And then there’s a whole window of work that we do around the US curve, the Euro curve, and then the other foreign currencies. And then there’s also a mix of duration — clean duration we put on through treasuries and some of the convexity products like the agency MBS. So there’s a wide range, but it’s an active discussion, I’d say, at ALCO, and one that we think will both be — we think of it both on an economic basis, but also on a risk management and protective basis, that we’ll have, I think, quarter-to-quarter.
Ebrahim Poonawala: Got it. Thank you.
Operator: Thank you. Your next question comes from Steven Chubak from Wolfe Research. Your line is already open.
Steven Chubak: Hey, good afternoon. Thank you so much. Good afternoon. Eric, I want to ask a follow-up on the new revenue disclosure. In the past, you spoke about the level of gross asset flows that would be needed to offset natural attrition in the business. In a similar vein, I was hoping you could frame the level of gross revenue wins that are required to offset natural attrition, recognizing per, I think it was Brian’s earlier question that, fee rates will certainly vary depending on new wins, but any way you could frame it in that context would be really helpful?
Eric Aboaf: Yeah, here’s what I described. You know, in the past we’ve talked about AUC/A wins. We had talked about $1.5 trillion of AUC/A wins a year. That’s kind of a — kind of volumetric benchmark. And as some of the discussion we’ve had, typically we’ve been winning on average higher than the current fee rate and so you can kind of work through that. On the fee revenue side and this is really around servicing fees, our goal for this year, 2023 is to deliver about $300 million of servicing fee wins. And you can compare that to the $5 trillion of — sorry $5 billion of servicing fees for the year and that kind of gives you a sense for I’ll call it gross revenue wins. As Ron described, we’ve got a series of initiatives, some of which are already playing through around adding to sales capacity, sales effectiveness, product feature functionality, and so forth.
And part of the disclosure that we provided just last month was that, while $300 million of servicing fee wins is appropriate for this year, we’d like to get closer to $350 million to $400 million next year. And again, you can kind of compare that to the $5 billion of servicing fees, and that kind of gives you a sense of gross fee revenues. I think the follow on work you’d want to do is, just think about the other drivers of servicing fee revenue growth on a net basis, right? There is typically some amount of attrition. We said we’d like to have retention at 97%. So you can think about 3% servicing fee attrition, that’s about $150 million a year, is a way to compare the gross wins versus the gross losses. And then there’s some amount of fee headwinds, which is about 2% a year that we’ve described.
So what we’re trying to do is create clarity for all of you on the elements of that growth — kind of the growth algebra. I’ll say it in an analytic manner, so that you can see where we’re really focused. And every one of those levers matter. We have tense efforts on each one of those, but it’s that mix of activity and the sales, the servicing fee, sales in particular, that will help us then deliver core organic growth from year to year to year. And a good way for, I think, us internally to be clear about what we need to accomplish and externally with you all as to what the bar is for good organic growth and success.
Steven Chubak: No, thanks for that color, Eric. And if I could just squeeze in one more clarifying question. There was a lot to unpack in the response to Ebrahim around Capital Management. It does appear, given the 4Q buyback level, assuming you execute on the $4.5 billion in its entirety, you’ll be at the lower end of that 10% to 11% range of CET 1, recognizing there’ll be a pull-to-par benefit. But should we be anchoring to the 80% to 100% payout that you guys have managed to in the past, just recognizing that there’s not as much excess if you’re going to run at those levels?
Eric Aboaf: I think for the rest of this year, the analytics I’d encourage you to do is to think about where we ended third quarter, kind of the middle of the range and that’s not necessarily a point, but there’s a range to the middle of the range. For fourth quarter, there’s pull-to-par, there’s RWA management. That gives us quite a healthy amount of buyback. And I think the continuation of something that’s quite accretive to shareholders, that is substantial in terms of capital return. I think once we get to the middle of the range, then we’re more likely to be that over 80% level of earnings. But I think that’ll be probably how we think about next year. But that’s next year. I think there is — I think we have good visibility into a good and healthy amount of capital return and comfortably over what we’ve committed to, I’ll call it the medium term.
Steven Chubak: Really helpful, Eric. Thanks for taking my questions.
Operator: Thank you. Your next question comes from Mike Brown of KBW. Your line is already open.
Michael Brown: Hey, great. Thank you for squeezing me in. So, multi-part question on the asset management business. So, first, it was just great to see the money fund flows come in this quarter and you mentioned that you believe there were some market share gains there. Can you just touch on what contributed to those gains and maybe some thoughts on the coming quarters? And then I look at the equity side, and consistent with the industry, there was pressure there on the flows. What’s your thoughts on maybe when investor sentiment could improve and flex there? And then just last part here, when you take a step back and you look at SSGA today, is there anything strategically that could be interesting to you from an M&A perspective to help bolster the asset mix or accelerate some of the future growth potential in the business? Thank you.
Ronald P. O’Hanley: Yeah, Mike, it’s Ron. So lot there in your question. I think, on the cash business, I mean, this is a core competency that we’ve had for a long time, and it’s also we’ve built up the capability both on the investment side and really on the distribution and channel side. So we’ve got a distribution and, if you will, kind of hooks in the water in many different pools and that’s including by the way, lots of connectivity into the core custody business. So as you’ve seen, for example, rotation from deposits, we’ve captured some of that in the money market business, but the — a lot of it — most of it has been external, most of it has been around investment performance and kind of being where the money is flowing.
