Question-and-Answer Session
Operator
(Operator instructions) Our first question today will be coming from the line of Craig Siegenthaler of Credit Suisse. Please go ahead with your question sir.
Craig Siegenthaler – Credit Suisse
Thanks and good morning. Just a few questions here, first for Tom on Parametric, we are seeing a little bit of a tale of two cities with institutional channel driving strong flows with some deterioration here in the retail corporate accounts channel, can you provide a little bit of commentary on the divergence?
Tom Faust
Well, I think it relates to the specific products. The institutional success that we are seeing today is largely in emerging market equities equity products. That is not a product that they offer in the SMA channel, the SMA channel products they have consist of tax-managed core equity and overlay products. The weakness that they have seen or we have seen, are seeing, really relates primarily to their tax-managed core product, which in essence is the way to purchase data to the stock market as well as a way to generate tax losses. You think about where we are today, where equity market data is not something that many people are looking for and where, at least for the time being, tax losses of not something that many people see it having great value, probably not a surprise that they have seen somewhat of a decline in that business, but on an overall basis, Parametric continues to be very strong.
Craig Siegenthaler – Credit Suisse
Understood. And then just a follow up here for Bob. Just looking at your distribution service fee revenues, I believe distribution revenues are really earned off of just B and C class shares, and it is earned off the AUM, and the service fees are really earned off of A, B and C class AUMs. But when I track that sequentially, I came to kind of 15% decline. But the declines in revenue is actually a little greater, it is actually a little bit about 20%. Just wondering if there is anything unusual which would have caused an unusually low decline in those revenue items or is my math wrong?
Dan Cataldo
I think – this is Dan Craig, conceptually, it sounds like you have got it right. The distribution and service fees are largely driven by the fund AUM that pay those fees. So, I would go back and double check the math and take a second look, because I wouldn't expect to be much variability between the average AUM levels in those funds and those fees. There is one component of the distribution fees which is sales based, and that is underwriting fees, but that is a fairly small component of that.
- To read the full transcript on Seeking Alpha, click here »
