Waddell & Reed Financial, Inc.

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Waddell & Reed Financial (WDR) Henry John Herrmann on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Call

April 26, 2016 10:00 am ET


Henry John Herrmann - Chairman & Chief Executive Officer

Nicole McIntosh-Russell - Vice President-Investor Relations

Philip James Sanders - Chief Investment Officer & Senior Vice President

Thomas W. Butch - Chief Marketing Officer & Executive Vice President

Brent K. Bloss - Chief Financial Officer, Treasurer & Senior VP


Michael S. Kim - Sandler O'Neill & Partners LP

Chris C. Shutler - William Blair & Co. LLC

Glenn Schorr - Evercore ISI

Daniel Thomas Fannon - Jefferies LLC

William Raymond Katz - Citigroup Global Markets, Inc. (Broker)

Adam Q. Beatty - Bank of America Merrill Lynch

Robert Lee - Keefe, Bruyette & Woods, Inc.

Patrick Davitt - Autonomous Research US LP

Eric Berg - RBC Capital Markets LLC

Macrae Sykes - Gabelli & Co.


Good morning, everyone, and welcome to the Waddell & Reed First Quarter Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please also note that today's event is being recorded.

At this time, I'd like to turn the conference call over to Mr. Hank Herrmann, Chairman, Chief Executive Officer. Sir, please go ahead.

Henry John Herrmann - Chairman & Chief Executive Officer

Thank you. Good morning. With me today are Tom Butch, our Chief Marketing Officer; Brent Bloss, our Chief Financial Officer; Phil Sanders, our Chief Investment Officer; and Nicole Russell, our VP of Investor Relations.

Nicole, would you read the forward-looking statements, please?

Nicole McIntosh-Russell - Vice President-Investor Relations

During this call, some of our comments and responses will include forward-looking statements. While we believe these statements to be reasonable based on information that is currently available to us, actual results could materially differ from those expressed or implied due to a number of factors, including, but not limited to, those we referenced in our public filing with the SEC. We assume no duty to update any forward-looking statements.

Materials that are relevant to today's call, including a copy of today's earnings press release as well as supplemental schedule, have been posted on our website at waddell.com under the Corporate tab.

Henry John Herrmann - Chairman & Chief Executive Officer

Thank you, Nicole, and good morning, again. Weak firm performance and tightened market volatility continued to pressure flows. Asset Strategy was the largest with $4.6 billion of outflows during the quarter, pressured by significant redemptions from a large third-party distributor.

We also experienced an increase in outflows from some of our other franchise funds. Improving performance is critical and, as such, priority number one. I believe in on our investment process and I'm confident that we have the right people and the right resources to get us back to delivering competitive investment returns.

Philip James Sanders - Chief Investment Officer & Senior Vice President

Good morning. This is Phil. The unusual market volatility during the quarter created an environment that few active managers navigated successfully. Persistently slow global growth, unusually accommodative global central banks, negative interest rates and the uncertainty regarding the upcoming U.S. elections remain at the forefront of investor concerns.

These ongoing economic, political and policy risks have resulted in a market where perceived safety, stability and yield remain in high demand. In our view, this has resulted in an environment where significant valuation and correlation anomalies are evident across specific sectors and the market in general. We believe these will normalize over time, thereby creating a more favorable backdrop for active management.