AGF Management Limited

Thank you, operator, and good morning, everyone. I am Adrian Basaraba, Senior Vice President and Chief Financial Officer of AGF Management Limited.

Today, we will be discussing the financial results for the second quarter of fiscal 2021. Slides supporting today’s call and webcast can be found in the Investor Relations section of agf.com.

Also speaking on the call today will be Kevin McCreadie, Chief Executive Officer and Chief Investment Officer. For the question-and-answer period with investment analysts following the presentation, Judith Goldring, President and Head of Global Distribution, will also be available to address questions.

Turning to slide four, I will provide an agenda for today’s call. We will discuss the highlights of Q2 2021, provide an update on the key segments of our business, review our financial results, discuss our capital and liquidity position, and finally, close by outlining our focus for the remainder of 2021.

After the prepared remarks, we will be happy to take questions. With that, I will turn the call over to Kevin.

Thank you, Adrian, and thank you, everyone, for joining us today. During Q2 of 2021, we continue to execute against our strategy and stated goals.

I will begin with some highlights. Our strong business momentum from Q1 has carried into Q2.

AUM and fee-earning assets crossed the $40 billion mark during the quarter. Our mutual fund business reported gross sales of $1.1 billion in the quarter, which is more than double the second quarter of last year.

Net sales were over $400 million, exceeding Q1 of 2021, which was at the time our best quarter of mutual fund flows in over a decade. At the 2021 Wealth Professional Awards, AGF was named the winner of two awards, Digital Innovator of the Year and Employer of Choice.

Designers speak directly to two key drivers of AGF success over the past year, accelerating digital transformation and employee engagement. In September of last year, we established AGFWave Asset Management to expand into the Chinese and South Korean markets.

During the quarter, AGFWave and our Chinese strategic partners brought a new strategy, the Hwabao China New Era Infrastructure mandate to market. The new innovative mandate brings together AGF and Hwabao’s quantitative investment capabilities and provides diversified access to China’s robust and growing digital economy and carbon-neutral pledge.

The strategy will target eligible investors in China and institutions globally, looking for access to the Chinese market. Moving on to our private alternatives business.

In May, we announced a new arrangement in our partnership with Instar Group. We are proud of the success that AGF and Instar Group achieved together through InstarAGF’s two flagship funds, which raised over $2 billion in equity commitments.

AGF will retain its economic interest in the funds, including an upcoming third fund, which AGF will support with an anticipated US$50 million capital commitment. Growing our private alternatives business remains integral to our strategy as reflected by our ongoing work with AGF’s Alternatives Advisory Committee, as well we will be deepening the platform with our private credit fund launches.

The AGF SAF Private Credit Limited Partnership and Trust will achieve first close soon. The LP targets Canadian institutional investors, while the Trust offers more liquidity that is more appealing for Canadian retail investors.

Finally, the Board approved an increase in our quarterly dividend from $0.08 to $0.09 per share, starting in Q2 for shareholders a record on July 9th. Starting on Slide 6, we will provide updates on our business performance.

On this slide, we break down our total AUM and fee-earning assets in the categories disclosed in our MD&A and show comparisons to the prior year. Mutual fund AUM increased by 22%.

I will provide more color on our mutual fund business in a moment. Institutional, sub-advisory and ETF AUM increased by 1%.

As indicated on our previous call, during the quarter, we received an allocation of approximately $150 million from an existing strategic partner to our American growth strategy. We also onboard a large U.S.

institution that selected three of our global and U.S. equity strategies for its SMA platform.

While AUM growth for this mandate will occur gradually over time, we are optimistic based on flows for the first two months. Building on the success of this win, we plan to expand our distribution reach by entering into similar relationships with other SME platforms in the U.S.

Looking forward, RFP and RFI activities have remained strong. We continue to see interest from institutional investors in a number of our strategies, which bodes well for future sales.

A private client business continues to demonstrate consistent steady growth with AUM increasing 19% year-over-year. Our private alternatives AUM and fee-earning assets were $2.1 billion, and we maintain our goal of reaching $5 billion in AUM and fee-earning assets by the end of 2022.

As indicated earlier, we recently modified our relationship with InstarAGF. As part of the change, AGF will receive ongoing fees of 14 basis points on Fund I and 2 basis points and 7 basis points on Fund III.

AGF will maintain its investment in carried interest participation in Fund I and II. AGF will also invest in and receive a carried interest entitlement in Fund III.

This initiative, along with our robust pipeline of opportunities, will help AGF achieve our goal of reaching $5 billion in AUM and fee-earning assets by the end of 2022. Turning to Slide 7, I will provide some detail on the mutual fund business.

After a cellar RRSP season, the Canadian mutual fund industry continued its robust pace reporting net sales of $33 billion for the three months ending May 31, 2021. AGF’s mutual fund business reported net sales of $408 million for the quarter, which is our best quarter of mutual fund flows in over a decade.

Excluding net flows from institutional clients invested in mutual funds, net sales were $431 million, compared to net redemptions of $93 million in the second quarter of last year. AGF sales improvement outpaced that of the industry.

While industry net sales are down 17% versus Q1 of 2021, our net sales are up 6% over the same time period. We continue to see year-over-year improvements across all channels, IIROC, MFDA and strategic partnerships and strong inflows into multiple categories, including global and U.S.

equities, fixed income and ESG or sustainable opportunity. The momentum in our mutual fund business has continued into June, where we have net sales of approximately $75 million up to June 25th.

Before I return the call back to Adrian, I want to give you a quick update on performance. AGF measures mutual fund performance by comparing gross returns before fees relative to peers within the same category, with the first percentile being best possible performance.

We target an average percentile ranking versus peers of 50% over one year and 40% over three years. At the end of Q2, average percentile ranking was 53% over the one-year period and 52% over the past three years.

The market rotation from growth to value has tempered the performance for some of our growth-oriented strategies. However, it’s important to note that one year and three-year performance for our top selling funds have largely remained in the top quartile.

With that, I will turn the call back over to Adrian.

Thank you, Kevin. Slide 8 reflects a summary of our financial results for the second quarter with sequential quarter and year-over-year comparisons.

Total EBITDA before commissions for the current quarter is $28.2 million, which is $1.4 million higher than previous quarter and $7 million higher than prior year. For ease of comparison, we have shown our investment management business separate from our private alternatives business.

Our investment management business reported EBITDA before commissions of $28.2 million. This is $4.6 million higher than Q1 2021, driven by an increase in AUM and lower SG&A.

Recall that Q1 expenses were impacted by timing of the cost of employee benefits. Compared to Q2 2020, investment management EBITDA before commissions was $6.5 million favorable, which was attributable to higher AUM and an increase in our revenue rate.

The increase in net revenue more than offset the increase in compensation related to higher mutual fund sales, strong investment performance and increasing share price. Q2 EBITDA before commission margin for our investment management business has improved year-over-year by 160 basis points to 25.8%.

Earnings from our private alternative business were muted this quarter, while our earnings include two months of revenue from fee-earning assets related to our new arrangement with Instar Group. This was offset by fair value adjustments from a strengthen Canada dollar, our investments held in U.S.

dollars within our LPs. Diluted EPS was $0.07 this quarter, which is a penny lower than Q1 2021 and slash last year.

Our EPS was reduced by the cost of rapid growth, primarily deferred selling commissions and so it’s important to consider the long-term value associated with these sales. While also considering its negative impact on short-term EPS.

Our mutual fund business reported gross sales of $1.1 billion, which is 2% higher when compared to Q1 2021 and deferred selling commissions were $17.7 million, compared to $15.5 million last quarter. On a percentage basis DSC sales increased slightly when compared to Q1 2021, but decreased when compared to prior year.

On our last earnings call, we revised our 2021 guidance to a range of $185 million to $199 million to reflect improving growth and related expense impact. During Q2 the improving growth trajectory has continued.

Our mutual fund business reported the strongest quarter flows in over a decade. We are working now to contain SG&A within $190 million without sacrificing opportunities to grow.

We are happy to pay for success-based performance and while this growth will create short-term strain on our financial results it will ultimately drive higher value for our shareholders. Again, please keep in mind, sales commissions paid to our salespeople and DSC are expense immediately and not capitalized, revenue on these over a much longer period, generally seven years.

So when assessing the appropriateness of expense levels, we are going to consider the investment management margin, which as I mentioned earlier, improved by 160 basis points year-over-year. So turning to Slide 9, I am going to walk through the yield on our business in terms of basis points.

The slide shows our revenue, operating expenses and EBITDA before commissions as a percentage of average AUM on the current quarters, as well as trailing 12 months due. Note that AUM and related results from Smith & Williamson and private alts business one-time items and other income are excluded.

The Q2 revenue yield is 113 basis points, flat to the trailing 12 months. Q2 SG&A as a percentage of AUM was 49 basis points, 3 bps lower compared to the trailing 12 months.

This resulted in an EBITDA yield of 20 basis points, which is 2 basis points higher compared to the trailing 12 months, which is yet another measure of improving profitability, and again, this is notable given the acceleration in growth year-to-date and related expenses. Turning to Slide 10, I will discuss free cash flow and capital uses.

This slide represents the last five quarters of consolidated free cash flow on a trailing 12-month basis as shown by the orange bars on the chart. The black line represents the percentage of free cash flow that was paid of its dividend.

Our trailing 12-month free cash flow was $46 million and our dividend payout ratio was 50%. Our remaining capital commitment to the private alternatives business is $51 million, which is $19 million lower compared to Q1 2021.

Not included and this is our anticipated commitment of US$15 million to an upcoming third fund managed by Instar. Capital commitments may be funded from excess free cash flow, but keep in mind, there will also be further recycling of capital as monetizations occur, which will help to fund future commitments.

In fact, after the quarter, one of our LP investments managed by SAF fully monetized and they received $6 million on June 24th, represents our carry -- representing our carrying value of the investment. This investment management by SAF returned a gross IRR of 48% and the MOIC of the 1.9% -- times.

In addition to the returns, AGF has recorded management fee earnings and carried interest earnings of $1.3 million since inception and we will be recording a further $2.2 million of carried interest income in Q3 related to the same fund. This supports our cash balance which at May 31st was $26 million.

And at May 31st, we also had short-term and long-term investments of almost $178 million along with no debt. We have also -- we also have the credit facility which provides credit to a maximum of $150 million.

While we currently have no debt, we are comfortable increasing our net debt-to-EBITDA up to 1.5 times should the right opportunity arise. We plan to deploy our capital in a balanced way including returning capital to shareholders, investing in areas of growth such as our private alternatives business.

We are deploying this excess capital to generate recurring earnings in a key strategic priority. Turning to Slide 11, I will turn it over to Kevin to wrap up today’s call.

Thanks, Adrian. Q2 was a strong quarter.

AUM and fee earning assets crossed a $40 billion mark. EBITDA before commissions for our investment management business was $28.2 million, 30% higher than the second quarter of last year.

Our margin improved by 160 basis points. We record another quarter of stellar mutual fund flows with improvements coming across all channels and multiple product categories.

Our institutional and sell advisory business continued to gain momentum, onboarding new clients and winning business from existing clients. Our new private credit products will achieve to first close soon.

We are also recognized as an industry leader in digital innovation and employee engagement. We are focused on building on the momentum of the past few quarters and creating value for our shareholders over the long-term.

In the past 12 months, we return almost $70 million to our shareholders through share buybacks and dividend payments. A strong business momentum has temporarily impacted the financial results as sales commission in DSC paid are expensed immediately and not capitalized.

However, it’s important to note that while growth will create short-term strain on our financial results, it will ultimately drive higher value for our shareholders. Along those lines I’d like to reiterate our strategic priorities, which are to deliver consistent and repeatable investment performance, drive the organization to sustainable net inflows, redeploy our excess capital generate recurring earnings, position the firm to reach $5 billion alternative assets by 2022 and meet our revised expense guidance while continuing to invest in key growth areas.

I want to thank everyone on the AGF team for all of their hard work in these challenging times. We will now take your questions.

Thanks and good morning. My first question just on the DSC commission line that’s been elevated last few quarters.

Can you talk about kind of what’s going on with your strategic partners? Are they pushing more sales ahead of the DSC ban or any other reasons you can point to?

And are you still confident in the growth sales activity post the June 2022 DSC change there with these strategic partners?

Gary, why don’t I start with that and I am sure Kevin might want to add some other comments. First of all, yeah, you will notice that DSC as a proportion of our total mutual fund gross sales year-over-year Q2 of last year to Q2 of this year really has declined from almost 44% in Q2 of last year and it was 36% in Q2 of this year.

There was a bit of increase over Q1 to Q2. But I think what we are seeing across the Board is that the partners we are working with are seeing spectacular growth, taking advantage of the industry growth as well, so they are participating in that.

We are trending downwards which is the direction we have been noticing obviously for the last number of quarters. And then as we work with our dealers, what we are helping them with as they navigate through the regulatory changes, we are working collaboratively with them as they move through the transition away from DSC.

And I think what we have seen in the past other dealers have transitioned with minimal disruption to their business and we don’t expect there to be any material impact to our strategic direction and to that of the dealers we are working with. And then I just want to comment as well, we are also strategically focused on growing the IIROC channel and we’ve seen certainly fiscal year-to-date a growth in gross sales across that channel of 167%.

So across the Board, we don’t have any real concerns with the DSC ban impacting our sales going forward.

Yeah. Gary, it’s Kevin.

I will just add to that. We are working with our partners.

We are pretty confident that they are going to navigate the change given the conversations we’ve had. So we don’t see a large disruption as we get to June of 2022 at all.

Perfect. Okay.

Thanks. And then my next question, Kevin, was, have you -- can you update us on your house view on the portfolio positioning side kind of views on interest rate, et cetera?

And can you also talk a little bit about the institutional pipeline that’s where you look out?

Yeah. I will take the first part and I will let Judith talk about the institutional piece.

But I think most you guys who know me, I am a little bit cautious about where we are. We have come a long way.

The market would tend to move in front of the economy. So the economy is catching up now.

We’ve had a strong first half. There will be volatility as we get into the fourth quarter, I think, probably, the summer.

So we are positioned within our balanced portfolio sitting on a little more cash. We have some of our anti-beta ETF hedges in those portfolios.

So if we get into a drawdown situation, those are instruments that will have a positive return. So to remind you, we use those last year going to COVID, when the market was down 35%, they were up 17%.

So we are positioned for a little bit of volatility within the equity side. And on the fixed side and those balanced portfolios, we remain underweight fixed income.

Not sure of the woods. We think there is probably a backup in rates that does occur.

We all have to worry and wait and see if this whole inflation story is transitory. So, again, underweight on the fixed piece.

As a firm, we are going to be more sensitive to equity volatility, so therefore the hedge is important there. We probably have less than 20% of our assets in the fixed income side.

So unlike others, the backup in rates won’t hurt us as much. But for our end clients, we are trying to diversify that fixed income experience, but thinking about things such as how do we hack up a fixed income portfolio, if you will, and add new things and you will see us talk about private credit and roll that out and I think it’s going to be timely as we move into this next 18-month period where rates have to try to figure out how to normalize to an economy that’s trying to normalize.

And then, Judith, you maybe want to talk about the institutional piece.

Sure. On the institutional side, certainly, we are encouraged by the momentum in that business.

Our pipeline is currently modestly positive. We are encouraged, because over the last two quarters, our Global U.S.

and ESG strategies have all won institutional mandates, and we are particularly excited by a platform that we were put on in the U.S. for three of our mandates that Kevin mentioned in his opening remarks.

That has already drawn in $100 million Canadian in the last four months and that has got a lot of momentum specifically. So we are really encouraged by that.

And then just looking forward, certainly, the key strategies among the Global U.S. and ESG space continue to outperform the benchmark on a one-year and three-year basis, and we believe that that’s certainly a strong indicator of future sales.

So, again, very encouraged.

Okay. Great.

Thanks for the color. And then the other question I have is just on the dividend increase, kind of what’s the thinking here 50% free cash flow payout on a TTM basis?

What’s the target payout when you look out and how does the DSC benefit on free cash flow come into play here, maybe not just some dividend increase side, but also on other capital allocation decisions like buybacks?

Yeah. Maybe I will start with that Gary and maybe ask Adrian for some color.

We’ve always had a balanced and disciplined approach on this -- on the capital allocation story and we have talked a lot about that in the past, which is real approach that do some buybacks. As you know, we -- if you think about last year between buybacks and dividends, we returned $70 million of capital with the SIB being at big component that we did in the fall.

It’s going to be a measured approach to a little bit of dividend, a little bit of buyback and then, obviously, investing in our future and growth. In terms of the payout ratio, we think about 50% is sort of a guideline on our policy.

Clearly, as we roll to 2022, our cash flows are going to improve. So it’s going to be something we will keep an eye on, but it’s going to be a very balanced approach to thinking about all three.

I don’t know, Adrian, if you want to add to that?

Yeah. I can just add to that.

Definitely, looking at the trends in free cash flow is one input into this decision. And then if you look at just the strong balance sheet as well, we’ve got $26 million in cash, $158 million in long-term investments.

No debt. We can borrow over $100 million and still stay within one times EBITDA.

So if you kind of pair those both together, the strong free cash flow trend and the strength of our balance sheet and it just made sense to share a little bit with our shareholders.

And Gary, I’d add one more piece to that. As we look forward and we start to think about our business model and some of the trajectories that we are seeing in different things, we have a pretty fair amount of confidence in some of those businesses right now.

So I think it makes sense to start on this path.

Okay. Got it.

And then last question for me just on the private alts side, I just noticed this quarter’s EBITDA seems a bit low with a loss of $0.5 million. I think the run rate last couple of quarters has been kind of in the $2 million to $3 million, kind of can you elaborate kind of what went on this quarter and any changes in outlook in terms of what we should expect on the -- on that side of the business?

Yeah. Gary, I can give a shot at that.

So, yeah, as you noted, the alternatives income this quarter was basically flat and it was pretty much completely due to an adjustment related to foreign currency. So within more of our LPs, U.S.

denominated investments, Canadian dollar rallies and it causes an adjustment related to foreign currency. But I think we’ve been pretty clear saying that probably could be because of the size of our alternatives business.

It’s going to be lumpy quarter-to-quarter. And if you think about this business going forward with $150 million or so of investments and limited partnership and if you conservatively say 8% to 10% returns from those over the longer term, I think, you can count on $3 million to $4 million of earnings coming from the general partners or other related fee arrangements.

And then stock carry on top of that as well, you are probably talking about $15 million to $20 million of EBITDA per year or $4 million-ish per quarter compared to the zero that we showed you this quarter. So I think you really have to look at that business in terms of the longer-term nature.

And carry is especially lumpy when you factor that into the equation, but as we mentioned in our call and in our materials, there is a $2.8 million number that was earned and a vehicle managed by SAF that had really great returns and that’s going to be recording in Q3. So Q3 we are already off to a good start for the alternatives platform earnings.

Okay. So if I can paraphrase like the delta between the flat to the $3 million to $4 million that was all entirely FX related this quarter?

That’s right.

Okay. Got it.

Okay. Those are my questions.

Thanks very much.

Hi. Good morning.

Set a question just on with the DSC and the Lolo band coming in next year and Ontario kind of harmonizing with the rest of the provinces. So the commissions then -- the commission expense should go to zero when it goes into effect.

And my question is in your models like, how do you see the trailers as a percentage of average AUM increasing on a yearly basis just as the AUM migrates more to kind of the full trailer?

Yeah. Geoff, it’s a good question.

So effectively it’s difficult to give you a forecast on the revenue rate in trailers, but I think it’s important for everyone to understand, as I am sure you do that, the elimination of DSC is basically the temporary benefit to our cash flow because as you sort of note in your question there’s an offsetting increase in the trailer expense that kind of creeps in over time. And so when we do our business planning and capital planning and those sorts of things, we absolutely talk about it and we don’t, we kind of consider that.

So all else being equal the profitability in our business should remain relatively flat if you adjust for that kind of temporary benefit.

Okay. And then just my other question was just on the tax rates, it’s been kind of I think consistent for the first half of the year.

Just wondering if we should expect or what is your guidance or how we should think about the tax rate for the second half of 2021?

I think it’s very similar to Q2. So I would -- if you wanted exact I would call it 28.5%.

Okay. Great.

That’s all the questions I had.

Hi. Good morning.

Adrian, just a follow-up on the DSC question, so is the right way to think about this is the trailer fee as a percentage of AUM that should start to trend higher as we sort of move into late 2022 and then 2023 over the course of over the next seven years as your existing DSC funds sort of, I guess, run their course in terms of a lower trailer fee relative to the rescue book, is that the right way to think about it?

Yeah. Graham, thanks for the question and I don’t want to overcomplicate this, but I kind of purposely stayed away from forecasting the trailer rate, because the solutions are on table as far as replacement for the DSC world, may not be the same products that you have had exist today.

And so I think we need to stay away from forecasting what’s going to happen on either the revenue line or the trailer line and really just think about it more so from a net basis, right? So from a net basis, we should be relatively stable on the net revenue line over time and the benefit that we see coming from the elimination of DSC will sort of reversed over time.

And we will track back towards something that looks more similar to the net revenue that we see today.

Got it. And are you alluding to sort of increased adoption of F class or ETFs would have an impact on that trailer fee over time?

That’s probably a better way to think about it. And again I don’t want to divulge some stuff that we are working on that’s not public yet, but that’s a better way to look at it.

Yes. Yes, Graham.

Okay. Can you give us a little bit of color and just maybe what you are targeting with the private credit, LP with SAF, in terms of the size that you are targeting for that fund?

And then also you mentioned that you are going to launch alongside like a trust version that’s more applicable for retail. What’s the -- should we think about the sales process there is just sort of like an incremental your wholesale team goes out and just tries to target that fund, is that the right way to think about that?

Yeah. Graham, thanks for that.

We are looking at it as sort of an incremental growing momentum sort of asset gathering exercise in terms of the products. It is really focused.

We are really focusing in on as a retail product. And so the team has been out.

We are getting that product onto dealer shelves. We were successful just yesterday learning that we are one of the larger platforms.

And once it gets through all the approval processes we do see this just as another product that will be very attractive to the retail investor. And probably looking at like -- I like to see $250 million a year.

Just again this is an evergreen product that just will continue to be available in the marketplace on an all-in basis through the IIROC channel.

Okay. Understood.

But there is an institutional funder as well. You are looking to raise money both…

Yeah. It’s available for…

… on the institutional side?

Yeah. It is available for institutional, probably, more attractive to private family offices or smaller institutions.

Okay.

The LP does feed into the evergreen or the -- yeah, they feeds into the evergreen vehicle. And as you may know about the structure of the product, the LP provides for a liquidity sleeve, which makes it attractive for the retail investors to be have flexibility with redemptions, which I think people would like to -- would benefit from than they are I think the final product quite unique.

Okay. Got it.

And then the third Instar infrastructure fund just what do you think in there in terms of timing and potential size?

Yeah. I mean, Graham, it’s Kevin.

Timing hasn’t announced on that yet. My guess is it’s probably somewhere in the next year or so.

And I’d say just typically in the industry and not specific to Instar, but you typically target a size of at least the last one. Those guys have been terrific managers of those funds.

So my guess is they will have some success on that launch at least a fund of the same size, but they haven’t targeted that yet nor timeframe. But I have had a guess…

Okay. What…

…I have had a guess when I say we are probably somewhere in the next year or so.

Okay. And then, obviously, a big uptick in your mutual fund gross sales when we look on a year-over-year basis.

Are there any funds in particular that are doing heavy lifting there or some sort of broad-based across the mandates that you mentioned?

Yeah. I mean, Graham as you know, we have had success pretty broadly with Global Sustainable Growth.

Global Select, which is the concentrated global strategy. Total Return Bond, which is it really depends upon strategy.

Global Convertible, which helps drive yield on a fixed income side. American Growth, SMidCap.

So we have had it. It’s been brought and so it’s not, and in their key categories they are really, really strong.

So it’s really been with the breadth of it and the channel breath is equally as impressive not just again one place that we are selling, but really across the Board.

Okay. And my last question just be the anti-beta product that you have.

Are you seeing any increased interest in that now that you are sort of perhaps in a stage in the cycle of the market were being more defensive is appropriate or perhaps is your sales team are they promoting that product a little bit more right now just to be aware?

Yeah. I’d say, it’s interesting Graham.

People do use it tactically right. Some smaller institutions in the U.S.

using it tactically and it’s just reminder but it’s a market neutral ETF that sorts the highest beta names in the market and goes along a basket of low beta names, right? And so when a market declined high bidder names tend to go down asymmetrically worse.

So 10% decline would see a typical drawdown of 17% and high beta. So that short basket really works what’s happened over the last year and a half as we have come to the pandemic, the high beta names have actually reclassified into the cyclical stuff.

It’s been more volatile. So think banks, think energy, et cetera.

So to the extent that people believe that that has played its way through and that that volatile shift and the value is over. If we hit into a market drawdown similar to the ones we saw a week or so ago, you will see that product do very well.

So you are starting to see people tactically use and we saw some pretty good size creates earlier in the month. So my expectation is when you look at some of the option books right now out there just in the capital markets that people are starting to position for what looks to be a little choppy or summer.

So I would expect that we will see some pickup there.

Okay. Good.

That’s it for me. Thank you.