Bradley Hays: Okay. As your net debt to EBITDA sits quite low, how does this play into or change your thoughts around the cadence of capital return or deployment?
George Aylward: Yeah. In terms of capital, again, we’re currently — as you’re pointing out, our level of leverage or encumbrance is relatively modest. We generate a good level of cash flow. We continually to evaluate how do we best deploy that, including in growing the business, which is fundamental to generating long term shareholder value, keeping the debt at reasonable and modest levels. And then again, the stock buybacks, which again, we’ve consistently done generally, maybe sometimes with some changes in terms of priorities within an individual quarter. So to us, they’re all important. And again, they’ll generally vary based upon relative attractiveness, i.e., how is our stock trading in a certain period, or what’s happening with interest rates as it relates to debt?
So we feel good that we’re very well positioned and we have that flexibility to really avail ourselves of different opportunities. And those do include the M&A transactions, which, while not fundamental to our strategy for long term growth, is something, as you know, we’ve consistently done over a period of time.
Bradley Hays: Okay. Great. Thank you. And then just one more question. Where do you see the best potential for flows, perhaps either specific asset classes or funds you’re feeling particularly strong about?
George Aylward: Yeah. We see — it’s a great question. I mean, the areas of opportunities, we do think on a — if we go through the pendulum, right, so I think on the retail side, we continue, and we said in our prepared comments, retail separate accounts continues to be great area of growth, as is ETFs. And a lot of our product development and introduction is really focused in on those areas. And we do continue to see opportunities on the retail separate accounts as well as on the ETFs, particularly actively managed ETFs. So that’s been a lot of areas. So we continue to see that great. But for us, institutional, in spite of the lumpiness that you’re seeing in this quarter where the outflows were elevated, and again, we had a late deposit in January that would — should have occurred in the fourth quarter, we see that as a good opportunity, particularly non-US.
Right. And we’ve highlighted that before, where is many of our managers and capabilities are not as well known. And we put a lot of our resources and efforts in terms of doing that. And that’s why we think we’ve seen some growth in the non-US client base. I think Mike cited 18% and continuing to have strong growth there. So I definitely think those are two areas that we’ve highlighted and we’ll continue to highlight as areas of growth. In terms of strategies, we offer a broad array because you could have certain — we’re seeing clients on the retail side going to that nice January we saw, and it was really nice to see a strong January, as we did, where certain people that were hoarding cash, in the fourth quarter, were finally redeploying into equity.
But simultaneously we saw strength in alternatives for people looking for non-correlated. So the reason that we try to focus on having diversity of different asset classes and strategies is because of the diversity in the client needs. So for us, in having 38 funds that are in the high star category, they’ll each have opportunities depending upon different client.
Bradley Hays: Okay. Perfect. Thank you very much.
George Aylward: Thank you.
Operator: Thank you. One moment for our next question. And our next question comes from Michael Cyprys of Morgan Stanley.
Michael Cyprys: Great. Thanks. Good morning.
George Aylward: Good morning.
Michael Angerthal: Good morning.
Michael Cyprys: Good morning. Hoping, we could maybe start off on the retail separate accounts. Maybe you could just elaborate on some of the areas that’s driving the improving strengths that you guys are seeing on the separate account side, maybe you could elaborate on which some of the underlying strategies that are helping lift that higher on a gross sales basis. And then on the private client business, maybe you could talk about the opportunity set that you see over time to further expand that part of the business.
George Aylward: Sure. On the first piece, and then Mike will have some additional color. So retail separate accounts have been consistently strong for us. So we actually had a pretty much a nonstop series of quarters of inflows until a little bit of breakage in the doldrums of the market. So we’ve consistently had growth, and I think as Mike has pointed, it’s gone from about 16% of our assets five years ago to a quarter of our assets today. So it’s always been a growth area for us. Our greatest strength has been in the small caps, the SMIDs and the Mids. That’s still a good opportunity. We’re actually seeing that as well in July in term — and January in terms of what people are looking to. We also know the reopening of some of our small cap strategies as well.
What we’re also then looking to expand. So we have other offerings on the fixed income space and we’re continuing to develop some additional ones. So what our hope is to continue to have the strength and the continued positive flows with our existing strategies, which were probably overweight equity, but really trying to expand that offering set from some of our fixed income strategies that don’t have full availability at the intermediaries yet and continue to build that out. So we’re kind of very optimistic about where we think the opportunity set there is. So Mike, you want to come on to that and then private client?
