Q4 2023 Artisan Partners Asset Management Inc Earnings Call

Participants

Eric Colson; CEO; Artisan Partners Asset Management Inc.

Jason Gottlieb; President; Artisan Partners Asset Management Inc.

C.J. Daley; CFO; Artisan Partners Asset Management Inc.

Alexander Blostein; Analyst; Goldman Sachs & Co.

John Dunn; Analyst; Evercore ISI Group

Bill Katz; Analyst; TD Cowen

Kenneth Lee; Analyst; RBC Capital Markets

Presentation

Operator

Good afternoon and welcome to the Artisan Partners fourth-quarter 2023 earnings conference call. (Operator Instructions)
Please note this event is being recorded. I would now like to turn the conference over to Eric Colson, Chief Executive Officer. Please go ahead.

Welcome to the Artisan Partners Asset Management business update and earnings call. Today's call will include remarks from Eric Colson, CEO; Jason Gottlieb, President; and C.J. Daley, CFO. Following these remarks, we'll open the line for questions. Our latest results and investor presentation are available on the Investor Relations section of our website.
Before we begin, I would like to remind you that comments made during today's call, including responses to questions may include forward-looking statements. They are subject to known and unknown risks and uncertainties, including but not limited to, the factors set forth in our earnings release and detailed in our SEC filings. Factors and uncertainties may cause actual results to differ materially from those discussed in the statements, and risks will obligation to update or revise any of these statements following the presentation.
In addition, some of our remarks today will include references to non-GAAP financial measures. You can find reconciliations of those measures to the most comparable GAAP measures in the earnings release and the [sentimental] materials, which can also be found on our Investor Relations website.
Also, please note that nothing on this call constitutes an offer or solicitation to purchase or sell an interest in any artist and investment product or a recommendation for any investment service.
I'll turn it over to Eric Colson.

Eric Colson

Thank you for joining the call or reading the transcript. For us, these calls are an opportunity to repeatedly communicate who we are what we seek to accomplish and the time horizons that matter to us, we intentionally de-emphasized quarterly and annual outcomes. Instead, we focus on what we are doing to create and maintain an environment and culture that maximizes the probability of long term performance for clients, talent and shareholders.
Artisan Partners is a high value added investment firm designed for talent to thrive in a thoughtful growth environment. Our purpose is to compound wealth for clients over long time periods. We do this through our talent driven business model. We attract, recruit and partner with exceptional and differentiated investment leaders, and we give them autonomy, resources and time to generate investment returns over a long time period.
As Jason will discuss, we have been doing this for nearly 30 years in public equities for a decade in fixed income and are in the early innings in alternatives time as a crucial ingredient in what we do. We retain the time of our investment teams so they can maximize time spent on research, investing and adding value for clients. We work to earn time to extend duration. We do this by being true to who we are by maintaining a culture focused on long term by avoiding the temptation to engineer short term results by remaining disciplined through difficult periods by constantly communicating our time horizon to clients and shareholders, setting the right expectations and doing business with individuals, allocators and institutions better aligned with our long-term approach.
The chart on slide 2 reinforces why we focus on the long term. Short time periods are noisy skill and luck are indistinguishable over longer periods. The value of process and discipline become apparent as we extend time the value of what we do becomes evident of our five strategies with 20-year track records. All five have added value over the period after fees with enough time outlook and compound into meaningfully more wealth for clients and investors, a simple example of which is on the right side of the slide, we take a similar long-term approach to developing our business. We look for opportunities that are consistent with who we are and where we have an edge. We are methodical. We don't chase fads. We remain focused on high value added investing if we do these things with patients, we are confident that quality long term outcomes will follow, have asked Jason to elaborate on this approach as it applies to our investment platform.

Jason Gottlieb

Thank you, Eric. As Eric mentioned, we have been building equity franchises for nearly three decades or a decade. And with fixed income and are in the early innings with alternatives, I want to start with our equity businesses. Today, we have eight equity investment teams and 16 strategies accounting for $137 billion in AUM and approximately $900 million of annual revenue. Several of our equity teams are well established franchises with recognized leadership, depth of resources, disciplined investment processes, unique cultures and long term track records. These characteristics result in powerful and durable investment and business engines, but it takes time the path is not linear and there are periods of decline as well as growth.
Slide 3 features our international value franchise Seed Portfolio Manager. David Samurai joined Artisan 22 years ago and launched the international value strategy. David has a well articulated value investing philosophy and process that the international value team has applied with discipline through market cycles. Result is outstanding investment performance over long time periods.
The International Value strategy has generated 466 basis points of average annual alpha net of fees. Since inception, the Artisan International Value Fund is ranked number one in its Lipper category. So you can see the business outcome on the page. The team laid the foundation in the early years, establishing themselves and their track record. They have steadily grown their business by compounding client capital and net new flows. Today, the team manages $41 billion across a diversified book of institutional and wealth channel clients in 2020 venues out and a non-for-profit. Gary joined the international value franchise and partnered with David to launch the international Explorer strategy. International explore now has a three-year record. It has generated 549 basis points of average annual alpha net of fees since inception is managing nearly $250 million in AUM and is poised for future growth. The international value franchise demonstrates the demand for high value added investing in public equities result as a highly valuable business assets, second compound long into the future. We have multiple examples of this throughout our equity business.
Turning to slide 4, we expanded into fixed income, 10 years ago with the addition of Bryan Krug and the credit team, the fixed income opportunity set is compelling. The asset class is large and growing. It is complex with tremendous opportunity for skilled talent to add value for clients. And there is asset allocation demand with aging populations creating the need for income and yield. We believe 10 years ago that the success of our talent-driven business model and long-term approach would translate to fixed income. Provided we partnered with the right talent, focused on high value added areas, fully resourced the effort and took the time necessary to build a solid foundation, we are beginning to see the long-term outcomes. The Artisan High Income Strategy is nearing its 10-year mark. Since inception.
It has generated an average annual return of 6.18% after fees compared to 4.31% for the index over that time period. The Artisan high income fund is ranked number one out of 324 funds in its Lipper category. As a result, the high income strategies generated $1.5 billion in net flows in 2023. In 2022, we launched our second fixed income oriented team, the M. sites Capital Group, which focuses on emerging markets. We are proving that our platform philosophy and approach can work in fixed income, evidenced by steady growth in fixed income AUM. We believe we are establishing two world-class fixed income franchises with significant investment capacity. It will take time but we believe these franchises will be every bit as successful and sustainable as our equity franchises.
Turning to slide 5, in the same way that we have methodically built our equity and fixed income businesses. We continue to build our alternatives capabilities. We remain in the early innings. We are focused on setting the right foundation, adding investment degrees of freedom, designing and launching strategies where we have an edge with talent and an opportunity to grow over time. We believe that fixed income provides a natural avenue to continue expanding in this direction. Our credit opportunity strategy now has six year track record and has generated an average annual return of 9.84% since inception. Net of fees from our recently launched global unconstrained strategy has generated an average annual return of 8.92% since inception, net of fees. And during the fourth quarter, we closed $130 million of commitments for our first closed-end fund designed to capture opportunities in dislocated credit markets. While we remain in the early innings, we are confident that our model and philosophy will work in alternatives like it is work in equities and fixed income.

Eric Colson

Thank you, Jason. We remain extremely excited about the long-term investments we are making across equities, fixed income and alternatives. Our excitement stems from a proven approach across asset classes and time periods successful long term outcomes for clients, shareholders and key investment talent and the limited supply of homes for investment talent, providing our combination of autonomy, resources and time will continue to think in decades versus years or quarters. And we will continue to focus on those things that we can directly influence day in and day out in pursuit of long-term success. Thank you for your time, and I will now turn it over to CJ.

C.J. Daley

Thanks, Eric. Our 2023 results reflect the impact of a rising market and strong investment performance. Market volatility experienced in 2022 and 2023 highlights the importance of our financial model, maintain a highly variable expense structure to minimize the distractions of short-term market volatility. As we've shown in the past, our financial model is able to deliver stable and predictable results through market cycles. Overview of our financial results begins on Slide 8. Assets under management ended the fourth quarter at $150 billion, up 10% from the September 2023 quarter and up 17% from the prior December year end. Investment returns contributed $14.6 billion to the increase in AUM in the quarter. Net client cash outflows during the quarter were $400 million and there was 500 million of Artisan funds distributions that were not reinvested. Average AUM for the quarter was down 1% sequentially and up 10% compared to the December 2022 quarter. The full year investment returns contributed $27 billion to the increase in AUM, $3.9 billion of those returns were attributed to investment performance, excess of benchmark returns.
Net client cash outflows were $4.1 billion for the year. Net outflows continue to be impacted by industry trends in favor of low fee passive index products and more recently, the move of funds into fixed income gross inflows remain muted and well below our historical levels. Average AUM for 2023 was down 2% year over year. Our complete GAAP and adjusted results are presented in our earnings release. Revenues in the quarter increased less than 1% compared to last quarter as performance fees more than offset the impact of lower average AUM. Total performance fees were $6.1 million in the quarter. However, as a result of the required consolidation of our credit opportunity strategy. $2 million of the performance fees are recorded on our P&L below the operating line as a reduction to net income attributable to consolidated investment products.
Fair to fourth quarter of 2022, revenues were up 10% on higher average AUM. Adjusted operating expenses for the quarter increased 1% sequentially and 9% compared to the same quarter last year, primarily driven by an increase in incentive compensation expense on higher revenues. For the full year, revenues were down 2% from 2022 on lower average AUM. Our recurring average fee rate remained at 70 basis points.
Adjusted operating expenses were up 2% in 2023 compared to 22. The decrease in variable expenses due to lower revenues was more than offset by higher fixed costs. Fixed compensation costs were up $10 million in 23 on a 4% increase in the number of full-time employees and inflationary salary and benefit increases.
Travel expenses were also up $3 million during the year. The higher expense was driven by an increased travel by Investor Research and distribution professionals. Adjusted operating income decreased 9% in 2023 compared to 22, and adjusted EPS was 7% lower. Adjusted EPS includes over $6 million of interest income earned on excess cash in 2023 compared to the negligible amount in 2022.
Balance sheet remains strong. We currently have about 150 million of seed capital invested in sponsored investment products with significant amounts of realizable capacity. As those products begin to scale, we will redeem the seed capital to either deploy into new products or otherwise reinvest in the business or return to shareholders. In addition, our $100 million revolving credit facility remains unused. We continue to return capital to shareholders on a consistent and predictable basis through quarterly cash dividend payments and a year end special dividend. Consistent with our dividend policy, our Board of Directors declared a quarterly dividend of $0.68 per share. With respect to the December 2023 quarter, which represents approximately 80% of the cash generated in the quarter. Our Board of Directors also declared a special annual dividend of $0.34 per share similar to prior years, we retained a portion of the cash generated in 2023 to fund future growth initiatives, primarily to make seed capital investments in new investment strategies and vehicles, total of $2.78 per share will be paid out with respect to 2023 cash generation.
That results in an annual trailing dividend yield of almost 7% and is in line with our historical average annual yield of 8% since our IPO in 2013 each year, our Board of Directors approved a grant of long-term incentive awards in the first quarter of 2020 for the Board approved an award of approximately $60 million, consisting of $39 million of cash base Franchise Capital awards and $21 million of restricted stock awards. Generally 50% of the award vest pro rata over five years and the remaining 50% vest on for 18 months after the qualified retirement.
Starting with this 2024 grant, the majority of our incentive awards will include a traditional retirement acceleration feature. New provision eliminates the five year vesting requirement when career award recipients have a qualified retirement after having met an age plus years of service threshold of 70. All other vesting conditions, including notice periods and clawbacks will remain in effect, all of the traditional retirement acceleration feature is to maintain our best-in-class compensation structure for top talent.
For financial statement perspective, the added feature results in front-loaded expense for awards granted to employees who already meet the age plus years of service requirement, the overall amount of expense to be recorded will remain the same. We're estimating $69 million of long-term incentive amortization expense for 2020 for approximately $8 million to $9 million of that expense. As a result of the new retirement provision, we expect to have elevated LTI expense for the next several years. Due to this change and then expect the expense will reduce and level off, including long-term incentive compensation.
Fixed expenses are expected to increase mid single digits in 2024. Majority of the increase reflects 2020 for merit increases. The absorption of a full year of expense for full-time employees hired in 2023 and an expected low single digit increase in employees in 2020 for the additions will primarily be related to investment in distribution roles to capitalize on our growth strategy. Travel may also increase slightly in 2024 as we execute on our growth initiatives, occupancy, technology and other fixed operating expenses are expected to be relatively flat compared to 2023. As a reminder, our compensation and benefits expenses are generally higher in the first quarter of each year due to seasonal expenses. We estimate these expenses will be approximately $6 million higher in the first quarter of 2024 compared to the fourth quarter of 2023.
That concludes my prepared remarks, and we'll turn the call back to the operator.

Question and Answer Session

Operator

We will now begin the question-and-answer session. (Operator Instructions)
Alex Blostein, Goldman Sachs.

Alexander Blostein

Hey, everybody, good afternoon and thanks for taking the question on Eric, I was hoping that you could start with the prospects you guys have for the fixed income business. Nice traction over the last couple of quarters and years. Clearly, there's a pretty high sort of expectation that market demand for fixed income will continue to improve. So how are your products positioned to perhaps participate in that? And what are your expectations for kind of growth in this in these strategies for 24?

Eric Colson

Hi, Alex. We have been emphasizing the credit franchise with Bryan Krug as well as the M sites franchise with Mike ceramic. I'll start with the insights franchise. And we saw quite a bit of outflow in emerging market debt and 22. I think it was the largest emerging market debt outflow in the history of that category. And then 23 last year, we saw probably close to a 10% outflow in the category as we look at our insights team. In the same way, we looked at our global strategies, Global Value and Global Opportunities. The bulk of the allocations come from the institutional channel, a high percentage, if not majority comes from outside the United States. There is a competitive landscape, but I think we stack up very well performance wise. And we expect as we I've witnessed with global opportunities and global value, the requirement for a three-year track record and then starting to see that, that steep slope and build up of assets once you get that three-year track record between now and the three-year track record, we were getting quite a bit of inquiries. We're building the asset base close to about $1 billion, and we expect to continue building the asset base over the next year, but really expect meaningful growth after the three year mark, given the traits and characteristics around that client base.
And similar to that credit, we also have a alternative strategy with global unconstrained that we highlighted in the deck. The returns, the risk of the correlation are all very favorable to participate in the movement in a higher allocation to alternatives, specifically liquid alts. And so we're quite pleased with where we're at with them sites and the progress they're making to get to that three-year mark with credit, our credit franchise with Bryan Krug, we've established a very strong base that has built in the same way that we saw our early-stage franchises build were about $10 billion in the franchise and were saving quite a bit. The capacity go into degrees of freedom and create alternative strategies. And with credit opportunities, which was highlighted, the drawdown fund that Jason mentioned and the floating rate fund. We just see a strong runway for building out that franchise and really seeing that take its second phase and build up as we've seen with our other more mature franchises. So again, it's patiently waiting for the right clients right terms and building those over time.
Great.

Alexander Blostein

Next, let us conclude a review IGG. one for you. Just on the change in long-term incentive awards that you highlighted earlier. And I guess, can you talk a little bit about what prompted you guys to go down this path and what sort of caused the change. And as you look out beyond 2024, it sounds like an elevated retirement acceleration clause will sort of weigh on incentive comp for a couple of years. So should we think about that incremental nine to $10 million as sort of the new incremental expense beyond 2024 as well?

Eric Colson

Yes. So thanks for the question, Alex. We've always aligned our business with long-term value creation, sustainable growth, and we've designed it for investment talent to thrive to extend their duration and provide a path for them. To spend their careers here and we've evolved and have been thoughtful over the 10 years. We've been public as well as book as a partnership before that in 2014, we introduced these career shares, which are comprised of both time vested as well as a qualified retirement provisions. And we've introduced, you know, this retirement clause as sort of in the next phase of, you know, extending duration and providing a path for investment talent to Sprint to spend their career here. So they don't have to worry about whether they're going to wind up forfeiting anything and they do the right thing there, qualified retirement, it will further align their their and our interests, our shareholders' interest, our clients' interest with the proper retirement and succession planning. And with respect to the expense, I would expect it to be elevated in the $8 millioN and for the next three years. And then it will step down pretty meaningfully and then up over a five year period or level off. And just to be clear, the provision only applies to grants that started in 2024 and forward. And so we think that benefit will be a long-term benefit for for everyone.

Alexander Blostein

Got it.
That's perfect.
Thank you.

Operator

John Dunn, Evercore ISI.

John Dunn

And could you maybe give us an update on the drivers of the non-US institutional channel for equities, maybe stuff like Europe, Australia because you got got better this quarter on the non-US drivers on a bit of it was around M sites that we had some of the early stage wins. There was probably the that big change. And I would say Australia has continued to wane on our distribution that we've had early fades in the first quarter. And then in the fourth quarter, we had some outflows. And then with our with one of our key relationships in the UK, we had a strong inflow as well in our Global Ops and Global Value strategies. So a few a few really broken down for the quarter, probably a good flow on Global Ops, global value and as well as our insights team. And that was out of the Middle East.
Got you.
And then at your guys' Investor Day, you talked about not having not having to be first and new into newer areas. But lately, there's been a bunch of private market firms and teams joining a bigger firms. Have you observed any changes in the backdrop for that or potential sellers thinking about stuff like getting better distribution or and whether it's better to be?
I'm a part of something bigger?

Jason Gottlieb

Hi, this is Jason. I'll I'll take that. I think we've we've seen a lot of activity in the private market space, probably primarily in the private credit world, not not to be surprising how we see it both in the world of lift-out opportunities, which is part and parcel with our model as well as the acquisition and we don't see that as something that's going to stop. I think that the changes might come more in the form of lift-outs. And our belief around that is that there's there's going to be a series of funds that may, in fact, wind up disappointing. And so the carry opportunities for some of the investment teams could be a little bit more shallow than they were in the past, and that might shake some opportunities for you. And that has been correlated to the the inbound inquiry that we've been experiencing here at Ares and so it's given us the opportunity to really take a very hard look and be deliberate with the opportunities in that area of the world. And that is a one asset class as we had discussed at the & Investor Day back in September, and we've talked about in the world of where we go strategically with alternatives.
Certainly that is an area of interest, but we're not going to obviously adjust our business model just to find a team. It has to be right for us, one that we think we can deliver differentiated returns in the segment of the market and identify the right clients. And to your point and all of these big column acquisitions or mergers tend to come in the form of what can you do for me on distribution and as you know, that's that's not necessarily directly our model. We're not we're not here to and first and foremost distribute. We're here to produce grow class, differentiated results and find the right clients on the right terms to deliver that outcome. And so we're going to remain very consistent with our past and our history and seek to take the right shot as and when it arises, recognizing that it's just it might take time.

John Dunn

Thank you very much.

Operator

Bill Katz, TD Cowen.

Bill Katz

Okay.
Thank you very much for taking the questions and appreciate the prepared commentary. Just maybe start off on the flow side. So it seems like there's a lot of different opportunities here. And I guess you made some comments in your press release around the opportunities within equities. Is it some of the smaller incremental vehicles that you've that you are sort of seizing into attractive time lines, attractive performance or there's some maybe older, more seasoned vehicles where you're seeing the demand. And I guess, relatedly, you've always watched capacity pretty carefully. I appreciate you highlight the International Value Fund, but at $40 billion, my instinct was okay, that's a pretty big fund. Where do you tend to sort of cap out incremental new dollars coming into that? Thank you.

Jason Gottlieb

Thanks, Bill. It's Jason again. I'm yes, our franchises have continuously sought to identify opportunities for expanding degrees of freedom. They've come in many forms, including broader securities via differentiated markets, market caps, liquidity structures. Also we see our teams build capacity through recruitment and infiltration of that talent.
David, Tamara, with high value. And as Eric mentioned, Bryan Krug with credit embody this mindset, importantly, their success with their success. They have the ability to work with like-minded sophisticated clients who understand their philosophies and importantly, their time horizons. This is in large part why we believe the opportunities for modest thoughtful growth are in place while they remain methodical in the pursuit of their top-tier returns for existing shareholders. And so we recognize that David success on the return side has propelled them to a reasonably large size fund, but his or his team has broadened out the types of securities you can use. You've seen us and I mentioned this on the other on the commentary, having Banyan on join the team getting down market cap really does give a much more expanded opportunity set for for David in the international value franchise.
And then more broadly, I guess I would say, and this isn't specific to any one team or any one market, but you've just seen a huge increase in the in the world and money market vehicles saying I might get the numbers off a little bit, but I think it's grown from somewhere in the high threes to about $6 trillion at the end of 2023. I don't know what the numbers are today, but until we see a reversal of that. I think there's a lot of pent-up demand and money on the sidelines. But when we do see that reversal, we think that our returns in our performance and our teams speak for themselves. And we think that those assets will ultimately find a home, whether it be with a value or credit or some of the global strategies in the institutional space or in anemia. So we're just going to we're going to stay thoughtful. We're going to stay patient. But we think when there is that that move back out of a backout of safety and money markets were we're very well positioned to capture that.
Okay.

John Dunn

Thank you. And maybe wanted to see, Jay, as you look ahead to the year how are you thinking about balancing reinvestment back into the business versus the payout ratio? Payout ratio came in maybe a little bit higher than what I think folks were invest think about this year like many 6.5%, if I did the math right, you've been running close to 90 ish percent a couple years before that. So we look at this year, recognizing some of the seasoning, somebody reinvestment need, see capital, et cetera. How do you think through the payout ratio is looking at for the year? Thank you.
I'm sure Bill at this time, I think you know, we're staying the course on. We held back some cash this year to seed new products. I think we feel pretty good about where we are and the size of our seed book. And so there could be potentially some additional cash freed up for for other uses next year, including adding to the special dividend but as we sit here right now, we continue to see the 80% variable dividend paid each quarter along with that special dividend at the end of the year to be our course of action. So I wouldn't I wouldn't anticipate know any major changes to what you're seeing from a from a payout percentage.
Thank you.

Operator

Kenneth Lee, RBC Capital Markets.

Kenneth Lee

Hey, good afternoon. Thanks for taking my question on just one on the credit alternative investment strategies, I wonder if you could talk a little bit more about how you see potential demand, especially in the current rate environment thing?

Jason Gottlieb

Yes, hi, this is Jason again. I'll talk about a couple of them. And then if there's a follow-up question, just let me know, but when you think about the credit opportunity strategy that that Brian has been that has been building and developing over the past six years. We now think we've got a phenomenal asset in the form of his performance. As we highlighted, it's around almost just shy of 10%, 9.8% net fee and we've always been really patient on the distribution side because we firmly believe that from time to time, we'll spend as time spent, I'm honing the record and we've now done that. And I think the the uptake with clients, whether it's existing clients that are evaluating Brian, in a different way through an alternative lens or some of the new clients that are starting to evaluate them that are building up in the pipeline.
We think that that's a really interesting opportunity for us to continue to develop and build and grow the alternatives allocation and then going back to the global unconstrained strategy on the insights team. Likewise, what's what's interesting is this is somewhat countercyclical to the money market conversation that we just had on a prior question, whereas if you have money market rates somewhere in the 4% to 5% range in the strategy that the global unconstrained strategy deploys, if you could generate a 3% to 6% excess return on top of that money market rate, you get really, really interesting outcomes somewhere in the, let's call it mid mid to high single digits potentially in the low double digits if we're able to execute, tends to be uncorrelated to the broader markets. And I think people are starting to take note of that.
Again, it's very, very early innings. As Eric mentioned, we're sort of two years into the journey, not even quite two years. And we think that once people evaluate the team early stages, they hit their three-year record. We think that that could be a really interesting leg to the growth stool. And I'd be remiss if I didn't mention the dislocation, the drawdown fund raising $130 million for Brian and dislocation opportunities is really a testament to, I think, the strength of his brand and our credit platform broadly. And this is hopefully going to be one of many. Once we deploy that capital, Brian produces the returns, we return the capital.
There should be an opportunity to continue to develop and grow and build a really exciting platform around these distraught m. vehicles. And so I think we've got really interesting short, intermediate, long term duration opportunities for the platform, and there's more that will ultimately reveal themselves, whether it's with the existing teams, which is the highest and best use of our time to develop that the probability of success is much higher or whether we go out and we identify the next the next team to bring out of the platform. We still feel like we've got really good opportunities for growth here.
Great.

Kenneth Lee

Very helpful there. And just one follow-up, if I may.
I think in the prepared remarks, you talked about an increase in distribution headcount. Wondering if you could just talk a little bit more about expansion plans for distribution this year thing?

Eric Colson

Yes, certainly, last year, we have we spent quite a bit of time optimizing our distribution team. We looked at the array of strategies on getting up to 25 strategies, the complexity of the product mix, including credit and alternatives, we felt the need to emphasize the the sales orientation of our distribution of our centralized distribution groups going after the intermediary non US from that centralized group, we adjusted compensation.
We added resources. We built in training with a real focus on sales and expanded relationship management for continued cross-selling we then also emphasized client service and product knowledge inside the dedicated distribution of those individuals attached to our autonomous teams. And with those adjustments, we're also adding a few individuals into both areas as well as we launch day alternatives. Our distribution team is focused in the center of the firm to help amplify sales for credit opportunities, global unconstrained and other alternative strategies. And we think at the end of the day, that will create a smoother sales cycle selling across the firm and also with the complexity, our clients will get direct relationship managers and product knowledge from individuals that are closest to the teams.

Kenneth Lee

Got you. Very helpful there. Thanks again.

Operator

This concludes our question and answer session and the Artisan Partners' fourth-quarter 2023 earnings conference call. Thank you. You may now disconnect.