Eric Colson: Alex, it’s Eric. What really interests us in this discussion is that change is going to occur here. Either people are going to pull back from Emerging Markets and reduce their allocation. They’re — or they’re going to look at their target allocation and have to re-up to that target and put money to work. So in our mind, there’s going to be money in motion. And when there’s money in motion, it gives us an incredible opportunity given the array of strategies we have. So, we’re not sure if there’s going to be an uptick or a downtick. But we definitely know people are going to have to rethink about their Emerging Market allocation, look at how they’re structuring it, using equity debt active, passive. And the marketplace is going through that right now, and it’s a great time for us to get out and showcase the breadth of Emerging Market strategies we’ve built inside the firm.
And on top of that, if they do reduce Emerging Markets, they’re going to go to higher value-added international or global strategies that have a higher allocation to emerging markets to pick up that exposure, which you wouldn’t see in a passive strategy. So again, it actually benefits, active international or global equity mandates, which we are very well positioned for. So, we’re just excited about that the topic is coming to market, and we’re starting to see that topic come out with institutional clients and consultants.
Alex Blostein: Interesting. C.J., a question for you maybe just around margins and expenses, a bit of a two-parter, but I guess, one, I know it’s — you guys are probably going through the budgeting processes. But any early thoughts on 2024 expense outlook, particularly around the nonvariable portion of the expense base? But also bigger picture at the Investor Day, and I think in the slides today, you sort of alluded to the idea that over time, the margin of the business was much higher than what you guys have currently kind of in the mid-30s versus low 30s right now. In the last decade, we’ve all been operating in a much more favorable market backdrop with probably higher market beta maybe than what’s on the come. But how do you think about ability to get back to that mid-30s percent margin if market tailwinds are less sort of robust than what we’ve seen in the past?
C.J. Daley: Yes. Sure, Alex. So first off, we’ve invested pretty heavily in sort of our new capabilities over the last couple of years. So I think we’ve seen a good amount of expense investment, which has obviously impacted our margin. And we shouldn’t underscore the effects of inflation as well and just the increase of cost of doing business where employee costs are higher as a result of inflation. Many of our vendors, including mostly data, technology vendors are increasing prices to offset those inflationary pressures they have. Our fee rates remain stable. And so the offset then is margin. We do — we are early in a budgeting process. I would expect us to continue to invest in distribution and marketing. I think a fair amount of the lift has been done, but there will be some more, and I can give you better clarity in January.
But I would assume normal inflationary plus 1% or 2 expectations for cost increases next year. And then getting back to the margin, we’re built to handle a much larger amount of AUM, and we have the capacity and the products to do it. The performance is there. And now it’s just about giving ourselves the time and being patient to capture that growth opportunity. And if we do, our margins will respond accordingly.
Operator: [Operator Instructions] And our next question comes from Michael Brown from KBW. Please go ahead.
