Patrick Davitt: Thank you.
Operator: Your next question for today is from Ken Worthington with JPMorgan.
Ken Worthington: Hi. Good morning. Thanks for taking the questions.
Christopher Donahue: Hi, Ken.
Ken Worthington: Maybe first, Tradeweb announced the acquisition of ICD, which follows BlackRock’s acquisition of Cachematrix how prominent are these platforms or portals in money market fund distribution? And how fast is the use of these platforms growing? And then as we tie it into you, what portion of your money market fund sales come through these portals?
Christopher Donahue: So the portals have been a long-term growing use. And I don’t know what our percentage of assets coming through portals is. But just about every one of the clients on the institutional side that are corporate are using various portals. And I don’t have more information on how we break down. As you know, we break our information done by institutional and quote, retail, which is basically a broker-dealer. But I don’t know the numbers by what comes through what platform.
Ken Worthington: Okay.
Deborah Cunningham: Okay. Maybe to add to that for just a second. On the platform side, from a trading perspective, for instance, with Tradeweb, which I think was maybe the beginning part of your question. We have very little, less than 5% in what we do on those types of platforms. We are much more of a voice-to-voice type of trading firm. We feel like we get better execution. We feel like we’re better received from a content and expectation standpoint, and this kind of endures us a little bit more when there are special things that come to the market. We feel like that helps us from a positioning perspective to be able to be part of those more esoteric types of products that come to the market. That is not the market norm. I’d say the market norm is probably over 50%, but it’s mostly indicative of smaller players, not the larger players.
I think most larger players like to have the relationship and the voice-to-voice contact that is the way that we operate our trading business from an FHI standpoint. As far as the portal distribution for our money market funds, we are on basically all the portals that are out there. So to the extent that the portals continue and maybe they consolidate to some degree from a — from an ownership perspective, we’re not looking at that as problematic. And again, I agree, I don’t know the percentage that Chris was mentioning as well, but it is not a very large portion of the business compared to other channels.
Christopher Donahue: And just to add to that, the open architecture is a key part of those portals, I guess, obviously, but we don’t expect any change in our business, for example, as a result of the ICD transaction.
Ken Worthington: Great. Thank you. Great. Then maybe on strategic value dividend, that product sort of has been in outflow, maybe even elevated outflows for a couple of quarters. I think the pitch on that fund is sort of income paid monthly and maybe some defensiveness. Has the value proposition for strategic value changed in the higher rate environment? And maybe if not, what’s sort of driving sort of the elevated redemptions that we’ve seen there?
Christopher Donahue: Well, unfortunately, one of the things driving the elevated redemptions is it’s artificial inclusion in the wrong Morningstar — in any category in Morningstar. That fund simply does what it does. And it’s going to return a 4-plus percent return and have 4%-plus increase in dividends by the companies that it buy. So when we go through that fund — when you look at that fund on the names basis, you’ve got to evaluate whether that work value should really be in there under those rules. So that’s going to be looked at. So that is a very, very, very unique fund. One of the challenges with that fund is when it is at the very, very top of the Morningstar category, which doesn’t really tell you what it does, then it gets assets in.
And people think that’s the kind of fund it is, but it’s not exactly like that. It is the way I described it, a dividend and dividend growth fund. Now in higher rates like you’re saying consistent, that is a factor. But don’t forget that this fund specifically allows some FAs to step out the yield curve a little bit or step into the market a little bit and not leave — not go all in. And so we still see gross sales in that fund. But as I mentioned, the nets are still negative, although they are, as the kids like to say, less worse this quarter than the prior quarter.
Ken Worthington: Okay. Thank you very much.
Operator: Your next question for today is from Brian Bedell with Deutsche Bank.
Brian Bedell: Thanks. Good morning. Thanks for taking my questions. Maybe just going back to the money fund and the environment, and thanks for your comments, both Chris and Debbie on that. If you had to choose an environment that you think would be best for just the money market business from an inflow perspective, say, over the next one to two years, do you think a gradual easing cycle, even if it’s delayed, would be better or a more stagflationary environment, not to say that that’s the environment we’re going to be in. But a stagflationay environment, say, closer to the 1970s, 1980s, where the Fed cannot cut, the growth is limited, equity multiples might be lower. Just in that type of environment, how would you compare that with the gradual easing cycle for the money market?
Christopher Donahue: Brian, thank you. I’ll answer that first, then I’ll let you give — let Debbie give a more technical and marketplace answer. My answer is that since money market funds are the eighth wonder of the world, they’re always a wonderful product. And we’ve gone through 50-some years of these cycles and people always need their cash taken care of. And we always gain more clients and don’t lose clients. Specifically, though, the main thing to me in terms of environment for the money fund is the word measured. So if it’s measured up, that means slow and deliberate. If it’s measured down, that means slow and deliberate. Measured is always better as an environment for the money fund. Right now, because we have an open retail trade and can look forward to a stronger institutional trade, it’s almost nirvana for money funds. Debbie?
