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Greetings, and welcome to the AMG Second Quarter 2026 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Patricia Figueroa, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us today to discuss AMG's results for the second quarter of 2026, Before we begin, I'd like to remind you that during this call, we may make a number of forward-looking statements, which could differ from our actual results materially due to a number of factors, including those described in today's earnings press release and our most recent Form 10-K and subsequent filings with the SEC. And AMG assumes no obligation to update these statements.

Also, please note that nothing on this call constitutes an offer of any products, investment vehicles or services of any AMG affiliate. A replay of today's call will be available on the Investor Relations section of our website along with a copy of our earnings release and reconciliations of any non-GAAP financial measures, including any earnings guidance provided.

In addition, we have posted an updated investor presentation to our website and encourage investors to consult our site regularly for updated information.

With us today to discuss the company's results for the quarter are Jay Horgen, President and Chief Executive Officer; and Dava Ritchea, Chief Financial Officer.

With that, I'll turn the call over to Jay.

Thanks, Patricia, and good morning, everyone. Today, AMG reported another quarter of record results. including the highest second quarter earnings in our company's history. Adjusted EBITDA of approximately $316 million and economic earnings per share of $8.29 grew 44% and 54% year-over-year, respectively, reflecting the strength of our diversified business and the ongoing execution of our strategy.

Assets under management increased to a record $942 billion, driven by net inflows in markets and setting the stage for ongoing earnings growth momentum in the second half of 2026. We continue to generate strong organic growth with $13 billion in net inflows in the quarter and $56 billion in net inflows over the last 12 months.

Importantly, these figures understate the exceptional momentum in higher fee, higher margin alternative strategies, which attracted $29 billion in net flows in the quarter and approximately $100 billion over the past 12 months.

Given this significant growth and our increasingly attractive business profile, we continued to repurchase shares at an elevated pace, deploying approximately $189 million towards repurchases in the quarter and approximately $375 million in the first half of 2026.

The momentum across our business highlights the successful execution of our strategy and is a result of the ongoing evolution of our earnings profile towards alternatives. Today, alternatives account for more than 60% of our earnings, and this contribution is expected to grow meaningfully over the next 12 months.

As we have discussed in prior calls, more secular trends continue to drive our organic growth profile. First, the accelerating client demand worldwide for secondary strategies across private markets. Second, the ongoing client demand for infrastructure strategies broadly. Third, the growing demand for absolute return strategies within client portfolios. And fourth, the continued expansion of tax-aware investing.

Together, these four growth areas: secondary solutions, infrastructure, absolute return strategies and tax-aware strategies; have been the driving force behind the $100 billion in net inflows into our Affiliates alternative strategies over the past 12 months.

Looking ahead, we expect ongoing strength in alternative strategies as clients increasingly seek differentiated sources of return and diversification against the backdrop of a more complex market environment. With 5 consecutive quarters of alternative-led net inflows so far and increasing exposure to structural growth areas, AMG is well positioned for sustained organic growth and earnings momentum.

More broadly, over the last 12 months, our assets under management have increased by approximately $171 billion or 22%, including $69 billion as a result of new affiliate investments. Following an active first half, including the completion of our investments in BBH Credit Partners, HighBrook Investors and an incremental minority investment in Garda Capital Partners, our pipeline remains strong.

In the second quarter, we saw a notable increase in new investment opportunities, including a number of high-quality independent firms managing alternative strategies, and that trend has continued into the third quarter. We are excited to execute on this expanded opportunity set. And we see meaningful potential to form new partnerships that further diversify our business and drive earnings growth.

Our reputation as a strategic partner that can magnify the competitive advantages of independent firms while preserving their independence, continues to distinguish AMG in the marketplace. No other institutional partner can match our 30-plus year track record in meeting the needs of and magnifying the opportunities for independent firms, which is why AMG's unique approach continues to strongly resonate with prospective Affiliates.

And given our competitive differentiation, our robust capital position and our strong pipeline of new prospects, we have a sizable opportunity to drive additional earnings growth and further evolve our business profile through new investments.

AMG's business is highly diversified across 40 Affiliates operating in private markets, liquid alternatives and differentiated long-only strategies. This unique business profile generates significant unencumbered cash flow, enabling us to navigate periods of uncertainty and changing market conditions while also making accretive investments in new and existing Affiliates.

In addition, given our forward growth prospects and the strength of our capital position, we have been a buyer of AMG shares in size, repurchasing more than 10% of the company's shares outstanding in the last 12 months and nearly 25% since the beginning of 2024. And we expect to continue to take advantage of this opportunity, especially during periods of dislocation in our share price.

Our attractive business profile and our ability to invest substantial capital in the areas of highest growth and return across new and existing Affiliates and share repurchases provides us with the opportunity to continue to generate a long-term compound annual growth rate and economic earnings per share of between 15% and 20% as we have done over the past 5 years.

And given the ongoing successful execution of our strategy, that growth rate has accelerated. In 2025, we generated growth in economic earnings per share of more than 20%. And we expect that growth rate to be approximately 40% in 2026.

As we look ahead, our capital allocation decision-making will continue to be, by far, the most impactful element of our strategy. We expect our cumulative free cash flow over the next 5 to 7 years to approximate our entire current market capitalization, enabling us to continue to deliberately evolve AMG's business towards areas of growth in our industry.

And with our unique partnership-centric cash-generative, return-focused model, we will continue to deploy that capital with discipline, further diversifying and enhancing our earnings power and our ability to create long-term value for shareholders.

And with that, I'll turn it over to Dava.

Thank you, Jay, and good morning, everyone. In the second quarter, AMG's business momentum continued to increase. supported by strong organic growth, record assets under management and accelerating year-over-year earnings growth, which have together resulted in a record cash flow generation in 2026.

Our results underscore the benefits of our diversified affiliate model, the positive impact of our strategic focus on areas of secular growth and the cumulative impact of our disciplined capital allocation decisions.

As we look ahead to the second half of the year, we see ongoing organic growth momentum at our Affiliates, managing alternative strategies. And given our strong balance sheet and record cash flow, we expect to continue to deploy capital in ways that support long-term EBITDA growth and shareholder value creation, including through growth investments in new and existing Affiliates and return of capital through repurchases.

Starting with our results for the second quarter. AMG's AUM ended the quarter at $942 billion, the highest level in our history, representing a 7% increase from the prior quarter. Investment performance contributed 6% to AUM growth, driven by strong equity market gains and net inflows representing 1.5% of beginning AUM.

On an LTM basis, our AUM grew 22%, driven by the addition of new affiliates, positive investment performance and record net inflows for our alternative Affiliates. Over the same period, our fee-related earnings, which exclude net performance fees and catch-up fees, grew 39%, representing a growing contribution to EBITDA and further enhancing the earnings quality of our business. Overall, these results highlight the scale and diversity of our business and the ongoing successful execution of our growth strategy.

Turning to flows. AMG's Affiliates generated net inflows of $13 billion in Q2. This headline result understates the strength of the underlying flow profile and alternative strategies, which generated a record $29 billion of net inflows in the quarter as well as the positive impact of those flows on our earnings profile. Over the last 12 months, our organic growth has had an outsized impact on our EBITDA growth rate as net inflows and alternatives have enhanced our overall fee rate and margin profile.

Within alternatives, we delivered another quarter of record-breaking flows, including a rising contribution from private markets fundraising. Over the last 12 months, Net inflows in the category were approximately $100 billion, driven by the four key themes that Jay discussed, including secondaries, infrastructure, absolute return and tax-aware investing.

This flow profile further illustrates the positive impact of our evolving business mix as AMG's exposures continue to shift towards higher growth alternatives, building an even more durable foundation for organic growth and cash flow generation over time.

Our private market Affiliates raised $8 billion in the quarter, driven by a diverse set of Affiliates, primarily in infrastructure, secondaries and specialized areas where our affiliates have deep expertise. Institutional demand for our private market strategies remain strong, supported by durable client demand trends.

Fundraising activity was broadly distributed across multiple Affiliates, strategies, vintages and channels, illustrating the differentiated and diversified nature of AMG's private market offering.

In liquid alternatives, our Affiliates generated $21 billion in net inflows in the quarter with contributions from several Affiliates. Net inflows were positive across client channels with $16 billion of net inflows from wealth clients into tax-aware strategies along with $5 billion of combined net inflows from institutional and retail clients across both absolute return and beta-sensitive strategies.

The quarter highlighted the breadth of demand for our Affiliates liquid alternative capabilities as institutional and individual investors continue to allocate to strategies that can complement traditional portfolios through diversification, liquidity and less correlated return streams across market environments.

Our differentiated long-only equity strategies saw net outflows of $14 billion, but we expect flows in these areas to improve over the medium to long term, consistent with a generally improving trend we have seen in recent quarters and as the overall earnings contribution of these Affiliates within our broader business has decreased to 35%.

In multi-asset and fixed income, net outflows of $2 billion were largely driven by seasonal outflows from money market and short-duration fixed income funds. We expect flows in this category to normalize to historical levels of modestly net positive organic growth, but we may experience second quarter seasonality on a forward basis, given the increased exposure to wealth clients from the addition of BBH Credit Partners this year.

Overall, the quarter's flows highlight the benefits of our evolving business mix and the growing contribution of alternatives to our organic growth and earnings over time.

Turning to second quarter financial results. We reported adjusted EBITDA of $316 million, which grew 44% year-over-year. Fee-related earnings, which exclude net performance fees and catch-up fees, grew 39% year-over-year, driven by positive organic growth, investment performance, and margin expansion at some of our largest Affiliates.

Net performance fee earnings of $10 million in the second quarter were at the high end of our guidance range and increased $5 million from the prior-year period. In addition, we reported incremental fees of approximately $7 million, primarily related to catch-up fees at private market Affiliates.

Economic earnings per share of $8.29 grew 54% year-over-year, driven by these factors and the impact of share repurchases, which have reduced our average economic share count by more than 10% from the prior-year period.

Now moving to third quarter guidance. We expect adjusted EBITDA to be in the range of $315 million to $325 million based on current AUM levels, reflecting our market blend, which was down 2% quarter-to-date as of July 29. This includes recurring fee-related earnings of $315 million, up from $299 million in Q2 and no material private market catch-up fees and net performance fees of up to $10 million.

Based on this and assuming an adjusted weighted average share count of 26.3 million, we expect third quarter economic earnings per share to be between $8.43 and $8.71, the midpoint of which represents approximately 40% growth versus Q3 2025.

Finally, turning to the balance sheet and capital allocation. We continued to repurchase at an elevated rate with approximately 189 million in shares in the second quarter, bringing year-to-date repurchases to 375 million. For the full year, we expect to repurchase approximately 600 million, subject to market conditions and capital allocation activity.

Our year-to-date repurchases of 375 million, together with the retirement of our junior convertible trust preferred securities in January, a portion of which effectively acted as incremental repurchases; have reduced our economic share count by 1.8 million shares since the beginning of the year. In addition, with the completion of our investment in Garda and HighBrook in February, we have allocated nearly $800 million of capital in the first 6 months of the year towards growth investments and capital return.

As we enter the second half of the year, we continue to see an active pipeline of attractive opportunities to deploy capital in support of long-term growth. Our balance sheet remains in a strong position, given our long-dated debt, low leverage and access to our revolver. We recently extended the maturity of our $1.25 billion revolver to June 2031 with enhanced pricing and covenant terms.

Our balance sheet is further supported by a healthy underlying business, generating recurring and growing annual cash flow of approximately $1 billion on an after-tax basis and ongoing access to capital markets. As Jay mentioned, we are seeing increased early-stage new investment activity and our balance sheet is well positioned to execute against that active pipeline while also repurchasing shares.

Our second quarter results reflect both the continued momentum in our business and the advantages of AMG's Affiliate model. Looking ahead, we remain focused on executing our strategy, evolving our mix towards higher growth areas, investing selectively in growth opportunities with new and existing affiliates and returning capital to shareholders.

With a strong balance sheet, growing cash flow generation and a disciplined approach to capital allocation, we are confident in our ability to generate durable earnings growth and compound shareholder value over time.

Now we are happy to take your questions.

[Operator Instructions] And our first question will come from Bill Katz with TD Cowen.

Thank you for the updated financial guidance. It looks very impressive. So Jay, a question for you appreciate the broad nature of the flows. You mentioned a few things, secondaries, ARS, infrastructure and tax aware, I think most investors are probably focusing on the tax-aware side of the equation.

So maybe there, how do you feel about the sustainability of that? You did speak to a pretty broad flow contribution. There's been a lot of scrutiny on that of late. And then maybe the broader question underneath that is how you thinking about the liquid alts outlook at large as well?

Yes. Thanks, Bill, and good morning. Well, let me start with context here and focus on tax aware and then more broadly, liquid alternatives.

So let me start by just commenting on the broader industry trend. As we've discussed in various settings over the past couple of years now, we believe that tax-aware investing, it represents a structural mindset shift in individual investor behavior. And we also see this as a long-term secular trend that continues to strengthen.

And the evolution of it is really impacting the entire wealth management ecosystem. So this is not a phenomenon that's driven by a single firm or a single product. We see it as a durable change across the entire industry.

At its core, the underlying drivers, will they make sense because unlike tax-exempt institutional investors, individual investors have to fund their daily lives with after-tax dollars. So as a result, if an individual's investment objective is to grow its after-tax savings, the managers and advisers, they should at least take tax consequences into account when making their allocation decisions.

And this trend extends beyond liquid markets. It's evident in ETFs, it's evident in traditional tax loss harvesting strategies, evident in long short equity approaches and frankly, across a whole bunch of different asset classes, including private markets.

We see it in real estate, which has long been a tax-advantaged investment category for individuals and even private equity firms, they're expanding their offerings to through structures and products designed to help investors compound wealth more efficiently on an after-tax basis.

We see the effects of the shift visible throughout the marketplace. A large number of asset managers have either introduced or about to introduce tax-aware strategies. And you can see that reflected across the industry dialogue on this topic.

From our perspective, we're experiencing this trend most directly through AQR, but we're also seeing a growing interest in our Affiliates operating in real estate, infrastructure and energy transition or the underlying strategies they possess inherent tax advantages and are tax efficient for individuals.

So maybe to get more specific in answering your question, at the AMG level, these tax-aware strategies, they represent just over 10% of our earnings today. But maybe taking a step back now and talking more broadly about AQR, it's business profile. It's positively influenced by two of the four trends that I mentioned in my prepared remarks.

The first, we just discussed, but the second is the increasing institutional demand for liquid alternatives and absolute return strategies. Institutions are increasingly directing their alpha allocations to liquid alternatives, given the attractive risk-adjusted returns, the enhanced liquidity profile, compared to private market, say.

And more broadly, AQR is a scale provider of a broad range of compelling liquid alternative solutions, and that contributes to its appeal across both institutions and individuals on a global basis.

So from our perspective, we continue to see strong demand for AQR strategies across both institutional and wealth supported by the firm's long history of delivering pretax alpha. And to be clear, we continue to have a positive outlook on AQR's business momentum and their prospects.

And then to get to the second part of your question, just more broadly, in liquid alternatives, we feel really good about the opportunity. At the industry level, over the last 3 quarters, net inflows into liquid alternatives were at the highest level since 2007. And at the AMG level, nearly everyone of our Affiliates managing liquid alternatives, including Garda, Capula, Verition, Winton and of course, AQR, have seen net inflows over the past 12 months.

And over this period, excluding tax-aware, our liquid alternative organic growth rate has been over 15%, which was supported by both institutional and retail demand. So we're excited about both those trends, liquid alternatives and tax aware. Thanks for your question, Bill.

Our next caller comes from Dan Fannon with Jefferies.

This is [indiscernible] filling in for Dan Fannon. Touch on the quant strategies and their demand. Can you talk about the various affiliates and strategies that are seeing the most interest and if there are any capacity concerns across these products?

Yes. Thank you. Thanks for your question. Maybe, Dava, just start with our overall flow profile, and then I'll come back and follow up after that. .

Sure. So thanks for the question. And again, let me take it up a level and talk about the overall flow profile, and we can touch on a few of these themes sort of as go.

As we discussed, we're seeing the strongest momentum in the four key areas that are collectively driving our organic growth around infrastructure, secondary solutions, absolute return strategies and after-tax investing. Those are precisely the areas where we've been building exposure over time, and they're showing up clearly in our net flows and forward fundraising outlook.

These key growth areas drove our flows from alternatives where we saw a record $29 billion in inflows in the second quarter and nearly $100 billion over the last 12 months, and we're seeing these trends carry into July in both private markets and liquid alternatives.

By contrast, we continue to see some headwinds in our differentiated long-only business. We reported $14 billion in net outflows from equities this quarter, reflecting ongoing industry and performance headwinds.

While the long-term flow trend is improving, we certainly expect some volatility quarter-to-quarter, and we continue to see pockets of strength where Affiliates have demonstrated a strong long-term investment performance track record.

In multi-asset and fixed income, we had net outflows of $2 billion, which were largely driven by seasonal outflows from money market and short-duration fixed income funds due to tax payment timing. Given our recent partnership with BBH Credit Partners, we expect to see the seasonality going forward in the second quarter. However, we expect this category to return to its modestly positive organic growth in Q3.

Finally, it's worth mentioning that our recent flow profile is one of the key drivers that is fundamentally changing the composition of our business and our earnings profile. As a result, our business is now more than 60% alternatives, up from about 50% 18 months ago and 35% 5 years ago.

Our earnings quality has improved with a higher proportion coming from management fee earnings and increased duration of capital. And our EBITDA contribution from flows is growing about 2x faster than our asset-based organic growth rates suggest, given higher fee rates and margin expansion at some of our largest alternative Affiliates.

And then to get to your sort of second question on capacity. We have a number of large-scale liquid alternative managers. They run multiple strategies across multiple types of products. Obviously, in liquid alts, that's a key issue as to how to manage your investment returns and your capacity, our Affiliates have a long-standing track record of doing so.

And maybe to comment on just specifically on tax aware, the vast majority of those strategies for us are long-short equities. And in that product, it's generally an MSCI World Index or an S&P 500 index. So these are deep markets and very diverse. So they do come with a lot of capacity for those products.

[Operator Instructions] Great. This now concludes our question-and-answer session. Ladies and gentlemen -- actually, we do have a follow-up question from Bill Katz.

Okay. By -- but I'll take advantage of the opportunity here. You mentioned that you're seeing an acceleration opportunity on the deal pipeline. Just wondering if you could comment a little bit maybe a click in a layer deeper as to sort of speak to the kind of Affiliates? It sounds like more on the private market side, maybe what you're seeing there. And how does that pipeline sort of compare from a 10-year perspective today versus beginning of the year?

Yes. Yes. Thanks, Bill. Thanks for your question. Appreciate it. Yes. So on the new investment pipeline, the backdrop of this is that 2025 was one of our most active periods in our history. It was near record level of capital deployed. It kind of carried over into '26. We had a few new partnerships at the beginning of the year, HighBrook, I did a follow-on in Garda and we closed BBH Credit Partners. So we've already started this year off deploying about $175 million into growth investments in new and existing affiliates.

And as you noted in my prepared remarks, we have actually seen a meaningful increase in new investment opportunities in our pipeline that began really the tail end of the second quarter. It continues in the third quarter. It's a setup for a pretty significant pipeline for the back half of this year.

I think we believe, and it's hard to always know this, but it reflects the discussions that might have been delayed earlier in the year because of geopolitical uncertainty. So some of the first-half shifting into the second half, and we're currently working through that pipeline.

As you stated, we are focused on areas of secular growth. And in both private markets and liquid alternatives, we do have firms that we're speaking to in both of those areas. And that's also been reflected more broadly in the last several years of our new investment activity and frankly, in our profile at AMG.

And I'll just pause for a moment and say one of the notable things this quarter is that our long-only businesses at 35%, but our alternative business is at 60%, and we see that 60% going to 70% in a relatively short order.

If there's anything that surprised us in the most recent several years, it's just how fast that transition has occurred. We've gone from alternatives 5, 6 years ago at 35% to headed 70% here in a relatively short period. And we see that because we have the flow profile, as we discussed but we also have the new investment activity, and it's adding new Affiliates in both private markets and liquid alternatives.

Look, we're quite constructive on our new investment opportunity. We offer really some key benefits in the market today. First, we offer independent firms, the opportunity to have a strategic partner in AMG where we can magnify their advantages but also preserve their independence. That makes us relatively unique or maybe unique, and that compares really favorably to control deals as well as the more financial-oriented buyers.

We've got a great reputation. We're obviously a good supportive partner, and we operate across private markets, liquid alternatives and differentiated long-haul. So we receive a lot of inbounds from firms in all of those segments.

We've ourselves built proprietary relationships with a number of potential new affiliates and their advisers. We've even gotten referrals from existing Affiliates. So we feel pretty good about our opportunity set there and deploying capital over the next 12 to 24 months.

And then maybe just to remind you a few more things about AMG, we typically are looking for check sizes in that $100 million to $500 million. We may go above that from time to time. And when we look at our current pipeline, we actually have some sizable transactions in that pipeline. Obviously, we have to work through it and make sure that the returns are commensurate with high teens returns that we require.

And I'll just say one last thing is that we remain disciplined in our capital allocation decisions. Our goal is to ensure that we deploy our capital to the highest-quality opportunities. As I mentioned, we target these high-teens returns on new investments. We've been able to achieve that really over a long period of time, short and long period of time. And if we can't, we'll obviously continue to return capital through repurchases, which we've done at scale in the last several years. Thanks for your question.

This now concludes our question-and-answer session. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.

Greetings, and welcome to the AMG First Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I'd now like to turn the call over to your host, Patricia Figueroa, Head of Investor Relations for AMG. Thank you. You may begin.

Good morning, and thank you for joining us today to discuss AMG's results for the first quarter of 2026. Before we begin, I'd like to remind you that during this call, we may make a number of forward-looking statements, which could differ from our actual results materially due to a number of factors, including those described in today's earnings press release and our most recent Form 10-K and subsequent filings with the SEC, and AMG assumes no obligation to update these statements.

Also, please note that nothing on this call constitutes an offer of any products, investment vehicles or services of any AMG affiliate. A replay of today's call will be available on the Investor Relations section of our website, along with a copy of our earnings release and reconciliations for any non-GAAP financial measures, including any earnings guidance provided. In addition, we have posted an updated investor presentation to our website and encourage investors to consult our site regularly for updated information.

With us today to discuss the company's results for the quarter are Jay Horgen, President and Chief Executive Officer; and Dava Ritchea, Chief Financial Officer.

With that, I'll turn the call over to Jay.

Thanks, Patricia, and good morning, everyone. AMG reported record results for the first quarter with adjusted EBITDA of approximately $317 million, and economic earnings per share of $8.23, representing year-over-year growth of 39% and 58%, respectively. Rising demand for liquid alternative strategies and ongoing strength in private marks fundraising, generated record quarterly net client cash flows of more than $22 billion, bringing net flows over the last 12 months to $52 billion, an organic growth rate of 7% over the period.

In the quarter, given our confidence in AMG's business profile and growth prospects, we repurchased shares at an elevated pace, deploying approximately $186 million and bringing share buybacks over the past 12 months to more than $700 million, a reduction of 10% in our shares outstanding. AMG generated these excellent first quarter results against the volatile market backdrop, highlighting the value of AMG's differentiated model and the ongoing strength of our diverse business.

As we have seen over AMG's history, our business is resilient and well positioned to navigate periods of uncertainty and dislocation. AMG's highly diversified profile has once again demonstrated that resilience as we ended the first quarter in a position of even greater strength relative to the beginning of the year, with record assets under management and record fee-related EBITDA. And we have continued to build this momentum in April.

With 40 affiliates managing a broad range of private markets, liquid alternatives and differentiated long-only strategies. This is the type of environment where we expect AMG to not only weather a volatile environment well but outperform. Given that we have strategically evolved towards alternative strategies over the last several years, a number of important secular trends are driving our organic growth story today. In private markets, where our affiliates manage $148 billion in assets, we see opportunities for growth across all 11 affiliates, with the strongest momentum coming in 2 areas: infrastructure and real estate, where affiliates manage more than $60 billion, and secondary solutions where our affiliates manage approximately $50 billion.

We expect rising demand for infrastructure strategies. As infrastructure investment has become a global imperative due to population growth, the need to modernize aging assets and an evolving economy shaped by energy, security, supply chain realignment and the rapid growth of digital infrastructure, all against the backdrop of rising inflation. We also expect ongoing demand for secondary solutions across private equity, infrastructure and credit. Given the role such strategies play in underlying portfolio management for both GPs and LPs to address liquidity, manage ration and adjust exposures, attributes that are even more important in the environment today, given monetization headwinds in private equity.

Together, infrastructure and secondary solutions have generated substantial organic growth from both institutional and individual investors over the past 12 months. In liquid alternatives, where our affiliates manage more than $261 billion in assets. We are benefiting most from growth in 2 trends: institutional demand for absolute return strategies and the growing focus on after-tax compounding in the wealth channel. Absolute return strategies which account for approximately $180 billion in assets include multi-strategy, global macro, relative value fixed income and trend falling and are designed to generate returns that have low or no correlation to broader markets. They provide AMG's business with ballast relative to procyclical strategies in private markets and differentiated equities, enhancing the stability of our earnings over time.

For the same reasons, clients globally are increasingly attracted to these absolute return strategies, especially as the outlook for the macro environment has become more uncertain. As a result, we had a meaningful uptick in flows in the quarter driven by institutional demand for absolute return strategies with contributions from nearly all of our affiliates in liquid alternatives. And we expect continued organic growth momentum in these strategies.

In addition, within liquid alternatives, we are benefiting from significant client demand for tax aware long/short strategies. These strategies account for approximately $69 billion of our AUM in liquid alternative strategies or about 8% of AMG's business. And while tax loss harvesting has been a secular trend for decades, clients and advisers are increasingly attuned to the impact of their portfolio allocation decisions on compounding returns after tax.

AMG has benefited from this underlying secular trend through ongoing organic growth, which has been significant over the past year. As I mentioned, these 4 growth areas: infrastructure, secondary solutions, absolute churn strategies and beta-sensitive long-short strategies have driven organic growth in the quarter and over the past 12 months. Looking ahead, given the continued tailwinds in these areas, and our Affiliates' excellent long-term track records, AMG is well positioned for further growth.

As demonstrated over the past 5 years, our business is strong, diversified and dynamic. Through our ability to shape AMG's business profile and scale our earnings power by allocating our capital to investments in new and existing affiliates, we will further evolve our business towards areas of growth and return. Our unique approach and track record as a partner are continuing to resonate with the highest quality independent firms. We have had an active start to 2026 in this area. In January, we completed our investment in BBH Credit Partners, a leading taxable fixed income and credit franchise.

In February, we announced a new partnership with HighBrook Investors, a private markets manager operating in the real estate sector. And we also announced an incremental minority investment in Garda Capital Partners, an existing, highly successful affiliate operating and liquid alternatives.

Stepping back from the quarter and to take a longer-term view of our business and our strategy, over the past 5 years, we have transformed AMG and evolved our business profile in a way that we believe will benefit shareholders for years to come. During this period, our business generated more than $5 billion in capital, all of which through our disciplined capital allocation strategy, we have reallocated to both high conviction growth investments and meaningful return of capital to shareholders, demonstrating our commitment to long-term value creation.

Together, these strategic actions have resulted in exceptional earnings growth, generating mid-teens compound annual growth rate and economic earnings per share over the past 5 years. And this growth is accelerating. In 2025, economic earnings per share grew by more than 20%, and we expect that growth rate to increase to more than 30% this year.

As we look ahead, our capital allocation decision-making will continue to be the most impactful element of our strategy. We anticipate our business will generate significantly higher levels of capital cumulatively over the next 5 years, and we expect the impact of deploying it towards growth investments and capital return will further shape and diversify our business profile and fuel our earnings growth.

With our unique partnership-centric cash-generative return-focused model, we will continue to press our advantages, executing the same proven strategy with the same level of discipline that brought us here. Today, AMG's reputation, value proposition and capital flexibility have never been stronger, a powerful combination for our firm and for our shareholders.

And with that, I'll turn it over to Dava.

Thank you, Jay, and good morning, everyone. AMG entered 2026 with significant momentum, and our first quarter results reinforce that strength, highlighted by record net inflows and significant year-over-year growth in fee-related earnings, adjusted EBITDA and economic earnings per share. Our alternatives business continues to scale underpinned by strong organic growth from existing affiliates and further enhanced by the addition of several new high-quality partnerships. These results underscore the strength and resilience of our model as a result of the ongoing execution of our strategy to evolve the business towards areas of secular growth while remaining disciplined in our capital allocation decision-making.

Starting with our results for the first quarter. AMG's AUM was $882 billion, the highest level in our history driven by record positive net inflows for our alternative affiliates and the addition of AUM from new investments. Our business reached this record AUM level despite market headwinds from broader macro events.

Net client cash inflows of more than $22 billion marked our fourth consecutive quarter of positive and increasing net flows, driven by ongoing strength in alternatives. In liquid alternatives, affiliates generated $25 billion in net inflows, marking another record quarter with most of our liquid alternative affiliates, including AQR, Capula, Garda, Systematica and Winton, contributing to the strong result.

Flows were broad-based. We had net inflows from wealth clients of $15 billion into long-short tax-aware strategies, $6 billion in net inflows into absolute return strategies from institutional clients and $4 billion of inflows into retail products across both beta sensitive and absolute return strategies. This is consistent with broader industry trends of rising allocations to these strategies as investors value the role they play in portfolios across market cycles.

As momentum continues to build across channels, we believe AMG's diversified liquid alternative affiliates are well positioned to continue to attract new flows over time. Our private market affiliates reached $4 billion in the quarter, primarily driven by Pantheon and secondary strategies along with infrastructure fundraises at ARA, DIG and Qualitas Energy. On the heel of our record fundraising year in 2025, we continue to see consistent demand given these affiliates specialized strategies, deep institutional relationships and strong long-term track records.

Importantly, with multiple private market affiliates contributing across vintages, products and channels, AMG exhibits a more durable and consistent fundraising pattern, reflecting a structurally diversified model rather than reliance on any single fund raise, differentiating our private markets profile from that of others.

To give further color on our private markets profile, we have a distinctive strategic position in the industry. Nearly 90% of AUM managed by our affiliates in private markets is institutional, largely in drawdown style funds. These drawdown funds form the core offerings of our private market affiliates. Additionally, we have experienced growing demand for these strategies from wealth clients and we are well positioned with our differentiated product offering and capital formation solutions for affiliates to access this long-term trend.

Our affiliates private market strategies are well diversified across strategies, including secondaries, private equity, infrastructure, real estate and private credit. Our private credit exposure is low, representing approximately 3% of AMG's total assets today. Within private credit, we have limited traditional direct lending exposure given the sale of our stake in Comvest private credit business last year. More broadly, the credit exposure we have is more opportunistic in nature, including secondaries in private credit and structured credit and relative value in liquid alternatives.

We believe the current credit market environment is creating compelling long-term opportunities for these strategies. In multi-asset and fixed income, our Affiliates generated net inflows of $3 billion, mainly driven by BBH Credit Partners with additional contributions from Baker Street, Artemis, Beutel Goodman and GW&K.

Finally, in equities, net outflows of approximately $9 billion in the quarter reflected ongoing industry and performance headwinds. However, we continue to see pockets of strength in our differentiated long-only business, including consistent positive net flows at Artemis based on its excellent long-term track record of investment performance.

In aggregate, our first quarter flows highlight the structural advantages of AMG's diversified business model with a broad group of affiliates spanning strategies, asset classes, geographies and client channels, we were able to navigate shifting market conditions and trends while continuing to capture growth opportunities. As we further evolve our mix towards higher growth alternatives, the resulting incremental diversification enhances the resilience of our cash flows and positions AMG to deliver more consistent, sustainable organic growth across market cycles.

Turning to first quarter financial results. We reported adjusted EBITDA of $317 million, which grew 39% year-over-year. Fee-related earnings, which exclude net performance fees, grew 29% year-over-year, driven by positive organic growth, the positive impact of investment performance and margin expansion at some of our largest affiliates. Net performance fee earnings of $49 million in the quarter increased $29 million from the prior year, driven by Capula, Winton, AQR and ValueAct. Economic earnings per share of $8.23 grew 58% year-over-year, driven by these factors and further benefiting from the impact of share repurchases.

Now moving to second quarter guidance. We expect adjusted EBITDA to be in the range of $290 million to $305 million, based on current AUM levels, reflecting our market blend, which was up 5% quarter-to-date as of April 30 and including seasonably lower net performance fees of up to $10 million. Based on this, and assuming an adjusted weighted average share count of 26.7 million, we expect second quarter economic earnings per share to be between $7.60 and $8.01 the midpoint of which represents approximately 45% growth versus Q2 2025.

Finally, turning to the balance sheet and capital allocation. Building on an active 2025, we continue to execute our capital allocation strategy in the first quarter of 2026. With the January close of our partnership with BBH Credit Partners and the February announcement of our new investment in HighBrook and follow-on investment in Garda. In January, conversions related to our 2037 junior convertible trust preferred securities were fully settled in cash. The $124 million in conversion premium effectively represented the repurchase of 600,000 adjusted diluted shares and the share dilution associated with these securities has now been fully removed from our capital structure.

We repurchased approximately $186 million in shares in the first quarter. And for the full year, we expect to repurchase approximately $500 million, subject to market conditions and capital allocation activity. Our balance sheet remains in a strong position given our long-dated debt, low leverage level and access to our revolver. This is further supported by a healthy underlying business generating recurring annual cash flows that continue to grow.

These after-tax cash flows are at record levels, delivering approximately $1 billion annually. With these factors, we are well positioned to execute our growth strategy across all stages of a market cycle. We have ample capacity to both make growth investments and simultaneously return capital to shareholders.

Our strong first quarter results reflect the accelerating momentum in our business and the advantages of our highly diversified affiliate model. Looking ahead, we are excited by the breadth of opportunities in front of us as we continue to evolve our business towards higher growth alternatives. We will remain deliberate and disciplined in deploying capital. Investing in growth opportunities with new and existing affiliates while also consistently returning capital to shareholders, and we are confident in our ability to generate meaningful incremental value over time.

Now we are happy to take your questions.

[Operator Instructions] Our first question comes from the line of Bill Katz with TD Cowen.

Jay, maybe just pick up in some of your commentary. I think the investment community in the last few weeks has gotten mildly focused on AQR, just given some of the headlines coming out of Schwab, the short southeast, et cetera, it all seems to be noise to us. And it sounds like there's a lot of diversification from your comments today, which we appreciate the expanded discussion. Can you dig in a little bit further into maybe these 4 verticals of opportunity for growth? And then I was intrigued by your comments of April off to a good start. I was wondering if you maybe expand on that as well.

Yes. Great. Thanks for your question, Bill. So I'll start, Dava can help. We're going to talk about our flows and then maybe I'll circle back on AQR. So yes, the answer is our flows were broad-based, and they were along the lines of the 4 trends that I mentioned in our prepared remarks. Just to dimensionalize that in the quarter, we had $29 billion in alternative flows. That was a record for us. Over the past year, we generated $90 billion inflows into alternatives. And I know there's a temptation there always has been to focus on 1 affiliate or 1 element of AMG.

But AMG is truly a diverse business. These 4 growth drivers that I mentioned, infrastructure, secondary solutions, absolute return and tax-aware strategies. They're all powering the strong organic growth story and the $90 billion of flows into alternatives. Our flows were balanced across each of these 4 areas over the quarter and over the year with none accounting for a majority. So maybe I'll turn it to Dava just to drill down a little bit further contextualize some of this, and then I'll come back and address maybe some of the noise.

So just digging in a little bit further here. Our flow profile is really an output of our strategy. It aligns our business with areas of secular client demand trends and alternatives, and it continues to evolve our mix through organic growth and new investments. I'll double-click into each of private markets and then liquid alts.

Starting with private markets. Our private market affiliates raised capital through multiple strategies, vehicles and channels, which help produce a more consistent fundraising profile than a single flagship led model. That consistency is supported by durable client demand trends, most notably in infrastructure and real assets, secondaries and specialized allocations such as decarbonization and health care.

Our private market flows have been relatively consistent over the past 8 quarters, exhibiting about 18% annualized growth on average. As one of our largest and longest standing affiliates, Pantheon has been a consistent driver of that fundraising, supported by a scaled multi-product platform, particularly in secondaries. It's been recurring demand across vintages and has had meaningful contributions from institutional clients as well as within the wealth channel.

Alongside of that, many of our other private market affiliates are more specialized and tend to raise capital through more targeted fundraises across their focus areas. Given we have 11 of these private market affiliates, we're less reliant on any single affiliates capital-raising calendar, and this tends to produce a more consistent, durable overall private markets flow profile.

And based on what we're seeing today, fundraising and client demand are expected to remain robust with multiple funds coming to market across our private market affiliate strategies, including all the affiliates we just recently partnered with over the past 15 months.

Now turning over to liquid alternatives. We had $25 billion of flows this quarter, and flows this quarter were broad-based across both beta sensitive and absolute return strategies. Also broad-based across investor channels with institutional wealth and retail flows all coming through. This is consistent with other industry trends as investors are increasing allocations to these strategies as they've demonstrated a real role that they can play across market cycles. And these allocations are flowing to the largest managers, and here we're well positioned with several of our affiliates, like AQR, Garda, Capula and Verition.

Finally, it's worth mentioning that we've been experiencing positive mix shift over the past year as well, leading to an increase in our management fee rate and margin expansion at some of our largest affiliates, which has had a direct benefit to our EBITDA. By contrast, though, we have continued to see some headwinds alongside of overall industry and equities. We reported about $9 billion in net outflows from equities this quarter, in line with average levels over the last 12 months. But when taken together with $3 billion in net inflows in multi-asset and fixed income, we're seeing an improvement in our differentiated long-only net flows. Across these affiliates, we see pockets of strength, including an Artemis, where strong performance has led to positive net flows and at BBH Credit Partners, where we see ongoing demand for fixed income strategies.

Yes. Great. Thanks, Dava. So I'm just going to comment on one thing here, which is in addition to the strong alternative flows. As we look out for the next 12 months, we actually think that our long-only outflows seem to be getting better. So our flow story, just all around for the moment is positive relative to what it's been in the past. We had $52 billion of net flows for the last 12 months, and that trend seems to be getting better as we look forward.

Now I'm going to take the second part of your question and just address AQR for a moment. And maybe I'll just start with a bit of a fun statement, which is, over the past 15 years, I've answered a lot of questions on AQR, mostly on these earnings calls. Virtually, every time I answer the question, I start and will end as well with one observation. AQR is an incredibly innovative business. Their success is rooted in its decade-long reputation and history of this innovation. They deliver strategies and products that meet client's objectives that can be used in portfolio construction and that can produce alpha.

So AQR's reputation is long-term investment track record across its broad range of strategies today, including absolute return, beta-sensitive, long only. It's driving demand across all of its client types, institutional, wealth, retail. The firm's primary goal is to deliver institutional caliber, pretax alpha to all investors. And for individuals, AQR has a focus on compounding after-tax returns. This is a very large addressable market. It's been around for a long time, and AQR is one of the participants in the market. We continue to see strong demand for these strategies, including in the second quarter. And we are not aware of anything that changes our positive outlook for the firm or their strategies and underlying trends supporting its ongoing business momentum.

These tax aware strategies, however, they only speak to one aspect of AQR's broad platform and its continued innovation. The firm has generated inflows across a range of strategies, including in this quarter. And we also are very excited about their absolute return strategies and the prospect for additional flows into these strategies, which have excellent performance and are gaining interest from all types of clients, including institutions.

Now I'd like to take it back to the AMG level. Long short strategy in wealth account for just 8% of our assets under management. As I mentioned, our Affiliates generated $90 billion in flows into alternatives, a minority of those flows came from tax-aware strategies. AMG is highly diverse, and this one trend is just 1 of the 4 major drivers of our growth. Again, these 4 trends being infrastructure, secondary solutions, absolute return strategies and tax-aware strategies. Again, all 4 balanced across -- all 4 are driving our growth and none are accounting for a majority.

So then the last question you asked me is April. Interestingly, during the first quarter, we had, as others did -- we had to face reasonably significant volatility in the market and beta was down in the quarter, yet, AMG had record AUM and record cash flow and record earnings in the quarter. In April, we have seen strong beta. And because of the balance in our business, our assets are at another all-time high. Thanks, Bill. I appreciate the question.

Our next question comes from the line of Alex Blostein with Goldman Sachs.

I appreciate all the detail and extra discussion on the flow backdrop. I wanted to double-click into the wealth channel. You guys had quite a lot of spas with Pantheon's retail product focused on secondary invest markets, how is the appetite for these kind of products in the channel today given the turbulence we're seeing in the credit part of the business. Obviously, that's not a part of your model, but just curious if you're seeing any spillover effects of that into other parts of the wealth channel?

And then maybe as part of that hit on the road map of additional you're likely to launch in the coming 12 to 18 months as we think about further diversifying your flow base?

Yes. Great. Thanks, Alex. I think that's an excellent question. We'll take it in a few different pieces. We'll talk about the wealth products, and then I'll circle back. I'll let Dava do that, then I'll have Dava do that, and then I'll come back and do Pantheon more broadly and then other products that we're looking at introducing.

Great. Thanks for the question, Alex. So we remain constructive on the secular trend. And while we're monitoring the broader industry dynamics, wealth investors and advisers continue to broaden portfolios beyond traditional allocations and evergreen structures are an increasingly important way to access institutional quality alternative in a more flexible wrapper.

AMG's focus on delivering the right strategies in the right structure, meeting clients where they are on liquidity preference, access and portfolio needs. We believe AMG is differentiated in this channel, providing investors access to independent affiliates and their breadth of offerings across private markets and alternative credit. We see the most compelling opportunities today in differentiated strategies, led by credit secondaries.

Liquidity needs, duration management and slower exits are driving greater secondary activity, while market noise and headline risks are creating pricing dislocations that can offer seasoned assets at attractive valuations. We also see opportunity in asset-backed credit solutions where structural protections and collateral quality support capital preservation. Ultimately, the key to long-term success is education and setting expectations while staying disciplined. Education remains a critical enabler of growth for evergreen private market solutions. While these vehicles expand access, their structural features differ meaningfully from traditional private market funds and require deeper understanding. We are committed to providing scalable education that equips advisers to understand these mechanics, assess suitability and thoughtfully integrate evergreen solutions to support clients' long-term investment objectives. We believe these products can be a compelling option for wealth clients seeking diversified access to alternatives over a long time horizon.

Let me walk you through a couple of the main products that we have here on the platform. First, P-BUILD. This is the AMG Pantheon Infrastructure Fund, which we launched last year, and it's still in its seed phase. The portfolio is ramping nicely, and we expect it will benefit from the rising demand for infrastructure strategies as infrastructure investment has become a global imperative. P-BUILD is uniquely positioned to combine the benefits of infrastructure investments, including the potential for capital appreciation, yields, lower volatility and portfolio diversification with the added advantages of secondaries, which can offer greater risk mitigation, shorter investment durations and more immediate distributions compared to traditional infrastructure investments.

The next one is P-SECC, the AMG Pantheon Credit Solutions Fund and it's still relatively new launched within the last 2 years. The fund's investment approach is first of its kind, focused on private credit secondaries. Since inception, it's been among the top performers in its peer set. And given broader market dynamics, we believe the current environment creates a compelling investment opportunity for the fund.

While near-term growth may be more muted due to traditional direct lending trends, we believe this is a compelling long-term product for investors and differentiated from peer offerings. In these environments, pricing dislocations and motivated sellers can allow access to high-quality seasoned investment opportunities at potentially attractive valuations. This dynamic enables selective capital deployment with a margin of safety, positioning the fund to benefit from both income generation and potential capital appreciation as markets stabilize.

For P-SECC, periods of increased volatility can create particularly attractive entry points for disciplined secondary credit investing. And this growing opportunity set underscores the increasing role credit secondaries are playing in managing liquidity and portfolio exposures in a market characterized by heightened demand for capital flexibility. And finally, P-PEXX, the AMG Pantheon fund, which has a long operating history since its launch in 2014, with a strong long-term track record of delivering private equity exposure through cycles.

Notably, it has a compelling fee structure for its market comparables with a lower management fee, and it does not charge performance fees. It provides a single allocation globally diversified portfolio across co-investments, secondaries and primaries, diversified by manager, vintage, geography and sector, which we view as more sustainable for building long-term compounding of returns.

We remain constructive on its outlook, including ongoing progress and expanding its reach to new wealth platforms and intermediaries. Overall, these 3 products represent a small growing proportion of Pantheon and when put into context of AMG represent less than 1% of AUM today. We are confident in the long-term secular trend and the underlying fundamentals of each of these products, but mindful of the impact of current market dynamics in the evergreen space on near-term growth expectations.

We continue to focus resources on partnering with affiliates in the U.S. wealth space through robust product development and access to our broad capital formation resources with several products including the newly registered AMG BBH fund in development. This fund is expected to be launched into a compelling credit market environment for its opportunistic structure and alternative credit approach.

Yes. So Alex, Dava covered it -- covered the landscape. But I think what I would maybe contextualize maybe even just give some perspective is, look, the market has had been painting everything with a single brush. This is actually an opportunity to differentiate. I think we see opportunities here because we think our products are unique, differentiated. Certainly, on the semiliquid side. Education, as Dava said, is key. People have to understand what they own, their suitability questions. But what we like about our products is that they're opportunistic in nature. I'll take the Pantheon credit secondaries fund, it actually had an opportunity to take advantage of what's happening in the market, and that's the same with the newly registered BBH opportunity credit fund.

So we -- and it's got it in the name. So I think we're having -- in some ways, we might come out better through this period as people sort through what products really are differentiated and what products people want to own. So we're long-term constructive. As Dava said, there is a bit of sorting that's going to go through -- we're going to go through here. But on the -- as we come out of it, we have an expectation that we're going to be on our front foot.

Maybe just on our wealth strategy more broadly, is clearly important to us. We collaborate with our affiliates. We offer strategic capabilities to new and existing affiliates. It's part of our brand. It's part of our reputation, the ability to engage with our affiliates and help them meet their goals, exceed their goals and get them into this channel. It's very difficult to get into this channel. It's an area where you need scale. AMG offers our affiliates that scale. We also offer them the ability to package the products and bring them to the market. So it's a growth area for us long term. I think we made it through this period reasonably well. I think partly because we were methodical and careful. But obviously, we have good fortune on our side, too. We're not -- I think we're just trying to do the very best that we can here. And we do think this is a good long-term opportunity for you.

Our next question comes from the line of Dan Fannon with Jefferies.

So Jay, I wanted to just talk about the environment for new investments. You guys have obviously been quite active over the last 12 months. But given some of the dislocations we're seeing in certainly the private credit markets or broadly within some of the equity markets, is that creating more of an opportunity for you to deploy capital in this environment? Or any changes kind of in the backdrop as you think about the new investment pipeline?

Yes. Great, Dan. Thank you. And I apologize, it's so early for you on the West Coast. So yes, look, we -- we did have a very active period in the last 18 months has been one of our more active periods of new investments. It's one of the benefits that we have. It's contributing to our earnings this year and our growth rate this year. We're very excited about the businesses that we invested in over this period, largely speaking, in alternatives with a focus on private markets but more specialty businesses.

So coming off of an active period, really even into this first quarter because we were just closing on HighBrook, the second investment in Garda and BBH. When we look at the rest of this year, one of the things that we note is that public market valuations for alternatives are way down. It takes a little while to have that trickle into the M&A market, but I think we have an expectation that it will. We're mindful that some of the key competitors in that market are the ones who have lower valuations today. So maybe they're not offering their stock. So competition just may have gotten better for AMG. As you know, we've been an active participant, maybe, I would say, the most active participant for independent firms over the past 30 years. We are open for business. We like to partner with outstanding independent firms, and maybe the competitive environment and pricing has gotten better for us as we look forward. So we're excited about that. Thanks for your question.

Our next question comes from the line of Brian Bedell with Deutsche Bank.

Good to see the really strong flows across the franchise and diversified contribution as well. We, of course, are getting more questions on the tax aware strategy. So I just want to zone in on that a little bit. Just your view maybe of obviously, really strong growth in 1Q. Maybe if you could talk a little bit about the contribution in 1Q from tax aware, and I think you mentioned it's 8% of AUM. But just was curious if there's a way to frame like what percentage of EBITDA that is or I think you -- last time you spoke about AQR as a percentage of EBITDA, it was about 20%. I don't know if there's updated comments on that.

And then just the -- as this is getting added to more platforms given really strong retail demand, if you can talk about the pipeline of doing that because I know, of course, Fidelity had constrained it. And I think Schwab had some guardrails around it. Of course, they're continuing to sell it. They just have some constraints around it. So just some comments around the growth outlook for that product as it pertains to adding it to more warehouse and brokerage and private bank platforms.

Okay. Yes. Thanks. Thanks, Brian. Well, I'm not going to go back through my conversation or my response on AQR specifically. But I will maybe just broaden it to talk about the environment for these products. And I'm sure I'll weave in a few of those data points that you're looking for.

Tax-aware businesses and tax loss harvesting, it's been around since -- as far as I tell since 1993. So just for everyone who may think this is a new business. It's a 3-decade old business. I think what's happened in the market is that advisers realize that investors, individual investors, they pay tax. And institutional investors, they don't pay tax.

And so when you think about your portfolio, you just have to think about it in general, on an after-tax basis. It might change where you allocate your capital. It might change the type of asset or the type of strategy you allocate to. So I think everyone should be aware the fact that taxes interrupt compounding. So if you're aware of that fact, then you need to at least consider it when you decide that you're going to create portfolio. These products that have been around many people, many big firms that you all cover have these products. AQR is just one participant in the market. So I just want to make sure that everyone understands that.

And then the other thing I would just say is we gave you the number on an AUM basis, which is less than 8%. I round it up. It actually has contributed to less than 8% of our EBITDA last year in the first quarter. It just isn't that big. But it has grown significantly. It's not -- it has been less than the majority of our flows. So just like I said in my prepared remarks and then in answer to the last question, the 4 major trends that are driving our business, they're balanced over that $90 billion of inflows that we had. No one of those trends made up a majority and even in the most recent quarter, $29 billion, the same statement holds. So very balanced. I don't want to go through that all again. But we feel pretty good about that trend as well as the other 3 trends in our business.

So I think in terms of sizing, it's important, but it's not a major factor. And when you zoom way out at AMG, and I think this is probably the most important thing that I haven't said yet is we have record cash flow. Our business AUM is at all-time high. We had record EBITDA in the quarter. As Dava said, our EBITDA guidance that we gave you at the midpoint would be up or at least -- it would be up with significant growth and cash earnings per share would be up 45% at the midpoint.

With that record, cash flow, if you think about that annualized out at over $1 billion a year, it is that cash flow that we have to reinvest. And so as we reinvest, we diversify the business, we add new sources of earnings. Our business grows because of it. So if you're thinking about AMG today, you need to think about what AMG is going to look like in 12 months, and then 3 years and then in 5 years because we generated $5 billion of cash flow over the last 5 years. We're expected to generate much more than $5 billion over the next 5 years. So the biggest impact to our business is what we do with those cash flows. And I think you know this, we have a very disciplined capital allocation philosophy. And as we continue to invest in growth areas and return capital through share repurchases, this record level of free cash flow is going to shape AMG.

We are looking forward to doing that. And when you think about where we are today at these record levels, we are trading -- our shares are trading at less than 10x after-tax earnings on a backward-looking basis, not a forward but a backward-looking basis and less than 8x EBITDA on a backward-looking basis. It isn't excellent opportunity for us to continue to buy back an elevated pace. So we're excited about our capital opportunity.

Dava mentioned in her script that we look forward to estimated share repurchases this year of $500 million. That's not all the capital that we have. If you think about the numbers I just gave you, $1 billion of after-tax earnings, $500 million is only half of that. And with a little bit of leverage because we'd like to lever it up to 2x. And right now, we're under leveraged at that point. We can do more than $1 billion. So in the next 12 months, more than $1 billion of capital will be the single biggest impact on our business for '27 and '28 and beyond. Thanks, Brian.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session, and we'll conclude our call today. We thank you for your interest and participation. You may now disconnect your lines.

Greetings, and welcome to the AMG Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Patricia Figueroa, Head of Investor Relations for AMG.

Good morning, and thank you for joining us today to discuss AMG's results for the fourth quarter and full year 2025. Before we begin, I'd like to remind you that during this call, we may make a number of forward-looking statements, which could differ from our actual results materially, and AMG assumes no obligation to update these statements. Also, please note that nothing on this call constitutes an offer of any products, investment vehicles or services of any AMG affiliates. A replay of today's call will be available on the Investor Relations section of our website along with a copy of our earnings release and reconciliations of any non-GAAP financial measures, including any earnings guidance provided. In addition, we have posted an updated investor presentation to our website and encourage investors to consult our site regularly for updated information. With us today to discuss the company's results for the quarter are Jay Horgen, Chief Executive Officer; Tom Wojcik. President and Chief Operating Officer; and Dava Ritchea, Chief Financial Officer. With that, I'll turn the call over to Jay.

Thanks, Patricia, and good morning, everyone. AMG delivered outstanding results in 2025, one of the strongest years in our company's history, with record annual economic earnings per share and substantial organic growth including record net inflows and alternative strategies, our results reflect the accelerating evolution of our business towards areas of secular demand, most notably in private markets and liquid alternatives. AMG generated full year economic earnings per share of $26.05, an increase of 22% year-over-year, driven by our strong organic growth and the positive impact of our capital allocation strategy. Our affiliates generated approximately $29 billion in annual net client cash flows, the highest level since 2013 and representing an organic growth rate of 4%.

As evidenced by our strong earnings growth and flow profile, our business momentum is accelerating. And given our confidence in our long-term prospects in 2025, we repurchased approximately $700 million of our shares or 11% of our shares outstanding. It was a landmark year for growth at AMG. -- throughout 2025, across both organic growth and new affiliate investments, AMG added approximately $97 billion in alternative assets under management, representing an increase of 35% in our total alternative AUM. This increase includes $74 billion in net inflows generated by existing affiliates managing alternative strategies. And $23 billion in additional alternative AUM from partnerships with new affiliates. As we have seen in recent years, our growing footprint in alternatives has fueled significant organic growth and accelerated earnings with more than $1 billion in capital committed across 5 new investments, we deployed near record levels of capital and growth opportunities in 2025.

We began the year with an investment in Northbridge, a private markets manager specializing in industrial logistics, followed by a partnership with Verition a premier multi-strategy liquid alternatives firm. Next, we invested in Montefiore, a European private equity firm focused on the services sector; and then Qualitas Energy, a leading renewables focused global infrastructure manager specializing in energy transition. And then later in the year, we announced a strategic collaboration with Brown Brothers Harriman to develop structured and alternative credit products for the U.S. wealth market.

In addition, we continue to invest our capital and resources in and alongside our affiliates, collaborating with our partner firms to develop new products for the U.S. wealth channel, including additional innovative alternative solutions across private markets and liquid alternatives. Each of our new affiliate partnerships reflects AMG's differentiated partnership approach, which magnifies our affiliates' long-term success through strategic engagement while preserving their independence. Our unique investment model continues to attract outstanding independent firms seeking a strategic partner, and our new investment pipeline remains strong. As further evidence, we just announced a new partnership with High Brook, a private markets manager operating in the real estate sector that invests across the U.S. and Europe in high-growth areas, including logistics, data centers and housing.

We also announced an incremental minority investment in Garda and existing affiliate operated and liquid alternatives. This incremental investment reflects the strength of our partnership and supports Garda's long-term objective of building an enduring independent firm. GARDA's outstanding multi-decade track record of performance and its leading position in the fast-growing area within liquid alternatives, underpin our strong conviction in the firm's long-term prospects. Both investments are consistent with our strategy and are expected to be accretive to our earnings in 2026. In addition, in 2025, we collaborated with temporary, Comvest and MDI on strategic transactions that created value for all stakeholders and resulted in liquidity events for AMG.

Across these 3 transactions, AMG received more than $730 million in pretax distributions and sale proceeds, more than 2.5x our invested capital and with an average IRR of more than 35%. We were pleased that AMG's strategic engagement ultimately resulted in an excellent outcome for all stakeholders, including AMG shareholders. The significant proceeds from these liquidity events highlights the underlying value of our affiliates and enhances our flexibility to execute our growth strategy. The growth investments we have strategically and deliberately made over the last several years have played a critical role in reshaping AMG's business profile.

Today, our affiliates manage $373 billion in alternative AUM, which contributes approximately 60% of our EBITDA on a run rate basis, including sizable contributions from 2 of AMG's largest and long-standing affiliates, Pantheon and AQR. As you know, AQR continues to deliver excellent performance and capitalize on emerging secular trends, including in tax aware solutions in the wealth channel, which is driving significant organic growth and an increasing EBITDA contribution to AMG on an absolute and percentage basis. In addition, Pantheon has established itself as a leading secondaries manager across private equity, private credit and infrastructure and also has a significant presence in the U.S. wealth channel. Beyond AQR and Pantheon, our affiliates managing alternative strategies delivered organic growth in 2025 and contributed to AMG's strong results in the year.

As we continue to execute on our strategy, investing our capital in firms and initiatives aligned with long-term growth trends, we expect to further accelerate the evolution of our business towards a greater participation in alternatives, driving future growth and further differentiating AMG. Now stepping back, over the past 6 years, we have fundamentally transformed AMG and built a strong foundation and business profile, which we believe will benefit shareholders for years to come. During this period, our business generated more than $4.5 billion in capital from operations and approximately $1.4 billion in after-tax proceeds from the sales of our interest in our affiliates, all of which, through our disciplined capital allocation strategy, we have reallocated to both high conviction growth investments and meaningful return of capital to shareholders, exemplifying our commitment to long-term value creation.

In doing so, over this period, we have strategically evolved our business mix towards areas of secular growth. pivoting towards alternative strategies and increasing the contribution of these strategies from roughly 1/3 of our EBITDA to approximately 60% today. In addition, we have grown our alternative AUM by approximately 55%, and that's net of affiliate sales. primarily driven by a combination of net client inflows from existing affiliates and the addition of 9 new affiliates operating across private markets and liquid alternatives. We also reduced our share count by more than 40%, further compounding our growth in economic earnings per share. Together, these strategic actions have resulted in exceptional shareholder returns, with AMG stock appreciating at a 23% compound annual growth rate over the past 6 years.

Despite these transformational results, we believe we are still in the early innings of our growth story with much more opportunity ahead. Looking forward, we will continue to press our advantages, executing the same proven strategy with the same level of discipline that brought us here. This means investing in additional high-quality affiliates in areas of secular growth while also leaning further into product innovation and distribution expansion to enhance our affiliate success and drive organic growth. We expect to see ongoing growth from our existing affiliates, operating and alternatives most notably from AQR and Pantheon. With our unique partnership-centric cash-generative return-focused model, we are well positioned to continue delivering long-term value. As we enter 2026, AMG's reputation, value proposition and capital flexibility have never been stronger, a powerful combination for our firm and for our shareholders.

With this durable foundation and our accelerating momentum, we are very excited about what we can accomplish over the next 5 years. and we are confident that the best is yet to come. We look forward to delivering even greater success for our affiliates, our clients and our shareholders. Finally, I would like to take a moment to recognize Tom Wojcik for his meaningful contributions to AMG over the past 7 years and to thank him for being part of our executive team during a critical period for AMG. Tom has informed us that he is ready to take a next step in his career and will leave AMG to pursue other leadership opportunities. Tom joined AMG in 2019, distinguishing himself as our CFO and contributing more broadly to the organization in areas such as strategy and team development over the years.

Today, we have a clear and effective strategy that is being executed by an outstanding leadership team that has even greater depth and breadth than we've ever had at AMG. With Tom's exceptional talent and experience, I have every confidence that he will be tremendously successful in whatever role he chooses next. And with that, I'll turn it over to Tom.

Thank you, Jay, and good morning, everyone. I'd like to start by thanking the AMG team for giving me the opportunity to be part of such a great organization over the past 7 years. The relationships I've had a chance to build within AMG and its broader set of constituents have made this an incredible experience, and I'm grateful to have been part of a strategy and an organization that I believe in. Time has come for me to contemplate the next stage of my career, and the team is in an excellent position for this transition to begin. I'm highly confident that the team will continue to successfully prosecute AMG's opportunity set ahead. 2025 was a pivotal year in AMG's ongoing evolution, one that reflects both the strength of our strategy and the discipline with which we've executed on that strategy.

We entered 2026 with significant momentum. Our alternatives business continues to scale, underpinned by strong organic growth from existing affiliates and further enhanced by the addition of a number of new high-quality partnerships. Our presence in the U.S. wealth market continues to expand, and our opportunity set to invest in growth remains robust. This year also marked a significant inflection point. AMG returned to organic growth, fueled by accelerating client demand for liquid alternative strategies and ongoing fundraising strength in private markets. In the fourth quarter, net client cash inflows of $12 billion brought full year inflows to $29 billion, representing an annualized organic growth rate of 6% for the quarter and 4% for the full year, respectively.

With $23 billion in net inflows and alternatives, the fourth quarter capped a record year for flows from alternative strategies at AMG, which totaled $74 billion in the year, more than offsetting $45 billion in outflows in active equities and highlighting the advantages of AMG's business profile, which is increasingly weighted toward high-growth alternative asset classes. In liquid alternatives, our affiliates value proposition continues to resonate with clients. AMG posted another record quarter in liquid alternatives with $15 billion in net inflows. Full year net inflows of $51 billion, which represent a 36% annualized organic growth rate were primarily driven by AQR with positive contributions from a number of affiliates, including Capula, Garda and Verition.

Importantly, alongside the significant ongoing opportunity in U.S. wealth including for solutions focused on after-tax returns, we are seeing strong demand and increasingly constructive sentiment for liquid alternatives from institutional clients. Building on this momentum, AMG's diverse group of affiliates managing liquid alternative strategies is well positioned to deliver excellent risk-adjusted returns for clients and continue to attract new flows over time. Our private markets affiliates raised $9 billion in the quarter, bringing full year fundraising to $24 billion, which represents an annualized organic growth rate of 18%. These inflows were mainly driven by Pantheon as well as fundraising at ARA, Abacus, EIG, Forbion and Montour. The ongoing fundraising momentum of our private markets affiliates reflects investors' conviction in their specialized investment strategies, along with their position at the forefront of secular growth trends.

Looking ahead, the fee-related earnings growth and carried interest potential across our private markets affiliates represents a significant source of upside for the long-term earnings profile of our business. In equities, we saw net outflows of approximately $12 billion in the quarter and $45 billion in the year, reflecting industry headwinds. Multi-asset and fixed income was flat for both the quarter and the year. We continue to have an outstanding group of differentiated long-only firms with multi-decade track records, which have been able to perform and deliver for clients through cycles. And notwithstanding some of the challenges in the industry, we think a lot of these businesses continue to be very well positioned to deliver for clients. As we continue to form new partnerships with growing high-quality independent firms such as our new investment in Highbrook and our follow-on investment in Garda this year, we are broadening our exposure to fast-growing specialty areas within alternatives and further diversifying our business.

Over the past few years, we have made significant investments in our capital formation capabilities, transforming our U.S. wealth platform from 1 focused primarily on long-only mutual funds to a platform with a proven track record of developing, launching and distributing alternative products in the high-growth U.S. wealth market. Alternatives AUM on AMG's U.S. wealth platform reached approximately $8 billion in 2025, with $2.2 billion in alternative net new flows during the year. Today, our platform has 5 continuously offered alternative solutions, including Pantheon products covering each of private equity, credit secondaries and infrastructure, giving clients direct access to a diverse range of differentiated institutional quality investment capabilities. And we continue to work with our affiliates to bring new in-demand products to market to capitalize on the multi-decade growth opportunity in alternatives in U.S. Wealth.

In December, we filed for the registration of the AMG BBH asset-backed credit fund, leveraging BBH's expertise in structured credit markets. Looking ahead, we expect to collaborate on a number of alternative credit products, leveraging DBH's differentiated investment engine and AMG's strengths in Evergreen product development and distribution further expanding our alternatives offering for the U.S. wealth market and bringing additional innovative solutions to help clients achieve their long-term investment goals. Along with the growth we are generating on AMG's U.S. wealth platform, our affiliates, especially Pantheon and AQR, continue to take advantage of tailwinds in wealth through their own product development and distribution capabilities. And as a result, AMG and our affiliates are collectively among the largest sponsors of alternative products for wealth markets globally.

Today, global wealth AUM at AMG and affiliates now totals more than $100 billion and grew organically at more than 100% in 2025. The success that we are having in the wealth channel is resonating not only with clients and existing AMG affiliates, but also with new investment prospects as accessing this attractive market requires scale and it's difficult, if not impossible, for independent firms to do on their own, given the resources required to be effective in the channel. With the ongoing growth of our existing affiliates in both liquid alternatives and private markets, our proven strategic capabilities to enhance our affiliates' long-term success and our expanded opportunities to invest in growth we have entered 2026 in a position of strength. With that, I'll turn the call over to Dava to discuss our fourth quarter results and guidance.

Thank you, Tom, and good morning, everyone. 2025 was a very exciting year for AMG. We continue to successfully execute on our disciplined capital allocation strategy and further evolved our business composition towards areas of secular growth. Together with the strength and momentum of our existing affiliates, our strategic actions and execution contribute to record economic earnings per share in 2025. We committed more than $1 billion in capital across growth investments and returned $700 million to shareholders through share repurchases. Given our strong balance sheet, significant cash generation and the overall positive trajectory of our business, we are in an excellent position heading into 2026 to build on these results and generate further meaningful earnings growth.

I will start by discussing results for the quarter, then talk about the positive impact of recent capital activity and existing business growth on our forward earnings and conclude with a discussion of our balance sheet. In the fourth quarter, we reported adjusted EBITDA of $378 million, which grew 34% year-over-year and included $125 million in net performance fee earnings. On a full year basis, we reported adjusted EBITDA of $1.1 billion, up 11% versus 2024, which included $161 million of net performance fee earnings. Fee-related earnings, which exclude net performance fees, grew 20% year-over-year for the quarter and 8% for the full year, driven by the positive impact of our investment performance, positive organic growth, and margin expansion at some of our largest affiliates.

Economic earnings per share of $9.48 for the fourth quarter and $26.05 for the full year 2025 further benefited from the impact of share repurchases. Economic earnings per share grew 45% year-over-year in the fourth quarter and 22% on a full year basis. Now moving to first quarter guidance. We expect adjusted EBITDA to be in the range of $310 million to $330 million based on current AUM levels, reflecting our market blend, which was up 3% quarter-to-date as of February 11 and including net performance fees of $40 million to $60 million. Based on this, we expect first quarter economic earnings per share to be between $7.98 and $8.52, assuming an adjusted weighted average share count of $27.4 million for the quarter, which represents 60% growth versus Q1 2025 at the midpoint of the range.

This guidance includes the impact of 2025 announced new investments and affiliate sales as well as the partial impact from our recently announced incremental investment in Garda and new investment in Highbrook. Combined, we expect these 2 newly announced transactions that add an incremental $20 million to adjusted EBITDA on a full year basis, a portion of which will be in Q1. Q1 fee-related earnings guidance of $270 million, which is our adjusted EBITDA guidance less net performance fees in the quarter as a good starting point for purposes of modeling full year 2026, incorporating all our capital allocation activity and organic growth in 2025 and represents 30% expected growth in quarterly fee-related earnings versus Q1 2025. As it relates to performance fees, we are starting the year from a solid point given our first quarter guidance range. We expect net performance fee earnings of approximately $170 million for 2026 which is consistent with our 5-year average from 2021 to 2025.

However, it is still early, and we plan to provide an update later in the year. Overall, we continue to have significant capacity to execute on new investments beyond Garda and Highbrook that could further enhance AMG's earnings power over time. Our capital allocation strategy, together with strong organic growth in our existing business has driven growth in AUM, fee-related earnings, adjusted EBITDA and economic earnings per share in 2025 and this momentum that we've built in our business has set the stage for meaningful growth potential in 2026 and beyond. Growth in alternatives in 2025 included substantial contributions from 2 of our largest affiliates, Pantheon and AQR, both of which were double-digit contributors to AMG's earnings.

Given their strong performance, ongoing innovation and differentiated expertise, we expect a growing contribution in 2026 with AQR likely to contribute more than 20% to our earnings. Further, we continue to diversify our business through new partnerships, and we feel good about the opportunities ahead as we strategically engage with our new and existing affiliates. Finally, turning to the balance sheet and capital allocation. Our balance sheet is in a strong position given our long-dated debt, low leverage level and access to our revolver. In August 2025, our 10-year senior $350 million institutional bond matured and was repaid. In December 2025, we concluded the issuance of a 10-year $425 million senior note at a 5.5% coupon rate and used the proceeds to redeem and settle conversions related to our 2037 junior convertible trust preferred securities, which were settled fully in cash in January 2026.

The total cost to refinance to security was $516 million, which included $342 million of debt and $174 million of conversion premium. The $174 million of conversion premium effectively represents the repurchase of approximately 600,000 adjusted diluted shares at a stock price of $293. Given this occurred in Q1 of this year, you can still see these shares in our Q4 2025 average adjusted diluted shares outstanding. The share dilution associated with these securities has now been fully removed for purposes of our Q1 '26 share count guidance of $27.4 million. Together, these transactions resulted in a simplified balance sheet and removed share count dilution from our capital structure. 2025 was an active year for us in terms of capital allocation.

We committed more than $1 billion to growth investments, which included new partnerships with Northbridge in Q1 and fruition in Q2 and Qualitas Energy and Montafur in Q4, plus our announced strategic collaboration with BBH Credit Partners. We repurchased $350 million in shares in the fourth quarter, our largest quarterly repurchase amount in firm history, bringing full year repurchases to approximately $700 million for the second consecutive year. We received aggregate pretax proceeds of approximately $570 million from the sale of our minority stakes in Peppertree, which closed in Q3 and Comvest private credit business and Montrusco Bolton both of which closed in Q4. These transactions represented positive outcomes for all stakeholders and collectively supported our $1.7 billion gross capital deployment in 2025 across new investments and share repurchases.

We have continued to actively allocate capital into 2026. We announced a new partnership with Highbrook and a follow-on investment in Garda. The combination of the $175 million committed to new investments, which are immediately accretive to EBITDA, and the $174 million conversion premium on the settlement of the trust preferred, which further reduces our share count, create strong earnings momentum to start the year. As we have demonstrated over the years, we aim to maintain a balance of strong deployment of capital across both growth investments and return of capital to shareholders. Along these lines, we anticipate repurchasing at least $400 million in shares in 2026 beyond the conversion premium on the trust preferred securities, subject to market conditions and capital allocation activity.

This does not reflect our full deployment capacity, and we plan to update everyone throughout the year as the quantum and pace of growth investments come into view. 2025 was a year in which every element of our growth strategy from affiliate performance to organic growth to new affiliate investments and other growth investments. to share repurchases and effective capital management, all contributed to standout business results. And looking ahead, we are very excited to continue to build on this momentum in 2026. We have a diverse set of opportunities ahead of us, and we remain deliberate and disciplined in our approach to deploying capital. We have entered the year in a position of strength and we are confident in our ability to continue to generate meaningful incremental value for our shareholders. Now we are happy to take your questions.

[Operator Instructions] Our first question comes from the line of Dan Fannon with Jefferies.

And best of luck, Tom, on your next endeavor. Just wanted to dive a little bit deeper into the outlook for 2026. In terms of AQR, there's -- they've obviously had very good growth. You talked about them being a more meaningful contributor in '26. Was hoping you could expand a bit upon the diversity of flows, some of these tax strategies and how you're thinking about competition and potentially the run rate and our growth outlook for what some of these newer strategies have done and how successful they've been?

Yes. Thanks, Dan, and good morning to you. Maybe I'll start here and just say that the momentum in our flow profile really is coming through both in the private markets area and the liquid alternatives area, and most notably, Pantheon and AQR. But beyond Pantheon and AQR, we still have positive flows in these areas. So I just want to give you some context to that and there is good diversity of flows across the other firms as well. There are 2 standouts. I think that's what you're noting or your specific question on AQR, I'll come back to you, and I'll ask Dava to fill in some more details. But maybe I'll just note that One of the benefits of our flow profile, which is the strongest that we've had since 2013 is that the average fee rates that they're coming in from the private markets and from the liquid alternatives is higher than our average fee rates. And those flows are coming into affiliates where they're scaling quite nicely.

So we are getting the benefit of that, too. maybe now I'll just say that Pantheon and AQR are our 2 largest and long-standing affiliates. They represent about 30%, maybe a little over 30% of our AUM today and over 30% of our adjusted EBITDA, they are growing very fast. They have tailwinds because their alternatives businesses, one, liquid alts, on private markets with substantial footing in the wealth channel. And so they're seeing significant growth there in U.S. wealth. And those tailwinds, the -- it's nothing more than just continuing at this rapid pace as we saw at the end of last year, they seem to be actually accelerating.

Maybe now I'll just say 1 more thing and turn it over to David, just on AQR. What's interesting about AQR is that, as you know, they are an innovator. They've innovated over so many years, outstanding investment product for a multitude of clients around the world, institutional U.S. wealth, even retail, and they continue to do that. And so I think there's -- there's a part of AQR that is ever evolving and growing, and we're seeing that real time. They've had excellent performance. They've tapped into a need in the wealth channel, which is tax aware space, but they're also raising assets globally, institutionally and even in the mutual fund format. So we're seeing growth across the diverse group of clients that they have both in the traditional liquid alts, but also in some of their long-only products. So maybe if I didn't -- if I left anything -- any meat on the bone, I'll turn it over to David because I think there are some other details that we can give.

Sure. Maybe just to build on what Jay was speaking to. AQR really has a decades-long track record of true innovation, product differentiation, portfolio diversification and strong performance and they built on that in 2025. They've built a platform that's attractive both to institutional and wealth clients and have a long history of strong client service and distribution reach across these investors. As they continue to innovate, they've expanded their reach with both institutional investors and the largest gatekeepers of U.S. wealth assets. And there's been ongoing strong demand for these products. We've continued to see flows into these products into the first quarter. AQR has been thoughtfully diversifying its distribution reach and continue to innovate on product design and solutions.

So there's multiple avenues for growth here. When it comes to competition, again, AQR really has this history of innovation that's built on a decade-long track record their product offering and platform are unique within the industry, and they certainly have a first-mover advantage in many of their innovative offerings. It's expected that competition will come but few firms have the institutional, operational and distribution platforms to match AQR.

Our next question comes from the line of Alex Blostein with Goldman Sachs.

To Dan's comments, Tom, best of luck to you and the next endeavor. Building on the alts discussion, can we spend a couple of minutes on the private side of the equation as well. I was hoping you guys could frame the pipeline of some of the maybe larger funds that you expect to come to market from your private or liquid alternatives in 2026 and how you think about sort of the contribution to organic growth from that part of the model?

Yes. Thanks. Alex, Good morning to you. I might ask Tom to do part of that as well with me and especially just on some of the new product that's coming to the market from AMG. Maybe I'll just start with Pantheon and also just talk about more broadly our approach to the other affiliates with respect to private markets. So on Pantheon, as you know, they are a specialist in credit -- sorry, specialists in secondaries across private equity, credit and infrastructure. So they specialize in secondaries across those 3 platforms. And they do have wealth products that are designed to attract individuals into those products. And so in each of those areas, they have unique wealth products. Those products while offered in the U.S., they also have structures that allow international and non-U.S. investors to invest into those products.

So they have mirror structures that allow growth to come not just from the U.S. but non-U.S. So the benefit of their position, which they've now secured over the last decade is that they are well known in the channel. They have the structures to accumulate wealth assets, both in the U.S. and non-U.S. and they continue to grow that franchise. Outside of those products, we are innovating additional products with our affiliates. We're also selling drawdown funds into the wirehouses and RIA networks for a number of our affiliates. And so we are actively marketing private markets products for our affiliates in those channels. And so maybe, Tom, if I could just ask you to expand just a little bit on the product side and other ideas that we have coming to market.

Yes. Thanks, Jay. And Alex and Dan, thank you both for the kind words. Maybe actually to take the last 2 questions and just pull them up half a level and then I'll get into a little bit more of the detail on product development. But if you think about liquid alternatives and private markets, they are really driving our flow profile, and that flow profile is entirely a function of our strategy. And as we start to get close to that 2/3 level of our EBITDA coming from alternatives, you're really seeing a significant impact in terms of the overall growth profile. And a lot of that is coming from wealth, whether that's from our own efforts or more broadly in the wealth ecosystem, we're seeing a tremendous amount of momentum there. One of the big initiatives that we have going into 2026 and beyond is our new partnership with Brown Brothers and we did announce late last year, the registration for our first fund there, the AMG BBH asset-backed credit fund.

And a part of that strategic collaboration is really to think about not just 1 product, but hopefully 2, 3, 4, 5 over the course of the next couple of years, where we can take the combination of the really unique investment expertise that exists across structured credit at -- from Brothers Herman and combine that with what we're able to do on the product development side and on the distribution side and really pair that with the client demand trends that we're seeing. So I think Jay hit a lot of the highlights in terms of where we're seeing a lot of momentum in private markets. And I think our goal at AMG and the team's goal going forward is not only to continue to prosecute those things from an existing AMG affiliate level but also to continue to be innovative and think about new ways that we can partner with both existing and new affiliates to build new IP for the channel.

Yes. And thank you, Tom, very much for that. So I think what's interesting to also note and I think you all are tracking this, but we continue to put our own capital behind the product innovation. And that -- what that means is we're seeding a number of these products we've committed to see these products. And we're looking to scale these products. From our perspective, from an ROI perspective, it's 1 of the most valuable things that we can do here, which is to create products. Obviously, we have investments in affiliates, and we have returns that we expect to make off our investments in those affiliates. But to start something new, something that wasn't there before, where we can really scale and BBH with their structured credit and alternative credit products. it's an opportunity to really scale those products, that ROI can be very high for AMG shareholders.

So this is in part of a capital allocation decision, it's also a magnifying our affiliates decision -- sorry, magnifying our affiliates' prospects. And ultimately, what we're trying to do is make our independent partner-owned firms, stronger, better, faster, more valuable, and I think we're doing that.

Our next question comes from the line of Bill Katz with TD Talen.

And Tom Best of luck for sure. 1 statistic that you laid out in this call was $100 billion of Global Wealth Management. Most of your comments seems to be focused on driving growth in the U.S. wealth management platform. But could we maybe zoom out a level of 2 and just maybe speak to the other $90 billion that you seem to have, you mentioned a very strong growth rate and how we should think about maybe the combined opportunity for wealth as we look ahead, that would be helpful.

Yes. So let me start by saying we are seeing significant growth in wealth. That is the case. And it's primarily alternatives. We also support our long-only business in the wealth channel as well, and we have seen pockets of growth there. And so we do take a holistic approach on the -- on our own efforts to work with our affiliates to innovate new products. We've looked into and have already supported ETFs for a number of our long-only managers. So I didn't -- I wanted to make sure that I said that. As it relates more broadly, we are seeing good flows, but also just increasing interest in liquid alternatives. So beyond U.S. wealth we are seeing opportunities to grow those assets from an inflow perspective.

So we -- and part of that, I think the volatility in market part of it's good performance on our liquid alt side. So there is opportunity to see not just U.S. wealth growth, but wealth -- sorry, growth outside of that on the institutional side. I don't know, Dave, if you want to pick up.

So we're happy to. When we think about accessing that wealth channel, both within AMG, but also at our affiliates, it's important to think about those 2 pieces together, right? So a lot about what we are doing in terms of building product alongside of our affiliates within the U.S. wealth space. And that's where we've had a lot of success, particularly with Pantheon Additionally, though, 2 of our largest affiliates in Pantheon and AQR additionally have access to wealth distribution sort of through their own channels. We've helped them think through product development in some of those spaces as well and really collaborated but when you think about the breadth of wealth access across the AMG platform, it's important to think about both what we're offering through our U.S. wealth distribution platform directly, but also that of our affiliates as well.

Our next question comes from the line of Brian Bedell with Deutsche Bank.

And also, congrats, Tom. Great working with you at AMG and best of luck for the next endeavor. Question maybe if I can squeeze in a 2 part here just related to AQR and then also -- so sorry if I missed the contribution from AQR in 2025. I know you said it was going to be over 20% of EBITDA in 2026. I just wanted to see what that incremental pickup is? And then does that contemplate any changes in the wealth channel in any of your major distribution partners, either growing distribution partners or seeing more competition at distribution partners? And then if I can just squeeze in a longer-term 1 on performance fee makeup, you got the $170 million '26 which is around your 5-year average. But as we think about, say, over the next 3 years or so, given the growth of your private markets and liquid alternatives businesses just structurally, should we be thinking of a longer-term higher trajectory of performance fees, particularly since I think you the private affiliates that you've invested in, you get carry on the new funds that have started up as opposed to the old ones. So maybe we're lagging into a bigger carry stream going forward.

Yes. Thanks, Brian. Let me -- I'm going to see if I can parse this out and then I'll come back and answer 1 of these questions. So maybe, Dava, if you could address in whatever order you like, either the performance fee make up and the kind of growing nature of it. And then AQR, the question AQR concentration. resources and growing our partnerships in wealth. .

Sure. So why don't I try to do this a little bit in the order you asked here, Brian. So on the AR side in 2025, we had mentioned that AQR was a double-digit contributor to EBITDA in 2025. And we do expect that to grow into 2026. and expect them to be north of 20% this year. That's really on the back of strong organic growth leading into what we think are really positive momentum dynamics into 2026. In terms of 2025 results for AQR, it was really buffeted by 2 things. One, they had very strong positive net flows into their liquid alternative products. But two, they generated strong investment performance across their platform, leading to substantial performance fee contributions for AMG. When we then think about the longer term in terms of performance fees, so I'll shift gears a little bit and think about that. The way we tend to think about our guidance, and this is what you see going into 2026 and why we're thinking about the $170 million of guidance here.

We think about that really as using the past 5 years as a good representation of a through-the-cycle number. There are certainly going to be periods of both outperformance on that and periods of underperformance on that. But if you look at the big picture, the mix of strategies that we manage here through our affiliates that generate performance fees is a diverse group across both liquid alternatives and private markets and this leads to a more stable and predictable earnings stream over time. And as AUM that is performance or carry eligible increases, we expect it to positively impact that trend line over time. And Brian, as you mentioned, since we generally don't buy in the ground carry when we're making new investments in private market affiliates, but rather participate in future fund carry, these do tend to be more back-ended opportunities, and we expect their performance fee contribution to grow over time.

It's separately important to note that as we've executed on our firm-wide strategy to invest in areas of secular growth and has benefited from net organic flows into alternative strategies, we've increased our AUM from strategies that typically earn a higher management fee, which you can already see impacting our year-over-year aggregate fee rate and growth in our fee-related earnings. This is shifting our mix of business towards a higher contribution from fee-related earnings.

And so let me pick up now on the question on the wealth strategy and just resources and growing it. I've got to just walk through, I think, where we see AMG leaning into our own wealth strategy, and I'll start with just product creation. So we have a group that thinks about what -- and receives feedback from clients in the marketplace on what products we should be creating. And then we go out to our affiliates and work with them to put those strategies into structures that are best suited for the U.S. wealth channel. So product creation, we've invested resources and people, human capital to grow that area for AMG.

We also have increased our balance sheet in terms of seeding. So once we've got an idea, we will seed it. That's very helpful in going out to the market. Generally speaking, we -- capital starts to form after we seed generally in the early adopters in the RIA market, we've increased the number of people and resources that we have addressing that part of market. Once we raise critical mass, we go out to the the regionals and larger RIA platforms. Again, we've increased our resources there. And then ultimately, in a place where AMG has always been particularly good is in the wire houses. And so once the products graduate to a scale and size that they can get on the major wire houses we have a wholesaling sales force to grow that.

So across our platform, from product creation to seed to RIA channel all the way up to the wire houses. We've added people and resources and effort. And so that is our strategy to continue to grow that. And so far, we've seen some success in doing so. Then maybe zooming way out because I see that we're getting close to the end of our time. I do want to just say a few things about where AMG stands today. We have we have really pivoted the firm. Today, we -- our business is being driven by alternatives, both private markets and liquid alternatives. And we expect to continue to press our advantages of supporting independent high-quality firms and helping them with their own strategy and their own success and magnifying their benefits while also preserving their independence.

When you think about what happened to us in 2025 and where we are already in 2026, it's really just a culmination of our strategy. And it really is beginning the foundation of the next 5 years and as I said in my prepared remarks, and we want to be humble about this, but we really do think that the best is yet to come for us because we now see very clearly how to continue to prosecute that strategy going forward, whether that's across making new investments in high-quality firms in areas of secular trends, helping those firms grow by investing in our capital formation efforts, or -- and where we can return capital to shareholders at attractive prices to help us compound our earnings. Those are the things that we're going to continue to do. That is our strategy, and we look forward to creating more value in the future.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. And we'll conclude our call today. We thank you for your interest and participation. You may now disconnect your lines.

All right. I think we're going to get started with our next session. Good afternoon, everybody. Thank you for joining us. It is my pleasure to introduce Jay Horgen, President and CEO of AMG.

Over the course of 2025, AMG continued to successfully pivot the business toward alternative capabilities, which now comprise over 50% of the company's EBITDA. Importantly, AMG has seen significant acceleration in organic growth with flows approaching the highest level in over a decade. I actually had to go pretty far back in my model to see the last time you guys were putting up the type of organic growth that you are, which has been great.

Look, lots to talk about, lots of momentum in the business clearly into 2026. So thank you for spending time with us. Great to see you here again.

Thank you. Yes, really appreciate the spot, and I always like the Goldman conference. I'm an alumni. So alumnus. So I'm really happy to be back. Thank you.

There we go. No, happy to have you. All right. So why don't we start with a question just around the business evolution. As I mentioned, over the last several years, a pretty meaningful pivot. The alternatives businesses now comprise over half of your run rate EBITDA. You obviously talked about alts comprising as much as 2/3 of the business over the next several years. What's the road map of getting there? How much of that do you think is organic versus incremental acquisitions to build you guys to that point?

Yes. Well, I appreciate some of the historical context as the start of that question, and maybe that's where I'll pick up first and I'll bring us forward. Yes, it is the case that we've had a strategy to allocate our capital and resources to areas of secular growth and in the main that has been alternatives. So it maybe starts at a little higher level as we're looking for areas where clients are allocating more of their capital and areas that we might be able to invest in independent firms that service those clients.

So when you think about us originating new investments or investments in existing affiliates, including their products, we are looking for those types of products that we think clients will allocate to and in the main, they have been alternatives. So really, for the last 6 years -- 6, 7 years now, we have focused our capital and our people and our resources on alternatives.

That has led to where we are today, we're at 55% alternatives, roughly evenly split between private markets and liquid alternatives, making us relatively unique as you would note in the asset management area where we have alternatives, but equally split between private markets and liquid. And then we have a long-only set of Affiliates as well. And that balance is really super unique I think it affords us a lot of opportunity going forward. We are -- we invest in independent firms. So that's the common theme across all of our Affiliates of independent firms in each of those segments. But we are looking to allocate more capital towards alternatives.

So when you think about what that means and what we've done over this period of time is that we have made a number of new investments, including this year, where we've had 4 new investments and 1 strategic partnership, all really in alternatives. And if you look at it over the longer period of time, we're well over a dozen now new affiliates that operate predominantly in those areas. So we've added new inorganically to our Affiliate base over that period, while certain of our existing Affiliates, the largest of 2 are AQR and Pantheon have grown. And that's why -- that's how we've gotten to this place of 55%.

Because we've hit sort of an acceleration period, we actually see that growing pretty significantly from here. So 55% growing to 2/3. It could be 2 years, it could be 1 year. It's actually depending on how fast we see organic flows, it could be very quick. So that profile of kind of 2/3, 1/3 is something that we had set out to do, and we're almost there at this point.

And it is a mix between new capital going into new Affiliates and frankly existing Affiliates. And then it's also just the growth and health of the existing Affiliates.

Great. We'll talk a lot more about the existing affiliates. Obviously, a lot to unpack there. But first, I was hoping to get your thoughts on just the acquisition strategy from here. The way you kind of framed it, you kind of went with your capital where client allocations have been going for the last several years. So talk to us a little bit about what does AMG pipeline for M&A look like today in terms of both sort of size, types of strategies, perhaps structures and as we think about the forward, should we be thinking about similar kind of smaller type of deals that can really scale nicely once they join the platform or there's scope to do something maybe a little bit larger in the old space.

Yes. So we -- for those of you who might be new to the story, it's important to note that we originate a number of our own new partnerships, and we do that by calling on Affiliates in a given year over the years.

In general, we sort of make it our business to kind of know all the independent firms. And then we go back to that overlay of where do we really want to allocate capital. So in any period of time, we probably will spend 80%, 90% of our time on the areas of secular trends, the areas of interest. And so we're trying to originate in those areas. Sometimes those businesses will select ultimately an adviser to advise them. And that's okay with us in some ways that sometimes that makes it easier.

But our goal is to have had a long relationship with that perspective, new Affiliate beforehand. So the reason why I start there is because we kind of can look out into the future because of those relationships and at least in the short term, maybe even the medium term and sometimes even the long term, like which independent firms we want to go after. So we enter into a process or with a bilateral negotiation with a long history, typically with affiliates. And that would describe all the transactions this year. When -- so it's important to note that because we're sort of out selecting them. And you might say, well, what criteria you're using. And I think it starts with the secular growth trends.

It also then goes to the next level, which is we are looking for businesses that we think we can help strategically. So our goal as an entity is to be a strategic partner to our independent partner-owned firms and also preserve their independence.

And when you put those 2 pieces of a sentence together, that does make us relatively unique because there are, on the 1 hand, passive stake buyers in the world, and then they are also consolidators that offer strategic benefits, but they require control. We're in the middle of that. So we offer independence, but we also offer strategic capabilities. But we really are looking for Affiliates that we think we can help.

And that means business development help, it means product innovation, help starting new products, maybe even seeding new products, then ultimately distributing products because one of the things that AMG has done over the years has developed a capital formation capability where we can sell affiliate product. I think we'll probably talk about that more in a moment. So I'll just touch on that for the first moment.

And then the second thing that we were really good at as an organization is helping firms stay independent. And that has a lot to do with the health of the partnership, making sure that the firm has what it needs to continue to thrive as an independent firm. So taking together, we're looking for firms that fit that criteria, somebody who wants our help and also wants to preserve independence, they choose us because they want to be independent and within the secular trend.

So now if I just reflect on our current pipeline, in general, our pipeline is full of alternative conversations of firms that are operating in alternatives, probably a disproportion of the -- disproportionate number of those are in private markets. We have a lot of active conversations. Some of them are involved in actually moving towards the potential transaction.

We've had a really strong year this year. We think our pipeline remains strong into 2026. Of course, there'll be a flood of new conversations in January as there always are, and we look forward to 2026, allocating more capital to these areas. So finally, to get to your -- what size are we looking for? Typical enterprise value for us is $250 million of enterprise value up to $1 billion. I'll comment in a minute whether we would go above that. But we typically invest in about 20% to 60% of the economics of the business. Oftentimes, we structure our transactions but between 20% and 60%, which generally speaking, is a $100 million to $500 million cash equity check. That's described most of our transactions over the last 7 years.

We would go above that level, but it would have to be higher bar. I think in that case, we clearly would want it to be a strategic predicate, whether that's starting new products, working with our distribution and it would have to have a dynamic that we see that has really good characteristics of return because we typically price our new investments to a mid- to high-teens return. We've in the main, been able to achieve that across all of those investments. And when they're larger, you really have to have -- so when they're $250 million of enterprise value, and we can help them, it's a lot easier to get them -- triple them in that period of time. If it's a much larger firm, it's just a little more challenging. So I think the reality is we're looking for growth, and we're looking for return. And that's why that size range makes sense to us, yes.

Great. No, no, that's clear. Okay. Let's shift gears talk about organic growth for a couple of minutes, and there's a lot to go over here. So maybe we'll start with the liquids, the liquid alts part of the business.

That's probably seeing the most significant turnaround in the franchise as a whole over the last couple of years. It struggled a bit over the last few years. The pace of outflows subsided a lot last year, and you kind of turned the corner this year. It's been a huge contributor to organic growth for you guys. Now lots of it is driven by AQR. So a twofold question there. I guess, first, talk to us about the competitive differentiation and the durability of the flows in AQR's tax-aware strategies. That's obviously been a big source of inflows. I think it's about $45 billion in assets, give or take. How much more room for growth do you see there. So that's kind of part one.

Part two, outside of this specific business, what else are you seeing underneath the surface in liquid-alts that could help perhaps differentiate or sustain this kind of pace of organic growth across the franchise.

Yes. Okay. Great. So let me see if I miss anything, you'll come back and follow up. So look, let's start with just liquid alts in general. I think we've always felt that there is, for us, a very good opportunity for us to invest in liquid alts, in part because we now have scale across 6 or so Affiliates. It's -- they contribute annual performance fees. They're diversified when you look at all of them across AMG. And they're also diversified relative to private markets and long only. So we like that package of Affiliates with operating as independent firms. AQR is the largest of that group and one of our largest 2 Affiliates.

You're right that AQR has been a driver of flows. But away from AQR, we have seen positive flows in liquid alts. So I think there might be some information there, which is useful to kind of take a step back after many years of liquid alts being in outflows or no flows one or the other. We're actually seeing an uptick in flows, not only in the wealth channel, but also in the institutional channel. And so we -- it's relatively early, but I think we would say, at least for this year and maybe the prior year, we started to see more interest. And so I'm going to come back to AQR in a moment. We have affiliates that operate in relative value fixed income.

We have affiliates that operate in equity-sensitive strategies. We have affiliates that have a multi-strat profile. And we have AQR, which in and of itself is a pretty diversified alternative firm. In fact, AQR is actually one of the largest hedge funds in the world, but it also has a pretty significant long-only business as well. So just to kind of put that all into perspective. And when we talk about liquid alts, we take all of the long-only stuff and we put it in the long-only bucket. So we're just isolating the liquid alts.

So when we look at our flows this year in alternatives, it's something just north of $50 billion, something like 2/3 of that have come from the liquid alts side. That's -- but we've had positive and strong flows in private markets as well. Both areas growing at significant growth rates.

The interesting thing about AQR is that they have taken their innovative technology and addressed what is, I think, a paradigm shift with RIAs and wealth advisers, which is to focus your attention on how much your client keeps not just what the headline is. And so if you're a New York State resident, you're going to pay, depending on your rate, you might pay 50% or more percent of your return away in taxes. And so -- and taxes are an interrupting event. So there's a lot of cost, taxes included, but frictional costs. So one of the benefits that AQR offers is they offer for different categories of wealthy individuals and even to the retail adviser, they offer a tax-aware set -- suite of products that focus on the fact that you want to let your our runners run your long -- things that are working and take your losses. And they do that in -- because of their technology, they're able to do that in a way that they can expand your balance sheet.

So you can go long and short, the S&P. And that allows you, depending on how long and how short you are to create more of these tax attributes that help you. So at the high end, at the highest investor, the ultra-high net worth, you can go directly into a limited partnership, and you can access their traditional liquid alternative products, hedge fund products, they call that Delphi Plus. Just below that, which is a separate account product that can be sold off of Fidelity and Schwab and any other adviser that has brought them on board. You can access their Flex products, which is the S&P 500 product that I just mentioned and the flex is you can flex up how much balance sheet you want to give them 140-40 all the way up to 200, 100.

And then last is the fusion products, which are mutual fund products that look to create positive tax attributes to reduce the drag of 40 Act Mutual Funds and they're going to compare those directly to indices and that so far, the returns are good.

So you can see that they are trying to pick up not just on the product trend but actually a paradigm shift on the way people think about managing wealthy assets. So we think it's a very durable trend. Obviously, things can always change. There's risk factors associated with it. However, in the current environment, it's a very attractive product and AQR has got a first mover advantage.

Today, we're on about -- they're on about half of the top 100 platforms for RIAs. So there's a long way to go. They have been growing very nicely. And one of the benefits of AQR to us is that in addition to the flows that we're experiencing, it's coming in at average fee rates higher than their average fee rate and our average fee rate. And we own a profits interest in that business. So we're experiencing it at all levels. So I think that answered your question on liquid alts.

It's mostly -- so just one follow-up, I guess, on that. When you think about capacity, for something like that. Just given the pace of growth for the tax-aware strategy, particularly at that higher end, how much runway do you think they have? And then when you think about -- sorry, 2 questions and when you said that they are on roughly half of the RIA platforms, where are they in terms of the wire houses and other like larger like high net worth networks?

Yes. Okay. Well, so -- maybe I'll answer 3 things because the other thing I failed to mention is their performance has been very good. And so in addition, they're just -- they're -- there's alpha in the period -- most recent period of 3 to 4 years. You would see significant outperformance relative to an indice. And so the combination of really good performance and additional reasons why you make the investment, I think it speaks to -- that speaks to some of their growth. But also the other thing is this is a very sticky asset because they're really just giving you these tax attributes, but they're lowering the basis in that pool.

So you're unlikely to sell that first to look for liquidity, you were likely to sell something else. So I think these are stickier assets that are in the wealth channel. So going to -- going back to things like capacity. So I do think that they have always had an academic approach. They recognize that they -- in the world of markets, there's limited capacity. But in this case, they don't see the end of the capacity in the near term. So -- and I think their experience is as time moves on, they will evolve themselves. And so they'll either be more capacity or they'll evolve their offerings. So I don't think that we imagine that there's a limit at this point on again in the medium term on growth. And so your last question.

The distribution front, you kind of mentioned half of the RIA network -- what about the...

They are predominantly on the large RIAs, and they've just come online with the wirehouses, right? So there is expectations the wirehouses will eventually -- as they normally do, it takes a little while, but they will eventually provide some flow and then they still have some significant RIAs that they have not gone on today.

That's helpful. Okay. Let's pivot to private markets. So kind of like the other 1/3 of the alt flows that you talked about earlier. Again, a really good story, perhaps a little bit more tilted towards Pantheon, that's one of the larger affiliates you guys have. I guess when we think about the world where institutional LPs are looking to do more with fewer managers, that's something we're going to continue to see in here from some of the larger alts. Where does AMG's strategy sort of fit in within that? And how do you think about the ability to sustain growth as LP sort of consolidate their interest with fewer GPs?

Yes. Look, I think you've asked 2 different types of questions here, and I'll try to address them. First, let me just talk about our view on our private markets affiliates, right? We have a little 10, 11 affiliates that operate, Pantheon being the largest and most diverse. We have very intentionally been focused on sort of specialized private markets, again, away from Pantheon but even Pantheon the specialists in the secondaries area. So that we have a view that longer term, we're picking up on the trends of biotech innovation, energy transition or energy needs.

And so they've all been a part of a theme. And so that's how we've come to our investment thesis within private markets, and that's in the main describes each one of them. And so when you look -- when you look across them, one of the things that they -- each individual one would have a hard time doing would be to start a wealth product, for example. And the benefit that they get by partner with AMG and one of the reasons why we have partnered with them as we actually think we can sell their product and we might even start a product for them. And in doing so, we become the larger financial institution going back to the fewer relationships with the LPs, in this case, the wealth LPs.

AMG represents a really unique opportunity for platforms to access unique differentiated return streams in private markets and liquid alternatives and even long only, but through a single salesperson that's an AMG salesperson. And the benefit of that is that we are actually capitalizing on the trend which is when Morgan Stanley wants fewer, we're part of the smaller crowd because we offer -- we're like a one-stop shop for a whole bunch of differentiated return stream. So it would be much harder for any one of our individual Affiliates to get on Morgan Stanley, but through us a lot easier to get on. And then I think the aspect of scale is a really unique aspect that we're seeing.

I do think scaling can be cyclical in nature, just like we saw it just before the global financial crisis, when things tend to go up and to the right, scale really matters, they get bigger. And I think until there's an event. And then all of a sudden, this sort of creation happens all over again, right? Small businesses get started and the whole process starts over. So we're definitely at the tail end of that growing into scale.

Pantheon is a scale player in secondary. They are one of the largest investors in infrastructure secondaries. And I think they are either the first or second largest in credit secondaries. And then they have a private equity secondaries business and we all know that their product, the AMG Pantheon fund has been around for 10 years, and it has grown significantly.

So our proof point here is we can actually partner with our affiliates, the specialized affiliates. And then through our own AMG distribution, get onto these platforms, of which we have about $50 billion of product today through AMG, and we're growing pretty nicely in this wealth channel.

So just maybe double-clicking into that, Wealth has been important. For now, it feels like it's really Pantheon's private equity fund that's driven the bulk of the flows for AMG in this private alts wealth channel. How do you think about the product road map evolving from here, both for the existing products and whatever else new things you're trying to do?

Yes. I think I know what you're pointing to, but you're talking about private markets. But if you really look at it from alts perspective, you would say Pantheon and AQR. Now we don't distribute for AQR. But when you think about AMG as an exposure perspective, if you're in a prospective investor, you're really playing the alts wealth theme through AMG because you get it both with the liquid alts going into the tax aware channel and you get it through Pantheon's secondaries. Both are growing very nicely. You can see all this information in general, and you do a good job reporting on it, Alex.

But where are we going next? So we did a transaction this year, which we deemed to be a strategic transaction, even though it was an affiliate transaction with Brown Brothers Harriman. It was a very validating transaction for AMG because this is a very old institution that wanted to sell its structured credit product outside of its own network. And they knew us through an affiliate relationship and they became aware of our distribution. So they approached us to distribute their product. We said we needed to be an affiliate because we only sell affiliate product. We're not a third-party marketing firm.

So they -- this is the validating part as they carved out their credit -- their structured credit business. They contributed to a new sub, which is called BBH Credit. We made a small investment in that, and we are starting -- we just announced this week that we funded and structured the first credit -- structured credit product with them, and we're going to come out with a whole line of structured credit and other types of asset-backed credit products and sold through AMG.

So we are looking forward to that. I think it's a deep market, it's a timely market. And it sort of speaks to the due diligence that they did and our own expertise. As -- away from that, we have a plan to add more private markets product that we are currently working on. Some of that's going to be an evergreen format. Some of it's going to be in drawdown funds. We also have the design to maybe even consider a multi-asset product where we have multiple affiliates that -- so these are all things that we're considering. So you can see that we have kind of unique advantage because we have this unique IP with our affiliates, we then also have our own balance sheet where we can seed the products. And if we're willing to sell it, and we believe the demand is there, we have an extra revenue item for AMG.

Yes, that all makes sense. That makes sense. When you think about seating product for something like BBH. Are you guys using your own capital? Or is it also in combination with BBH balance sheet?

So when we look to see, we typically use some of our own balance sheet. In the case of a typical seed situation, we would then market just -- they're a whole marketplace of seed investors out there that we partner with, generally speaking, their large RIAs and single-family offices. And in the case of BBH, we, they and a group of early-stage investors are looking to come into those products.

Got it. Okay. All right. We have 7, 8 minutes left on the clock. I want to get to some financial items as well. Starting maybe from the bottom up, let's go from capital return and share repurchases. We talked about M&A already, so we probably don't need to go there again. But when I look at AMG's earnings growth profile, it's really been super impressive to see 40-ish percent decline in your share count, I think, over the last like 5 years or something like that. So a pretty powerful part of the story.

How do you think about the payout in a more normalized kind of way, taking into account your forward growth prospects? How should we think about kind of the pace of share repurchases going forward?

Yes. So it's a really good question, maybe starting from the top. We truly believe in a disciplined capital allocation framework, where we attach a return to all the capital that we receive, and we get capital in every year, if you think about our funding mechanism as the distributions from our affiliates. That tends to be after tax, something it looks like $800-plus million a year. And then we can lever that a little bit, typically, we do 2x. So we can spend about $1 billion a year and keep our leverage roughly the same.

So it starts with where do we put that capital? And we look across all of our opportunity set. Our business is relatively simple. We can make an investment in a new affiliate, we can make an investment in an existing affiliate. We can make an investment in a product for affiliate to help it grow or we can buy back our shares.

In general, we think of that buyback shares as a capital return aspect because that means that we looked at 1, 2 and 3, and we decided that the best thing we could do is give the capital back. There is some part of the capital return that I think we view as kind of a dividend because we don't offer a dividend. And so you could imagine 2%, 3%, 4%, we would do every year, year in and year out. But this extra bit that we have been doing is because we believe in our strategy.

We've been able to see underlying our data, and it's on one of our slides where you could see we've had progression on the outside of increasing flows both in private markets and liquid alts over like the last 8 quarters. And we also knew that the balance of our business was moving towards more alternatives. So as that was happening, we've just increased the repurchases. And that's where we've seen a pretty significant decline in our share count. As you would have heard Dava say on the call, our CFO, she said that we're looking to up it in the fourth quarter by going to over -- more than $500 million for the year.

We also just yesterday refinanced. We were redeeming and we refinanced out our last remaining convertible, so simplifying our balance sheet, but it's also an accretive transaction because we got rid of the share count. And so we are sort of very bullish in the way we are repurchasing our shares. So if you take it all together, when we look forward, we'd love to do new investments. We'd love to do investments in existing affiliates and new products, and we are going to do all of that, but I also think we're going to continue to share repurchase just given how attractive our share prices is to us.

Right. Well -- and look, I mean, the growth has improved, the multiples improved, but probably not quite enough, so it still feels like a good...

Well, you said, and I appreciated the historical lesson, and you remember this because you and I are both getting old, is we did have a really long run of positive flows year in and year out. And if we are back into that area because it seems like our flow profile is continuing maybe even accelerating you could see those share repurchases paying dividends going forward.

Yes. Yes, for sure. Look, another important attribute of the model that people pay attention to, but maybe don't think about the structural change in this line too much is performance fees and really kind of the quality of the performance fees being probably more durable than not in your case, just given diversity of the underlying managers and also the fact that the private bid is growing which theoretically should drive larger performance fee contribution over time in some of those fund season.

So I guess 2 part question on that as well. When you look at the last 5 years, you talked about averaging about $160 million in annual performance fees. This year, I think the guide suggests $110 million to $155 million. So I guess, one, any update to that given we're pretty far in the quarter? And two, how should we think about the movement in that $160 million somewhere higher over time?

Well, so just you're close, $150 million has been our average for 5 years. And this year is an average year for us. And I would just describe why it was an average year. We don't have as a percentage of our performance fee eligible assets. We don't have a huge beta-sensitive group. It's either private markets, which is beta sensitive but over a really long period of time and an absolute return. So we're actually not in the environment where you would see outsized performance fees.

2022 was the year where markets were down. We had outsized performance fees, and it ended up being sort of well over $200 million. I don't exactly. So this was just an average year. But your point is well taken, which is the combination of carry that -- so when we invest in a new private markets affiliate, we only buy future carried.

So over time, you're going to see more carried come into that, that group, our liquid alternatives businesses have grown. And so there is an opportunity for us to walk that number up over time. But historically, we have stuck to this $150 million or just this average, whatever the average is, because from a modeling perspective, from your perspective and from our perspective, it's hard to know in any 12 months whether it's going to be. I think the most important thing that I would say about it is the asymmetry is to the upside. And what I really like about performance fees, and I am a big fan of them is that it's just real capital. And when we get that upside year of an extra $100 million or even more than that, it's capital we didn't expect that we can either use for new investments or a growth opportunity or buy back our shares.

Right. Right. Okay. With about a minute left on the clock. I do want to add on 2026. On the last earnings call, you talked about really material acceleration in growth, and you alluded to a number of these factors even though the course of the last half an hour or so between strong organic growth and sources of that organic growth really coming from areas with higher fees and really higher like economic margin to AMG.

So curious what that actually means for you guys into '26, not sure if you're ready or would like to give us a '26 EBITDA guide, we'll take it if you have it. But if not, at least the flow through from some of these tailwinds to earnings as you think about next year.

Yes. Well, I will sort of update you. But not give numbers because we're not ready to come out with numbers. We really do need to see what the starting point is for next year. So the year-end marks and a profile of where we ended up with alternatives as a percentage of AMG. But what I will say is in the quarter that we're in, we have seen continued momentum in alternative flows, both private markets and liquid alts. So we're excited about finishing off this quarter.

And then maybe taking a step back to your point, those flows are not only higher fees, but they're also higher margins, so they're having a more significant impact on the bottom line. In general, the dynamic this year is that was back-end weighted for AMG. So if you think about the second, third and fourth quarters where we saw the sort of uptick in flows and each quarter having -- the first two being one higher than the next, and hopefully, we'll see what happens this quarter. We would say that the full effect of that has not played out into '26, about half of it maybe has played out.

Separately, but coincidentally, new investments this year, we did 5 new investments but throughout the year. And we've only seen about half of the impact of that. Now offsetting that were these a couple of sales that we saw between Comvest and Peppertree where we got a lot of capital back 3x their money, really good returns, highlights the value of those affiliates.

So the net effect of all of that does mean we have a step function going into '26, both from flows and the net effect of that. But we're not ready to go out yet. I do think that the Street including you then continue to raise your estimates for us, and that's probably been the right thing to do so far.

Yes. Well, hopefully, more to go...

Thank you. Thank you very much, Alex.

See you. Appreciate the time.

Greetings, and welcome to the AMG Third Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Patricia Figueroa, Head of Investor Relations for AMG. Thank you. You may begin.

Good morning, and thank you for joining us today to discuss AMG's results for the third quarter of 2025. Before we begin, I'd like to remind you that during this call, we may make a number of forward-looking statements, which could differ from our actual results materially and AMG assumes no obligation to update these statements. Also, please note that nothing on this call constitutes an offer of any products, investment vehicles, or services of any AMG affiliate. A replay of today's call will be available on the Investor Relations section of our website along with a copy of our earnings release and reconciliations of any non-GAAP financial measures, including any earnings guidance provided. In addition, we have posted an updated investor presentation to our website and encourage investors to consult our site regularly for updated information.

With us today to discuss the company's results for the quarter are Jay Horgen, Chief Executive Officer; Tom Wojcik, President and Chief Operating Officer; and Dava Ritchea, Chief Financial Officer.

With that, I'll turn the call over to Jay.

Thanks, Patricia, and good morning, everyone. It has been a landmark year for AMG with record net inflows in alternative strategies and near record levels of capital deployed in growth investments across both new and existing affiliates. Our third quarter results reflect the building momentum in our business with a 17% year-over-year increase in EBITDA and a 27% growth rate in economic earnings per share. In addition, our organic growth profile continued to improve in the third quarter, driven by alternative strategies with $9 billion in firm-wide net inflows, bringing our year-to-date total net inflows to $17 billion which represents a 3% annualized organic growth rate.

Through the third quarter across both organic growth and new affiliate investments, AMG has added approximately $76 billion in alternative assets under management, representing an increase of nearly 30% in our total alternative AUM. This increase includes $51 billion in net inflows into alternatives. Today, our affiliates manage $353 billion in alternative AUM contributing 55% of our EBITDA on a run rate basis and including sizable contributions from 2 of AMG's largest and longest-standing Affiliates, Pantheon and AQR. Both firms continue to capitalize on the tailwinds in their respective areas by leveraging their scale, innovative cultures and differentiated expertise which are collectively driving strong ongoing organic growth for AMG.

These elements are continuing to have a meaningful impact on our business profile and earnings. And as you know, we expect each affiliate to be a double-digit contributor to AMG's earnings this year. Given the substantial increase in our alternative AUM, the significant growth and margin expansion at AQR and Pantheon, the positive contributions resulting from capital deployed in growth investments and the positive impact of our ongoing allocation of capital to share repurchases we anticipate a meaningful increase in our full year economic earnings per share in 2026.

Looking ahead, we have expanding opportunities to further invest in growth by investing in new and existing affiliates and by investing in AMG's strategic capabilities to magnify our affiliates success. Our new investment pipeline remains strong with active ongoing dialogue with prospective affiliates operating in both private markets and liquid alternatives. Our investment model continues to resonate with the highest quality partner-owned firms seeking a strategic partner that can enhance their long-term success while also supporting their independence.

And our strategic capabilities, particularly in capital formation, increasingly differentiate AMG and our dialogue with prospective affiliate partners. We recently announced a strategic collaboration, which highlights the value of AMG's capital formation capabilities in the U.S. wealth channel. Brown Brothers Harriman, a globally recognized 200-year-old firm with considerable scale chose to strategically collaborate with AMG to develop innovative products and deliver structured and alternative credit solutions to the wealth channel, a very strong statement on AMG's value proposition.

Also in the third quarter, we announced the sale of AMG's minority stake in Comvest private credit business. AMG invested in Comvest to provide a combination of growth capital and strategic capabilities that accelerated the growth of its credit franchise. We were pleased that AMG's strategic engagement ultimately resulted in a positive outcome for all stakeholders, including AMG shareholders. The significant return of capital, nearly 3x our purchase price highlights the underlying value of our affiliates managing alternative strategies. Having committed more than $1 billion across 5 new growth investments so far in 2025. We continue to actively expand AMG's participation in areas of secular growth. We have an excellent capital position, which was further enhanced by the significant proceeds from the sale of our interest in Temperature and Comvest. And given our ample financial flexibility and our distinct competitive advantages, we have an outstanding opportunity to further increase our earnings growth by continuing to make growth investments and return capital to shareholders.

Finally, it has been an extraordinary year for AMG in terms of both organic growth and new affiliate investments, laying the groundwork for accelerating EBITDA and earnings growth in 2026. As we continue to execute our strategy, building upon more than 3 decades of successful partnerships, we are confident in our ability to continue to generate long-term earnings growth.

And with that, I'll turn it over to Tom.

Thank you, Jay, and good morning, everyone. AMG's activities over the course of this year illustrate our strategy in action. As we evolve our business mix more toward alternatives, our business is generating strong organic growth in both liquid alternatives and private markets. And we continue to invest in both our affiliates and in AMG's own capabilities to support future growth opportunities. This year, we have entered 4 new investment partnerships with alternative firms squarely aligned with long-term secular growth trends. We also announced a strategic collaboration to bring structured credit products to the U.S. wealth marketplace with BBH Credit Partners highlighting the strength of AMG's capital formation capabilities. And we engage strategically with our affiliates across a range of business initiatives, including new product launches, building out adjacent capabilities and supporting 2 of our private markets affiliates and their sales to consolidators.

Taken together, these strategic actions and many other elements of our unique model drove significant earnings growth and cash flow generation, which we have invested and will continue to invest for growth, fueling the execution of our strategy and the forward evolution of our business, while simultaneously returning capital through share repurchases and further delivering value to our shareholders. In the third quarter, AMG delivered $9 billion in net client cash inflows and $17 billion on a year-to-date basis, representing an annualized organic growth rate of 3% thus far in 2025. Our strong organic growth this year reflects rapidly growing client demand for liquid alternative strategies and ongoing momentum in private markets fundraising. In the quarter, our affiliates generated $18 billion in net inflows in alternatives, more than offsetting $9 billion in outflows in active equities and highlighting the advantages of AMG's business profile that is increasingly weighted toward high-growth alternative asset classes.

In liquid alternatives, our affiliates value proposition continues to resonate with clients. With $14 billion in net inflows, AMG posted the strongest quarterly net flows in liquid alternatives in our history, driven primarily by tax aware solutions, and supported by positive contributions from a number of affiliates. Client demand for tax aware strategies remains substantial, and AMG's Affiliates offer highly attractive products. And more broadly, AMG's diverse group of affiliates managing liquid alternative strategies is well positioned to deliver excellent risk-adjusted returns for clients and attract new flows over time. Our private markets affiliates raised $4 billion in the quarter, mainly driven by another strong quarter at Pantheon and positive contributions from EIG and Abacus demonstrating the diversity of our affiliates offerings across private market solutions, credit, private equity, real estate and infrastructure.

The ongoing fundraising momentum of our private markets affiliates reflects investors' conviction in their specialized investment strategies, along with the impact of ongoing secular growth trends. Looking ahead, the management and performance fee potential across our private markets affiliates, including some of our most recent new investment partnerships, which are not yet reflected in our results, represents a significant source of upside for the long-term earnings profile of our business. As we continue to form new partnerships with growing high-quality independent firms, such as our new investments in Northbridge, fruition, Montafur and Qualitas Energy this year and our strategic collaboration with BBH Credit Partners we are broadening our exposure to fast-growing specialty areas within alternatives and further diversifying our business. BBH's taxable fixed income franchise has delivered top quartile performance across strategies and market environments.

Our strategic collaboration will bring the firm's industry-leading structured and alternative credit expertise into the U.S. wealth marketplace. As high net worth clients and their advisers continue to drive demand for alternative strategies, credit remains a core focus. And the return characteristics and scalability of structured credit make this area uniquely attractive. BBH is 1 of the industry's longest tenured and most active players with a differentiated structured credit investment track record across the full capital stack, and in combination with AMG's product development and distribution capabilities, we see significant opportunity to build unique investment solutions to meet growing demand. AMG provided excellent alignment with BBH's goals for a number of reasons. The complementary strengths of our respective businesses, access to significant seed capital, the permanent nature of our model and strong cultural connectivity across our firms.

The strategic collaboration will accelerate the expansion of BBH structured credit franchise and will further enhance AMG's position as a leading sponsor of alternative strategies for the U.S. wealth market. The rapidly growing demand in U.S. wealth for distinctive alternative products is 1 of the most visible mega trends in the asset management industry today, and AMG is uniquely positioned to benefit. AQR has been a leader for more than a decade in developing and delivering excellent investment solutions to U.S. wealth clients and its innovation and tax aware strategies continues to drive rapid adoption. Pantheon was 1 of the earliest innovators in limited liquidity vehicles in private markets and product development and flows are accelerating across its product line. Our collaboration with BBH Credit Partners speaks to the success that AMG has seen thus far in driving growth in alternatives in the wealth channel, and we see significant opportunities ahead.

As clients increasingly look to AMG as the industry's leading entry point to access the differentiated alternative investment capabilities of independent partner-owned firms, AMG's footprint in U.S. Wealth is well positioned for rapid growth. Importantly, the success that we are having in the U.S. wealth channel is resonating not only with clients and existing AMG affiliates but also with new investment prospects as accessing this attractive market requires scale and is difficult, if not impossible, for many independent firms to do on their own. As we continue to invest in new partnerships with alternatives firms, we look forward to collaborating with additional affiliates to broaden their reach and expand their platforms. AMG's business has continued to evolve in 2025, driven by our focus on allocating our resources and capital to areas of secular growth. As we execute our strategy, we expect the contribution from alternative businesses to further increase, enhancing our long-term organic growth profile and earnings profile, and we are excited about the opportunities ahead.

With that, I'll turn the call over to Dava to discuss our third quarter results and guidance.

Thank you, Tom, and good morning, everyone. It has been an exciting year for AMG. In 2025 to date, we have committed approximately $1.5 billion in capital across growth investments and share repurchases, and we continue to be in a strong position to execute on future growth opportunities and return capital to shareholders, given our significant cash generation and strong balance sheet. I will start by walking through the results for the quarter then we'll discuss the positive impact of recent capital activity on our forward earnings power and conclude with a discussion on our balance sheet.

In the third quarter, we reported adjusted EBITDA of $251 million, which grew 17% year-over-year. This included $11 million in net performance fee earnings and reflected a full quarter contribution from Verision and Pepper Tree's final contribution. Fee-related earnings, which exclude net performance fees, grew 15% year-over-year driven by the positive impact of our investment performance and organic growth in our alternative strategies, partially offset by outflows from fundamental equity strategies. Economic earnings per share of $6.10 grew 27% year-over-year, additionally benefiting from share repurchases.

Now moving to fourth quarter guidance. We expect adjusted EBITDA to be in the range of $325 million and $370 million based on current AUM levels, reflecting our market blend, which was up 1% quarter-to-date as of Friday and including net performance fees of $75 million to $120 million, bringing expected performance fees for this year to between $110 million and $155 million. This guidance includes a full quarter contribution from Monte fur, a full quarter contribution from Comvest's private credit business and no impact from our announced investments in Qualitas Energy and BBH credit partners, which are expected to close in Q4 and Q1 2026, respectively. We expect fourth quarter economic earnings per share to be between $8.10 and $9.26, assuming an adjusted weighted average share count of 28.9 million for the quarter.

Looking further ahead, we anticipate a meaningful increase in our full year adjusted EBITDA and economic earnings per share in 2026, mainly driven by strong organic growth and our capital allocation strategy, and I'll describe each of these further. Organic growth in our existing business is having a meaningful impact on bottom line earnings. Strong organic growth in alternatives including record inflows and alternatives year-to-date is driving growth in AUM, having a positive impact on our aggregate fee rate relative to the prior year and incrementally expanding margins at some of our largest alternative affiliates. Furthermore, the approximately $1.5 billion committed to growth investments and share repurchases, combined with the sale of our stakes in 2 of our private market affiliates is expected to substantially increase our earnings in 2026.

Additionally, we believe there is incremental upside to our earnings potential over time as we strategically engage with each of our 5 new partners in the next phase of their success. This combination of organic growth in our existing business and new investment activity has led to strong year-over-year earnings growth so far in 2025. And underpins our confidence in our 2026 earnings profile. Importantly, most of this earnings growth is in fee-related earnings delivered by products with longer expected duration.

Finally, turning to the balance sheet and capital allocation. We repurchased approximately $77 million in shares in the third quarter, bringing year-to-date repurchases to approximately $350 million. We are increasing our full year guidance for repurchases and now expect to repurchase at least $500 million, subject to market conditions and capital allocation activity. Our balance sheet remains in a strong position with long-dated debt, significant capacity from ongoing cash generation and access to our revolver. Additionally, we received pretax proceeds of approximately $260 million from the sale of our stake in Peppertree, which closed in the third quarter and will receive approximately $285 million in proceeds from the sale of our stake in Comvest. Given our ample financial flexibility, which is further enhanced by the proceeds from these affiliate transactions, we are well positioned to continue to invest in growth opportunities and return capital to shareholders.

We continue to employ a deliberate, strategic and disciplined approach to allocating our capital and investing in the ongoing growth of our business. We have a diverse, unique set of opportunities available to us, including investments in new affiliate partnerships and alongside existing affiliates, and in AMG capabilities. Through our capital allocation framework, we selectively engage in opportunities that align with our overall business strategy and that we believe will create significant long-term value. And looking ahead, we are confident in our ability to continue to generate substantial value for our shareholders.

Now we are happy to take your questions.

[Operator Instructions] Our first question comes from the line of Bill Katz with TD Cowen.

Jay, maybe 1 for you. I think the theme coming out of today's call is just the franchise momentum both from a de novo perspective as well as incrementally through inorganic. A, maybe I was wondering if you could just maybe delve a little bit more into BBH, how that sort of rose? Did they seek you out. And then just as you look at the pipeline looking ahead, how should we be thinking about activity level into next year after a really strong 2025?

Great. Bill, and thanks for your questions. I will -- let me take the first 1 just on the momentum. Tom, I'm going to ask you maybe to talk about BBH and then maybe you can send it back to me and we can talk about pipeline. So check them all off. So yes, thanks, Bill. I think I agree with your setup. It has been a landmark year for AMG, an output of our strategy, as you've heard us talk about it over the last 6 years, both inorganic and organic our flow profile, which is driven by alternatives, it's been improving for some time now this quarter is our second significantly positive quarter. It is building and we feel good about the continued strength of it.

Our strategic engagement with affiliates, collaborating with them to magnify their long-term success is generated meaningful results at places like Pantheon, AQR, Artemis, Garda and many others where we're working on business development initiatives to enhance their value. It's been, as you've seen, 1 of the most active years for us in terms of new investment activity, near record levels of capital deployment. We've announced for new investments and a strategic collaboration with BBH, which Tom will talk about in a moment. We've had 2 stake sales from 2 consolidators in Peppertree and Comvest. So it's just been an extraordinarily active year for us. Maybe looking at where the business stands today, alternatives contribute 55% of our EBITDA on a run rate basis. We're working hard to increase that to more than 2/3 in just a few years from now. We think that will continue to sustain our organic growth and also we see good opportunities to make those new investments.

And finally, as we have been committed to disciplined capital allocation, -- it has resulted in $350 million of repurchases this year. You heard Dava say that we've just updated our guidance to at least $500 million for 2025. So it has been an extraordinary year in terms of both new investments and organic growth. And that lays the groundwork for accelerating EBITDA and earnings growth in 2026. So maybe, Tom, if you would mind -- give us a bit more detail on BBH.

Yes, happy to. Thanks for your question, Bill, I think Jay provided a lot of very good context in terms of our strategy overall. And really, when we think about the BBH strategic collaboration, it aligns very well with a number of different elements of our strategy and key themes and areas that we're really focused on like alternatives and like the growing opportunity for alternatives in U.S. Wealth. Over the course of the past couple of years, you've heard us on earnings calls and some of our meetings talk about this repositioning that we've gone through in our U.S. Wealth business really to just focus that organization on the opportunity and alternatives. We've built a new affiliate product strategy team. We've channelized our sales force to address both RIAs and the wire house opportunity. And we're partnering very closely with affiliates like Pantheon to build, seed and distribute differentiated investment solutions to U.S. wealth clients.

So in a lot of ways, the strategic collaboration with BBH is both a recognition of the success that we've had to date in going through that change to our U.S. wealth platform and the opportunity and the success that we're seeing, but also the next chapter in terms of opportunity to build on that success with a great partner like BBH. BBH is 1 of the most respected and trusted brands in financial services globally, and we're very excited to work closely together with them. You asked how this came together. And effectively, I would say we found each other. They had an opportunity that they were thinking about in terms of an excellent structured credit franchise. We had a strong view on structured credit as an opportunity in U.S. Wealth and there was a real complementary opportunity for us to come together and try and build something together. We do think that BBH choosing AMG to be their strategic collaboration partner is a very strong statement on our value proposition in U.S. wealth. And I mentioned some of this in my prepared remarks, -- but we think AMG was the right partner for them for a number of reasons.

As I mentioned, the complementary strengths of our respective businesses there in terms of underwriting, pricing, risk management around structured credit and on our side, product development and capital formation resources, access to significant seed capital that we underwrote as part of this collaboration. The permanent nature of our model and also, very importantly, really strong cultural connectivity across our firms. We spent a lot of time together, got to know 1 another very well. And I think we have a shared vision for where we can take this. So collectively, we're really excited about the collaboration. We think it will materially accelerate the expansion of BBH structured credit capabilities and also further enhance AMG's position as a leading sponsor of alternative strategies for the U.S. wealth market as we continue to build momentum in that area. So Jay, maybe back to you on the pipeline.

Yes. Great. I'll just say 1 thing. It was very validating and rewarding that our capital formation capabilities, and that's an area, which, as Tom just mentioned, we've invested heavily in repositioning it. It was a centerpiece of this strategic collaboration with BBH and we do think it will allow us to drive more product in the wealth space around alternatives. So we're very excited about that.

Turning to the pipeline, Bill. So I know you heard me say that already that it's been near record levels of deployment from our perspective. We continue to see opportunities to invest for growth in new and existing affiliates. Our pipeline reflects this opportunity set. And maybe just giving a bit of color at a high level, we stay -- we're staying focused on areas of secular growth, both within private markets and liquid alternatives. Importantly, we are interested in businesses where AMG's strategic capabilities can add value and firms that would like to have a strategic partner. So that has increasingly become a part of the dialogue and part of our differentiated area for success. We'd like to be able to magnify our affiliates business plans, their business initiatives, and we're doing so through our active engagement with affiliates.

We've had a proven track record of providing capital and resources in these areas, business development, product development and distribution. So we're excited about continuing to add new affiliates in areas that we think we can help them grow. This unique sort of advantage that we have now in addition to just preserving independence, which we've always done very well, as you know, the ability to magnify the advantages of partner-owned firms has really added to our attractiveness in the market.

The last thing I'd just say around our pipeline, in addition to we continue to have a significant opportunity to invest our capital and growth initiatives. We will remain disciplined as always. The goal is to ensure that we deploy our capital at the highest -- in the highest quality opportunities with a target mid- to high teens returns as we've said in the past. We have been successful in doing that over the past 6 years. But if we cannot find good investment opportunities, we will look to return capital through share repurchases, and we've done that also during this period, having reduced our share count by 40%.

So maybe I'll just leave you with a summary of our new investment opportunity. We feel really good about it. We feel good about our ability to originate and invest in new affiliates in areas of secular growth and we're confident that we'll continue to meaningfully evolve our business through these growth investments and enhance shareholder value over time. So thanks, Bill, for your questions.

Our next question comes from the line of Alex Blostein with Goldman Sachs.

For the question as well. So lots of enthusiasm from you guys in 2026. It feels like it's a little bit earlier typical to give guidance in 2026, but I was wondering if you kind of could help contextualize what that could mean for next year given a number of moving pieces including you alluded to expansion in the margins at AKO Pantheon, that sounds like it's an important part of the story here as well. So any way you can help us frame what sort of the growth expectations you might have so far into 2026 would be helpful.

Yes. Thanks, Alex, and good morning to you. I'll let David do the meat of this. Maybe just to set it up. One of the reasons why we're so excited about 2026 is that, as you've seen in the past, when we do new investments, the year in which we do invest new investments is a partial year. And so the full year contribution from those new investments actually happens in the next year, in this case, 2026. We've also had the added benefit this year of having organic growth really come into the middle of the year and continues -- the momentum continues. And as you heard and you rightfully pointed out, there's an added benefit there because it's into businesses where we actually have margin expansion opportunity. So maybe I'll let Dava expand on what we're seeing in terms of mix and forward look. It is a little early to land on to 2026, but I think we can give you a sense for it.

That's right. Thanks, Jay, and thanks, Alex, for the question. At a high level, we expect the combination of new investments, share repurchases and the impact of net inflows from alternatives to be impactful to our 2026 EAPs. Really, given the strategic evolution of our business profile over the last 6 years towards greater participation and alternatives, the EBITDA impact of the growth that we're seeing today is really meaningful. The largest driver of that has been a turnaround in our net flow profile as we've moved the business from what was shrinking organically around 10% annually to a business that today grew 3% annualized on a year-to-date basis and 5% annualized this quarter. And as we've experienced an even larger EBITDA contribution, the past 2 quarters from our net flows, then our organic growth rate would indicate so we're seeing some further expansion in EBITDA than you would expect in our net organic growth rate.

This trend is occurring because of the bifurcation we've seen between strong organic growth on the alternative side, and the headwinds on the traditional side. The growth in alternatives is moving the business towards a higher fee and longer lock strategies that, in some cases, have future performance fee and carry potential while the outflows have been more isolated to lower fee open-ended equity funds. So even though we tend to own more of the firms where we're experiencing outflows the higher fee rate from the alternative products have more than offset this impact. And we'll give some further guidance on the next earnings call in terms of our overall thoughts on 2026.

Dava, you might just want to also talk about just the composition between NFRE and PRE just briefly. I think that's also something that's meaningful that's happening.

Sure. So what's exciting that we've seen to date, again, based on both the combination of the new investment profile that we've been -- that we've had this year and also in terms of organic growth, we've seen our year-over-year aggregate fee rate and real growth in fee-related earnings. So you've seen that up about 15% on a quarter year-over-year basis. And the shift mix of our business is moving towards a higher contribution from fee-related earnings.

Our next question comes from the line of Dan Fannon with Jefferies.

This is Rick Roy on for Dan. So you reported another quarter of accelerating liquid alt flows, and it sounds like momentum in the tax ware AQR strategies continues to be a big contributor towards that. So maybe on that, I was hoping you could add a little bit more color on the full diversity of flows coming from the AQR broader franchise and maybe perhaps also describing the performance fee potential of the broader set of HR strategies that are gathering inflows?

And then maybe separately, if you could note any notable private markets fund raises to be aware of in the near term and into 2026, that would be helpful.

Thanks, Rick. I'm going to let Tom just sort of give you an overview of flows, and I'm sure within that, we'll drill down on some of the trends that we're seeing.

Rick, to -- and Jay, actually, maybe after I go through this, you can give a little bit more color on EQR specifically, but I'll give you the whole picture and then we can fill in from there. To put the whole thing in context, our flows are primarily a function of 3 key drivers. The first is the alignment between our affiliates' investment strategies and overall client demand trends. The second is the evolution of our business mix and Dava just talked about some of this as to Jay, over time through both organic growth rates, the relative organic growth rates of our different business lines, and the investments that AMG is making to form new partnerships and growth areas in line with our strategy.

And then finally, the third driver is really the lift that we're able to provide at the AMG level to our affiliates through new product development and distribution. In terms of alignment with client demand trends, with approximately 55% of our EBITDA now coming from alternative asset classes and a growing portion coming from wealth clients our overall positioning is very well aligned with forward trends. In terms of where we go from here, as we look to continue to push that percentage of EBITDA from all closer to the 2/3 level over the course of time, all of our recent new investment partnerships have been focused on alternatives. And significantly more than 100% of our total net flows over the past few years have also been in alternatives. And over that same time frame, we've grown alternatives AUM on our U.S. wealth platform from about $1 billion to more than $7 billion. And you're seeing the cumulative impact of that business mix evolution on AUM on our fee rate, as Dava just talked about, and on the contribution of EBITDA that's coming from alternatives overall.

So to go into the individual buckets in private markets, as I mentioned in my prepared remarks, our affiliates raised $4 billion in the quarter and that's really a continuation of momentum that we've been seeing over the course of the past several years. It was another very strong quarter for Pantheon, alongside positive contributions from EIG and Abacus. And I think importantly, that really demonstrates the diversity of our affiliate offerings across a variety of different areas, private market solutions, credit, private equity, real estate infrastructure, where our affiliates are real leaders in these specialized strategies in the market. Liquid Alternatives was another record quarter for us, $14 billion in net inflows. And as you referenced in your question, driven primarily by solutions for the wealth channel focused on after-tax returns at AQR but importantly, with positive contributions from a number of our liquid alternative affiliates, we're seeing real breadth in that area as well.

This is now the fifth consecutive quarter where we've seen positive flows in liquid alternatives. And over that time period, we've seen $3 billion in total net inflows. Equities, we continue to see headwinds, and that's in line with the overall industry. You saw that this quarter with about $9 billion in outflows that said, it's been another good year for beta, and beta continues to support AUM levels overall. And we're also seeing some pockets of strength, Jay mentioned earlier, Artemis River Road. So there are some real bright spots that we're excited about there also.

So when you put all those things together kind of back into that initial framework, better alignment with overall client demand trends as we continue to shift our business, continued investments in new affiliates active collaboration with our affiliates to develop and create innovative new products that can help to drive client demand through our capital formation capabilities, together with our confidence in our ability to continue and maybe even enhance and accelerate the impact of these growth drivers going forward, we feel like we're in a really strong position from an overall franchise perspective in terms of forward organic growth opportunities.

And Rick, let me address AQR specifically. Incrementally, it has been very helpful to our flow profile, but I'll highlight a few key attributes about that business is a very diverse business. And the way I describe it is it's a liquid alts business, 1 of the top 3 in the world it has a pretty significant tax aware wealth business that has a different dynamic than just its overall institutional liquid alts business. And then it has a 40 long only business as well. Because of its excellent performance, it's seeing inflows in each of these areas. And so I think we would be remiss without sort of the obvious, which is a very big, diverse business with lots of different strategies and lots of different opportunities within it.

Maybe I'll highlight, though, as I did last quarter, sort of a paradigm shift that's occurring in the wealth channel. and AQR is leading -- or has a leading position in this paradigm shift. The basic strategies to harvest losses, they've been around for decades, but AQR, they brought in additional set of tools and capabilities to it. They've kind of unlocked the power of investing for after-tax outcomes with the use of liquid alternatives, specifically using long-short investing techniques, either to track market data or they have a goal of absolute return, and that has generated superior after-tax outcomes, and that's what's leading to the significant flows. The shift in focus by RIAs to after-tax outcomes from their historical convention of evaluating on pretax returns, we think this is just in the very early innings. So the AQR has quite an opportunity ahead of them.

As you know, they've been an innovator in liquid alternatives for more than 20 years now, their ability to bring new strategies and products to the market as 1 of the best in the industries. They've been building this tax aware business for some time. They've developed an entire suite of products inside of separate accounts, limited partnerships and now mutual funds. Their strategies generate for us, management fees and many of them have a potential for performance fees. As I've said in my prepared remarks, AQR has the potential to increase their fee rates here over some period of time as their flow mix changes -- they also have an opportunity to increase their margins, and we feel that in our EBITDA contribution that Dava mentioned earlier.

I gave most of this background on the prior call. So I thought I might just kind of update you bring you forward on our thoughts today. So we see AQR as having a first-mover advantage. It obviously has a differentiated culture in an operating environment that is advantageous compared to most competitors. On the first-mover advantage, it takes time to get on platforms to penetrate the largest RIAs in the country to integrate into systems at the wirehouses. AQR has a more than 2-year head start is now finishing the onboarding just now with several of the largest wealth platforms. So they haven't even gotten on all of the parts of the market where they could distribute their product. So we do expect continued momentum from AQR in this area. But I would be remiss if I didn't comment on the institutional business, again, with their great performance. They have a very nice pipeline building on the liquid alternative side. And through the lens of AQR, we're seeing increased interest in liquid alternatives more broadly on the institutional side.

So maybe the last thing I'll say about AQR is that their assets have grown from approximately $100 billion at the beginning of 2024 to $166 billion as of September 30. And so you can see there's quite a bit of growth, and most of that came from organic flows. And thank you for your question. Appreciate it.

Ladies and gentlemen, this concludes our Q&A session and will conclude our call today. We thank you for your interest and participation. You may now disconnect your lines.