And again we’re seeing episodic events there. We’ve seen a couple of mandates already be awarded, but we are seeing it there. And finally, we continue to see activity across the private alternatives area. Our private credit investors, which we highlighted last quarter, which is now celebrating its 10th anniversary, it has a number of new vehicles and we’re seeing interest not just in the U.S. but also in Europe and Asia for products that they’re flagging as well as what we’re doing with CarVal. So I think it’s pretty well mixed across the horizon. I would just think that equities are probably a smaller component of the search activity from our perspective today. And so maybe let me turn it over to Onur for more color.
Onur Erzan: Yes. No, that was a great summary. We are very pleased with our institutional sales trajectory, positive sales growth, both sequentially and year-over-year. In terms of the segment dynamics, we continue to be very excited about our prospects in insurance. We continue to build that insurance worth of it. We made a new hire, Geoff Cornell, to lead that insurance sector with us along with existing very strong team and we are seeing strong engagement and demand from the insurance clients as we have much more insurance friendly solutions across the fixed income and private credit spectrum. I think that space will continue to be quite active. And I think our engagement is going to be heavy in that part of the market. And then as an example of that, the one new story in terms of what is new versus maybe a year ago, we started funding our new NAV lending solution, which was out of the PCI platform that Seth referenced earlier.
That’s a great example of private credits, some of the new innovation we are realizing in the market and using it with our insurance clients, starting with [indiscernible].
Dan Fannon: Great. Thank you.
Operator: We’ll take our next question from Luke Bianculli with Goldman Sachs.
Luke Bianculli: Hi, everyone. Good morning and thanks for taking the question. Appreciate the commentary on the fee rate earlier. If we could just dig into that for a minute, can you help us frame maybe how you’re thinking about the trajectory of the fee rate going forward? I’m just trying to square away how to think about base fee rate declines in recent quarters despite stronger equity markets, American Income Flows, which I understand to be higher fee rate and retail inflows versus institutional outflows, all of which I would have thought would have been tailwinds. So I would just like to get your thoughts there. Thanks.
Jackie Marks: Well, as I mentioned in my remarks, we expect the fee rate trajectory will continue to reflect the mix of organic growth and combined with market movements. We have — while we continue to enjoy a favorable mix from our institutional pipeline as the fee base is 80% higher fee and the active fee rate at 56 basis points is 3x the channel average, which we expect will be supportive of fee rates over time. But as I mentioned, fee rates down 2% in the quarter was really mix based.
Luke Bianculli: Got you. Okay. Thank you. One quick one. Appreciate the teaching slides on the retail business this quarter, always super helpful. You highlighted the client segment specialists. How do we think about the impact of the expected 2024 hires? And do you anticipate to keep up the same pace of hiring post 2024? And sorry, I know multipart here, but how would an eventual slowdown hiring, I guess flow through to the expense growth trajectory? Thanks.
Onur Erzan: Thanks. Let me jump in, Onur here. We basically pace our hiring based on the revenue trajectory. If you look at our U.S. Retail business along with our rest of the global retail business year-over-year, our revenue is trending up. I think it’s up around 10%. So as a result, we have the ability to digest some of the new hires and some of the hiring is more mixed than always net new headcount additions. So sometimes when we have attrition in different parts of the sales organization, our bias is to add more specialists to the mix. And then furthermore, as you think about it, we always take a forward-looking view. As Mark mentioned, we had seven consecutive years of growth and we are still in the early parts of our escrow when it comes to things like our ETFs, which are only 18 months old and we are now at $2.6 billion with 12 months.
So when we see these new products becoming available, obviously, we see the opportunity to add more resources to get more sales and revenue out of it. So overall, I think we can pace our hiring and expenses more in line with our revenue trajectory. I know it’s not as precise as an outlook or a guidance, but that’s our guiding principle.
Luke Bianculli: Appreciate the color. Thanks.
Operator: We’ll take our next question from John Dunn with Evercore ISI. Please go ahead.
John Dunn: Thank you. Maybe, just like on private wealth, you mentioned SMAs, Alts and ETFs, but maybe a little more granularity on where demand and gross sales are coming from?
Seth Bernstein: In private wealth, John? Yes. So in essence in private wealth, we have a very diverse product platform that replicates obviously the diverse asset allocations of our high net worth, also high net worth institutional and family office clients. In terms of demand, we are definitely pleased with the strong track record in raising Alts assets. From a timing in the year perspective, we had a heavier Alts product launch in the second, third and fourth quarter of this year versus Q1. That is quite different than what we had in 2022 and 2023, and that by the way, might impact sometimes the sales momentum. So in the second quarter, we have several important fund raisers, which we are pleased about like CarVal’s flagship funds coming to first closed.
We launched that strategy as an example. So overall, you will see the upward trajectory in the private Alts bucket in Private Wealth. Second, given the equity market uncertainty, clients appreciate some of the structural protection that Buffered Solutions provide and we have been innovating on the product side there both with external as well as internal products. Our new BUFC ETF is definitely a contributor to that. And then finally, taxes are evergreen as clients deal with greater capital gains. Our proprietary direct indexing, Tax Optimization Solution, PAT [ph] had a tremendous run, and we are now approaching $5 billion in that kind of strategy. So I would say broadly speaking, Alts, some of the more structured multi-asset kind of solutions as well as tax optimization in Tax-Smart SMAs like that.
John Dunn: Great, okay. And then, look, obviously, American Income has been doing great. Can you kind of contextualize, how investors think about it, in the current rate environment?
