Brian Bedell: And do you feel you have the internal capacity to execute that strategy right now? Or do you think bolt-on M&A would accelerate that?
Christopher Donahue: Well let’s put the question this way first. We have the toys to do it right now. We would love some bolt-ons. Tom has talked before about how we could accelerate the real estate efforts, place buildings, Saker mentioned it on this call already as a viable thing in the United States. But we’re not hard to throw on something like that right now, we would love to do it. So yes, bolt-ons would be good, but they are mutually exclusive. Just because you’re looking for a bolt-on or would do it doesn’t mean that you don’t have the toys to be able to get to the future anyway.
Brian Bedell: Okay. Great, fair enough. Thank you.
Operator: Your next question is coming from John Dunn with Evercore.
John Dunn: Thank you. For the fixed income franchise, how do you think that the next phase of the rates picture affects you guys? It seems like you should be beneficiary. What are like the big puts and takes for the major product areas?
Christopher Donahue: Well, there are several there. I’m going to start off with Munis. And the record here in terms of the performance of both the funds and the SMAs has been excellent. And we’re seeing increased interest there, including in CW Henderson in terms of them growing assets under management. So as people look for bigger yield, that’s one place to go. In other places, our core strategy. Obviously, total return bond fund and the core SMAs where the records are simply outstanding. And that’s why we did the ETF with that type of strategy. Sooner or later, the excellent history and our opportunistic high-yield gets more and more visibility. It’s all a question now of which companies you own and whether you own the ones that are having a lot of trouble refinancing, and we think we do a good job on the credit analysis there.
So if you then say, okay, well what about across the spectrum of maturities and you look at it, you got money funds and Microshorts, the Ultrashorts, the intermediates, all the way out the spectrum, we have reliable, solid product that when people want to really gauge and ladder their fixed income approach, we have the answers, and we are very helpful to them when they want to do that. So the fixed income franchise is very strong, and I think very, very well set up for the future.
John Dunn: Got you. And then as we seem to be going into a more normal environment over the course of 2024, what’s kind of the outlook for Hermes strategy specifically, both in the U.S. and the U.K. and retail and institutional?
Christopher Donahue: I’ll let Saker take a swing at that one.
Saker Nusseibeh: So if you break it down. In our equity franchise in the U.K., we have a large exposure to emerging markets. That’s an exposure that’s been somewhat out of favor, as you know, if you look at the performance of — the emerging markets, particularly China versus the rest of the world, it tells you why. We have two kinds of strategies there. One is an outstanding over the strategy, which we have we’re running here and another one by a separate team, which is one of the best performing value strategies. Now our contention is at some stage, things get so attractively valued that they will see some more inflows. And as we see more inflows this year come back to, particularly with the general environment worldwide, we would imagine that asset allocators would put more assets into those strategies.
We have other equity franchises, the thematic funds of biodiversity, the impact and so on, and we would expect people to continue to want to allocate them. If you look at our fixed income, our teams continue to see good demand, as you’ve seen from our release, and we expect that flows to continue. So I’m happy with that and direct lending we’ve already covered. And we’ve already talked about the pipeline, which is very strong in our alternative market franchises. So none of this is a prediction, obviously, because you can’t predict, but that’s how I would imagine the market to behave as we move forward in this market environment because of the tough market environment for the last couple of years.
John Dunn: Thanks very much.
Operator: We have reached the end of the question-and-answer session, and I will now turn the call over to Ray Hanley for closing remarks.
Raymond Hanley: Thank you, Holly, and that concludes our call. We thank you for joining us today.
Operator: Thank you. This does conclude today’s conference, and you may disconnect your lines at this time. Thank you for your participation.
