Improvement of Operational Performance: A Deeper Analysis of the Third Quarter

In the third quarter, the company recorded remarkable operational and financial performance, reflected in increasing sales across all product categories. Despite general outflows, the executives were pleased with the sales growth and momentum, as well as improvements in net flows, indicating a more favorable market environment. Particularly noteworthy was the performance of equity managers, who outperformed their competition with 82% of equity investments. The company introduced new products, including an actively managed ETF from Kayne Anderson Rudnick focusing on mid-cap stocks, and a private credit CLO ETF from Sykes. These followed the launch of the AlphaSimplex Managed Futures ETF in the second quarter. Assets under management increased by 6% to $183.7 billion, supported by market performance and positive net flows in separate retail accounts, ETFs, and global funds. While net outflows of $1.7 billion were recorded compared to $2.6 billion in the previous quarter, retail accounts were particularly notable with a positive net flow of $0.4 billion. Kayne Anderson Rudnick's asset management business was ranked as the seventh best RIA firm by Forbes and third among the best independent advisors for 2024 by Barron's. The company also increased its capital return with an enhanced share buyback and a seventh consecutive annual dividend increase. The operating margin reached its highest level in two years at 34.4%, driven by higher revenues from investment management and disciplined expense management. The company raised earnings per share to $6.92, representing a 6% increase compared to the second quarter. Through engagement with new managers and the introduction of new products, the company achieved significant growth rates in assets under management, positioning itself well for continued growth.