Are you confident that you will see net redemptions still improve over the next few quarters or could it kind of swing back the other way given where markets are today? Any color on that would be great.

Sure, Gary, this is Blake here. What we have seen is certainly some of our strategic partners are certainly selling more of -- some of our products and I think that has been a key emphasis for us.

I think we have been successful bringing out some interesting new products as well which have been helping on the gross side of the equation. And the current market volatility that we are seeing right now and the skittishness of investors, I mean that's the question.

I mean, certainly though our performance -- I should have started with that, of course that has been probably the -- one of the key determinants as far as overall performance.

Yes. The other thing, Gary, this is Kevin, that I would add is that obviously performance has played into that.

The fact that we have held up relatively well in this volatile market has also probably not gone unnoticed in some of our strategies as Blake mentioned that are more risk aware. So we feel pretty good about where we are.

Okay. That is it for me.

Thanks.

Yes. I just wanted to quickly double back on the institutional side.

It sounds like Global Core, your performances there. And I just want to make sure I'm understanding what's going on.

But it looks like you are seeing traction and net sales on that front, but it's being offset largely because of emerging markets volatility. Is that the right way to look at the trend overall for your institutional business?

Yes. Global Core and Global Dividend on our Global suite are significantly outperforming.

Global Core we have got a number of searches going on right now for. EM is really, as I said, an industry issue right now -- not specific to us.

Performance is pretty much in line, as you know. Gary [sic] Graham, we were a little underweight consciously China earlier in the spring because we were cautious about that and we have made that ground up for the most part.

So, Graham, I'd look at it and say I am not worried about it being a performance driven issue right now. And so, I think if you X that out the Global Core, both div and EM feel fairly stable with EM being the one I would flag or underline as it will be an industry type issue as volatility picks up or wanes there.

Okay, great. And then it looks like you are trying to leverage Highstreet a bit further here.

Just wondering how much of their AUM is Highstreet managing right now?

Yes. Highstreet is about $4 billion of AUM shy of that right now.

Highstreet really provides us with couple of things. One, the way they manage money is highly quantitative which complements our fundamental strategy so it sits nicely alongside of us.

So we have a product offer that can be, again, fundamentally driven as well as that which is -- or more quantitative. As you can see in some of the new product launches whether it be here or in the states where assets are flowing through are more solution driven that are more -- have this quantitative bent.

So we think about in the future not just the existing platform of products but the ability to develop new products and do R&D in there as well as help our investment teams from a process driven side to test process changes. So for Highstreet for us is a pretty good engine both from a product delivery today but also future R&D as we think about new solutions.

Great. And then maybe just lastly on your retail gross sales side.

Is there any color you can provide how much of that gross sales is coming through your strategic partners versus how much is a standalone funds like the new product you launch and whatnot?

We'd probably say that both channels are working out and so it would be probably about 50%.

Great, thank you.

Hi. Good morning.

Just the first question I had is, so when you X out the restructuring on the SG&A side you get to about $45.7 million for the quarter. You have had some headcount reductions and the markets have been down.

Just wondering to think about what we might -- or should be thinking about from a run rate perspective, mainly looking out over the next couple of quarters?

Yes. Geoff, as I mentioned in our -- on the call in terms of my comments that we are -- and then as Kevin mentioned, we are still working through some cost structure changes, although most of the heavy lifting has been done.

So we are guiding to $45 million for the next quarter and we will update on our January call.

Okay, okay. And then just going just -- just to follow-on along the questions on the institutional and sub-advisory side.

I mean it sounds like things are getting better from where they were call it a year or two years ago. Would kind of -- saying the businesses are stabilizing from that respect, would that be a fair characterization?

And maybe if there is additional color you tab on kind of the new stuff that you are seeing on sub-advisory and then you talked a little bit on the institutional side.

Yes. So I look at it a couple of ways.

One is that stabilization is the right word for the base business, which as you look at the existing book you have, look through where you have had performance issues, et cetera. I feel pretty good that we are fairly stable.

X out again, as I said, what could be an industry issue with how people feel about EM. In terms of the new business, again, we are down a couple sales guys and at the same time we are in the middle of a massive fund raise for the essential infrastructure fund on that sales team.

So if you think about it, we are able to run an awful lot of searches for Global Core, et cetera at the same time as we are participating in this pretty long tail but heavy lift on the fund raise for the essential infrastructure fund. So I look at the stabilization of the existing client base plus the opportunity set that we know is in the pipeline to the out years.

I feel like stabilization is probably a soft word. I think I am pretty positive on the strengthening of the business.

Okay. And just a final question, I had is obviously with the markets being volatile and the markets being down right now, I mean it sounds like maybe on the mutual fund side there may be some pressures on the net redemption improvements remains to be seen there.

But just maybe, Kevin, from your perspective when you kind of came in and you wanted to change processes, maybe think a little bit more on the risk management aspect there. From what you have seen so far on the fund performance in this type of environment is it happening the way that you envisaged or are they still tweaks that you think that need to be done?

Yes. I think we are in a place we are going to continually tweak.

We have done a lot of the heavy lifting, as Bob said, around process and teams, redundancies on teams. We try to put money in the best hands that we think have the best consistency going forward.

But risk has also been a big factor for this or risk management. Some of our risk managed solutions have really done quite well in this environment.

You look at sector class, which I hate to look at short-term performance but in the month of September, which was incredibly volatile, it was in the top decile of performance. So we are doing what we are intending to do, I don't -- no one likes these markets.

But I will tell you that the ability to I think drive consistent performance in this type of environment frankly validates how I feel about where we've gone with the platform. So can't control where that market will go, but we can aim to reduce that volatility if we focus.

Okay, great. Thank you.

Thank you. So I have two questions for you.

First is related to the alternative platform. Just curious on the decision to bring aboard the people from Kindle Capital in terms of the timing given that you are relatively close to closing the essential infrastructure fund.

So I was wondering --

Yes. First on that one, we -- it has always been our intent to start to build out the business and the platform.

As we complete that round of the early fund raising we start moving to the investment side, we have always talked about bringing in some more talent and depth. So if you look at the folks who we just brought on, it is a great addition to the team to be able to strengthen and deepen.

So it is really not about fundraising as it is as much about talent acquisition.

Okay, thanks for that. And then second question is related to the performance on the institutional side.

So, the implied performance on retail AUM for the quarter is roughly negative 4. If we do a similar calculation for the institutional we get to negative 8.

So just wondering what accounts for the difference there. Is it just the asset mix with more EM on the institutional side?

Yes. Could be if you think about the peak to trough on the quarter, depending on what market you are in.

If you are in the U.S. markets you were down 12%.

If you were in the Nikkei you were down 17% and 18%, and this is all in local -- Canadian dollar. And so the EM down North of 20%.

So depending upon the mix that could be some of it. The other is, if you were picking up some of those strat account flows, that may be being pulled out through the -- when I look at it, it may be rolling up in retail, Bob, is that how we think about it?

No, it would have been disclosed in the institutional.

You may be picking that up as well that that we disclosed that big seg account which I think of as not our traditional institutional business but more related to our retail business. So it could be a combination of both those, which is market mix or market activity on our mix as well as that partner that internalized their assets.

But the true core institutional business we haven't seen frankly, ex the one withdrawal I just mentioned, really it has been pretty stable.

And then one final question would be related to debt covenants. So as you disclosed your debt to EBITDA is roughly 2 times now, but market has been coming off since quarter end.

So wondering how you are thinking about debt covenants. Is it something we need to think about in terms of paying down debt or any other action you may need to take?

Not at this point, Paul, we have nothing to add with respect to that. We are comfortable with where we are in terms of our liquidity position and debt covenants.

Okay. That is it for me.

Thanks.

Thanks.

Thanks a lot. Kevin, just if I look at Highstreet, and obviously you have put in effort to grow it organically and it is rather internalization of assets.

Assets there, as you said, are $4 billion right now. Is there a target that you look at in the next three to four years?

Are you looking to double the AUM in this platform or how should we think about the growth over the next couple of years?

Yes. It's interesting, I don't have a target to prop up Highstreet.

I mean Highstreet has earned the right to manage money for our clients. And so, I don't think about doubling, tripling or reducing.

I think it is about what the right process and products are that we have. Obviously, we hope for a great organic growth out of that platform as we start to introduce their product set to some of our institutional client base.

But probably more importantly is going to be the product development efforts that we think they are capable of helping us with as we generate some of the new solutions from a risk managed base. So I don't have a target, it is going to grow organically, then it is going to grow from our product development efforts.

And then just one last question. So the Primerica distribution channel, what are the assets there?

And I think growing or declining over the past couple quarters?

Yes. It has definitely been increasing but we don't disclose any client sort of by asset by individual client.

But that would be included in institutional and sub-advisory, right, Primerica? Or what would that be --?

Actually both, Scott. So certain of the mandates would be included in the institutional and some of the mandates are reported through IFIC [ph].

Okay.

Yes.

Okay, perfect. Thanks a lot.

Okay.

Thank you very much for joining us on today's call everyone. Our next earnings call will take place on January 26, 2016 when we will review our results for the full-year fiscal 2015.

Details of the call will be posted on our Web site. Finally, an archive of the audio webcast of today's call will -- with supporting materials will be available in the Investor Relations section of our Web site.

Thank you and good day, everyone.