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>> Of course, the person that all of this

rolls up to is Rob Sharps. He's been

with the company for three decades,

almost his entire career and a third of

the lifespan of T- Row itself. Starting

as an analyst and rising to become

chairman and CEO of one of the pillars

of the American retirement system. Let's

face it, if you have a 401k in this

country, there's a decent chance one of

Rob's deputies has a hand in managing

some of that money. Rob, great to have

you here.

>> Great to be here.

>> And I do want to start off with that

responsibility that comes with managing

that money. You hit $1.9 trillion, a big

milestone a few months ago. Talk to me a

little bit about what that actually

meant within these walls.

>> Yeah. Um, it's a significant

responsibility that we're deeply focused

on. Uh I would also point out that

2thirds of that 1.9 trillion is

retirement related in some way. Uh I

feel that retirement is a first order

objective certainly for most individuals

and many institutions around the globe.

Uh and I really think that we're

incredibly well positioned to deliver

great outcomes for retirement savers and

retirees. When you think about what your

job is and more importantly what your

job is for your clients, how much does

that mesh with the original sort of idea

and ethos that Thomas Roric Jr. had when

he founded this company 90 years ago?

>> Yeah, the the the founders's vision was

if you took care of your clients,

they'll take care of you. And I still

think that's very central to our culture

and to our value proposition. I think

we're a very client- centric

organization and deeply focused on

delivering great investment outcomes for

those clients. But I think the

foundation of all of it is our

integrated global investment platform,

right? the deep expertise that we bring

uh across asset classes across

geographic markets that ultimately

allows us to deliver again those those

uh really compelling investment outcomes

for our clients. The stronger that

engine is, the the stronger we are as an

organization. I I'm always surprised at

your career. I mean, you've you've been

here for for 29 30 years. you started as

an analyst, uh, worked your way up. When

you got tapped on the shoulder where you

were going to be elevated to president,

then CEO, and then ultimately chairman,

were you surprised?

>> Uh, in some ways. Um, I I certainly

didn't have the classic backdrop or or

um experience set to be the CEO of an

enterprise the scope of of TR Price in

the sense that I'd really only been on

the management committee and the

leadership team at that point for a

little over four years. But if you take

a step back, I started my career as a

research analyst following financial

services. Uh so I had the opportunity to

cover uh many of our counterparties, our

clients, our competitors as a research

analyst.

>> Um I spent the bulk of my career

building a large cap growth franchise.

So had the opportunity to to to really

uh master the craft of investing but

also get a sense for the commercial

aspect. Uh finals presentations

uh fees, positioning and performance

updates. U you know got a sense for what

was really important to the clients that

we serve in terms of consistency of

philosophy and process and um you know

kind of ultimately delivering those

great returns. So I mean it did give me

a real sense for the essence of what we

do. Uh and I was ready for uh a new

challenge and um you know I had the

opportunity to run our global equity

business then ultimately run all of

investments as our group chief

investment officer. Uh so I'm I'm not

sure that I was surprised but certainly

very flattered by the opportunity.

>> Well well I mean well you have to be

because you also came in at a big

inflection point not just for T-roll but

really for the investment industry

overall. And I and I am curious if you

can talk a little bit about what's your

vision for growth and getting t-roll

price back on sort of a track for

organic revenue growth. I mean you have

an AUM that's obviously hitting record.

You have gross inflows but there's still

a lot of concerns about net inflows and

the transition from the mutual fund side

of the business to all of these other

elements whether it's active ETFs

private assets etc. Yeah, I'd say record

gross inflows and and record

aumumumumumumumumumumumumumumumumumumumum,

but um you know we have faced some

headwinds that are consistent throughout

the industry in terms of outflows from

active equity within actively within

funds in the US in the equity asset

class. Passive now has about 64% market

share and it's picking up 2 to 3%. Some

of that I really think has to do with

the complexion of the market over a

relatively long period of time now where

the largest market cap companies have

persistently delivered the the the best

performance. Um some of it also has to

do with the open-ended mutual fund as a

vehicle where we've been very very

successful in the past and remain deeply

committed but it's become less central

to many of our clients. So in response

uh we're uh really leaning into ETF uh

SMA on the retirement side trusts so

other vehicles. Uh we're growing in

fixed income. Um we've had you know

several years of very consistent growth

in fixed income. Our performance in

fixed income strong and we have a very

powerful retirement date franchise that

has been a growth engine for us. We're

the largest provider of active and blend

target date funds. Uh, and I think that

positions us well going forward. We're

also pushing into alternatives. Roma,

um, we acquired OA right before I became

CEO at the end of 2021. They're an

alternative credit provider. They do,

>> uh, stressed, distressed, structured,

private, and multistract credit.

>> U, we, uh, have developed internally a

late stage venture capability that we're

meeting significant success with. and we

announced a partnership for uh public

private offerings for the wealth and

retirement market with Goldman Sachs uh

not quite a year ago. So we've got I I

think we've got very significant

opportunity to to grow and to overcome

eventually the headwind from active

equity and from mutual funds.

>> Well, talk about that bridge from the

from that Oakill acquisition in 2021. I

mean you were responsible for the

Goldman partnership and a lot of people

were like okay that's interesting. I

think you finally going to have an

interval fund uh just launched out of

that here. But give me a sense as to why

partner rather than maybe try to go out

and find someone to buy or maybe even

built it yourself.

>> We we're open to building things

organically like we've done with that

latestage venture capability. We're open

to acquisition like we did with OA and

we're open to partnering. In the

instance of the Goldman Sachs

partnership, we think they're a

compelling partner in the sense that

many of their strengths are

complimementaryary with ours and they

brought some capabilities that we didn't

have in certain parts of private market

alternatives that would allow us to

bring these products to market

relatively quickly. I think the industry

landscape is evolving pretty rapidly and

speed to market was part of the decision

with regard to partnering relative to

building internally or organically or

acquiring both of which would take

significantly more time.

>> Well, give me a sense here when we talk

about Okay, so the inter interval fund

came out pretty quickly. Give me a

sense. Are we going to start to see

private assets actually in a target date

fund in a in a T-roll target date fund

sometime soon?

>> Operationally ready to launch a trust

that incorporates uh private market

assets at certain points along the glide

path. Uh we're seeing some client

interest. Uh I think at the outset it

will be a subsegment of the market.

there'll be a part of the market that's

enthusiastic about incorporating the

diversification and the elevated returns

that you should be able to get by

trading liquidity for return and

incorporating those private market

alternatives. But I think there are

significant segments of the market that

will want to watch and see ultimately

how this plays out where there'll be

maybe be a greater focus on on fees and

where there will be a little bit more

hesitancy. So uh I do I do see adoption

of private market alternatives in

defined contribution plans. I think it

will be a relatively slow evolution in

the outset confined to a certain

subsegment of the market.

>> What do you think speeds that up? I mean

because I mean all of most of the other

asset classes are relatively transparent

and some a lot of the concern right now

with private assets at least from a a

potential client perspective is you

don't necessarily have that transparency

always. I mean it's one thing to say

liquidity but ultimately people want to

just know how it's performing. So, how

do you sort of create products where

people have a confident sense of how

things I mean, I can go and check my

mutual fund, my ETF or whatever any day

of the week and have a completely

accurate sense of what it's doing.

>> Yeah. Well, defined contribution plan

should have a very long time horizon and

I do think that this is something that

will have to play itself out over an

extended period of time. I don't I don't

think you'll be able to look after a

year or perhaps even three or 5 years

and say that this has been a success.

But, you know, for most people that are

participants and are contributing to

defined contribution plan, their

retirement date is decades away. And in

many instances, they'll want to continue

to own that asset well into retirement.

Right. So if you look at historical

returns, even if you can get a

contribution that elevates your compound

return by u a half a percent or a

percent by incorporating private market

assets at certain points along the glide

path, it really does create a more

differentiated outcome in retirement for

for for that participant. Um so I again

I think there's a subset of the market

that will get comfortable with that more

quickly and then it'll just have to be

something that proves itself out. Yeah,

it's interesting uh interesting dynamic

and obviously it seems like everyone

feels like we're going there one way or

the other. I am curious about your um

interest and more importantly your

client's interest in some of these tax

advantage strategies whether you're sort

of looking at new products to actually

feed into that uh at all.

>> We we are the first thing I would say is

that the ETF as a wrapper is more tax

efficient than open-ended mutual funds.

Uh so first order of business for us is

to make sure that we have a great range

of ETFs and ultimately that we use those

ETFs in model accounts, asset allocation

models that deliver solutions and

outcomes on behalf of clients that are

trying to build after tax wealth. We

also have SMA business and the SMA

business is where a lot of the emphasis

on tax loss harvesting and tax

optimization has really manifested

itself. we have that capability as well

and you know kind of ultimately believe

that that's an area where we'll have the

opportunity to grow

>> on the regulatory side. I mean I'm sure

you know the IRS has taken a closer look

at some of these things. Have you been

in contact with the IRS about making

sure that as you push into these

products everything is going to be copet

the the approach that that that we would

use I feel very very comfortable with. I

think there are certain products in the

market that are likely to come under

more scrutiny. um we currently don't

have any offerings in that arena and

again the the the approach that we would

use would be relatively straightforward

and you know I don't really have any

concerns along those lines.

>> The FM investment uh uh purchase uh

caught a lot of caught a lot of

attention and probably for a good reason

I guess why FM specifically and more

importantly why fixed income.

>> Yeah. So

it it the FM acquisition although small

I think is a really important signal of

the importance of fixed income ETFs and

SMAs to TRO price and its strategy.

Right? Fixed income is an area that I I

think has thus far proven to be more

resistant to passive. Um it's an area

that's diversifying for us as a firm. We

have a very successful very important

equity business but that gives us a lot

of equity beta exposure uh in our

underlying financials as a company. So

the more we can build our fixed income

business the more uh you know kind of

the less of that volatility we'll be

subjected to. Uh and as we talked about

u ETF and SMA is really kind of the

preferred way to access investment

capability in the wealth channel going

forward. So that's something that's very

very important to us. The wealth

business is a very big channel for us

and one of the areas that we're focused

on strategically in terms of YFM. They

have a unique capability that we don't

in the liquidity and cash management

area and I think they have some talent a

team that's really excited to join

Torrice that is innovative. You know, my

view is that we can take those

capabilities that they have, take their

talent and their team, extend it and

grow it in a much more meaningful way

than they would have been able to do on

their own and much more quickly than we

would be able to do if we were to try

and build those capabilities.

>> And correct me if I'm wrong, but you're

allowing them more or less to kind of uh

uh, you know, stay independent to a

certain extent, for lack of a better

phrase, to kind of to do the extent. Why

was that a deliberate choice?

It was a decision basically to make sure

that

we got off to a strong start together

and that we were really focused on

evaluating the best ways to integrate

and I don't think it's an end state. you

know kind of ultimately I think that

we'll learn each other's businesses and

approaches in a deeper way and determine

you know how where we can add uh

distribution muscle you know where they

can help us with our product roadmap

etc. So my sense is that you know kind

of with with a longer lens there will be

more opportunity for us to work more

closely together.

>> Are are you planning any other M&A?

We're always evaluating our our our

industry is consolidating. The

definition of scale is being redefined

and we're always evaluating M&A

opportunities. We have a very very high

bar. Uh but you know, we're interested

in things that bring us new capability

that can help us reach new clients,

particularly to the extent that they're

not disruptive to our existing

obligations to to clients. But but given

your size and your might. Are people

knocking on your door uh with potential

uh opportunities to be bought?

>> We we have many things brought to us. We

we have

>> scale. I think we have a wonderful

brand.

>> How many things do you say no to?

>> Most all of them.

>> Wow. Okay.

>> Well, that could you can see how many

things we've said yes to, right? OA,

Retiree, and FM investments over a

period of five years. So, you know, and

that that would be a a a very very small

minority of the things that we that we

look at.

>> Well, that also gets to your own

independence. I mean, Tro has always

been proudly independent. I'm sure there

were plenty of points in in the history

of this company where somebody probably

was ready to write a check if you guys

were willing. uh I'm not sure anyone

could really afford it now but but it

gives the sense here of of like what

does that independence mean to you uh as

CEO and chairman as you try to position

this company for you know the next 90

years

>> it's not something that I think

tremendous about in terms of of

independence for the sake of

independence right I mean I think we are

focused on delivering for our clients

creating opportunity for our associates

and ultimately I believe that that will

deliver return for shareholders and as

long as that's the case it's not

something that should have to worry

about. We have a very very long time

horizon. U as I said the industry is

consolidating. We're financially strong.

We can participate in that consolidation

to the extent that that we think it's

the right thing to do for all of all of

those stakeholders.

Um so I'm I'm I'm confident in our path

forward. And

>> but why don't you think investors are

maybe giving you a a little bit more

credit? I mean, we've seen the

underperformance of the stock as of

late, and there are a lot of people

concerned now that as you shift into

these news new products, some of them

are effectively lower fee products than

what you would have gotten on your

traditional mutual funds. And there's

some concern about that bridge as to is

this a company that maybe um does a lot

more business in terms of assets, but

maybe has less revenue on a relative

basis. Is that the future?

>> I I think

>> yeah, look, there's no question that

industrywide there are pressure. there's

pressure on fees from a like forlike

perspective. To some extent, we can

offset that if we're successful in

alternatives where there's also fee

pressure, but where the mix is much

richer than um uh what our current mix

would would look like. I think investors

are very very focused on the near-term

outflows and near-term fee pressure. And

I think some investors might like us to

go more quickly in terms of leaning into

some of these areas that uh are are

really on trend and are really growing

in the industry. I think for us it's

more important to do it right to make

sure that you know how ultimately we

launch the right strategies that have

differentiated value proposition things

that are really compelling things that

are going to deliver those great

outcomes for our end clients than to do

it quickly. As I said, you know, we have

a long time horizon. I'm confident that

we'll be able to grow fixed income.

We'll grow alternatives. We'll grow in

retirement. We'll be able to stabilize

in active equity and get back to growth

in a period of time. It may be that that

period of time is not as quick as some

investors might like. Uh

>> I need to ask you about technology and

some of the uh changes that have been

made with regards to using AI internally

within the company. You have a new AI

leadership structure. I am curious as to

how that's being integrated and what the

end goal is. Yeah, we're really leaning

into AI. I would say the first order

objective would be to leverage those

powerful tools to enhance our investment

insight generation. Right? All of our

investment professionals have access to

AI tools.

>> We have experts that are partnering with

our portfolio managers and research

analysts to really use those to enhance

their ability to surface insights from

our proprietary research. So, Well, you

know, that's why I asked you because I

figured somebody who started his career,

started here as an analyst. I mean,

that's is sort of the fear is that, oh,

these AI tools will somehow replace the

analyst.

>> No, I think there there are tools that

that the analyst will be able to use to

do certain portions of their role in a

much more efficient way and allocate

more time to value added insight

generation, right? Interaction with

industry experts, with leaders of the

companies that they're following,

perhaps expand their coverage. So I

think there are tools that will allow to

make the job actually more interesting.

Yeah.

>> Uh and hopefully more impactful in a

way. There certainly will be areas where

you're driving productivity or

efficiency. And we're doing that in a

number of parts of of our business as

well.

>> But I think if we get right leveraging

those tools to enhance what already is a

differentiated research platform, an

integrated global investment platform

that will be the most powerful for our

clients and for our shareholders. Well,

speaking of technology, I have to ask

you, I saw you guys launched a crypto

ETF. Uh, oh, come on. What would the

founder think of that? [laughter]

>> Times change, right? You have to evolve.

Um, you know, we listen to clients.

>> Uh, and you know, ultimately, I think we

take feedback from clients and say, is

there a way that we can meet this need

>> in with with a strong value proposition,

right? A durable investment proposition

and in a differentiated way relative to

our competition. So what we launched is

an actively managed multi-token exchange

traded product. I think it's unique in

the industry. I'm not aware of another

one like it. So for clients that do want

digital assets as part of their overall

portfolio or part of their asset

allocation, I think that what we offer

can be can can be really outstanding

relative to what's available in the

marketplace today. Uh, you know, Rob, so

we're sitting here in this brand new uh

building, relatively brand new building

uh that that you've built here. Uh, it

just opened last year. And I have to ask

you about uh T-roll prices roots here in

Baltimore, but more importantly, the

fact that it stayed here, and obviously

I would assume the fact that you spent

all this money to build this building

means you're not going anywhere uh soon.

Uh you've got thousands of employees uh

based here in this building and I think

out in the out in the suburbs uh

somewhere here. uh at a time where I I

you've seen a lot more dispersion of

financial industry jobs away from just

you know Wall Street and some of the

other financial centers. Why why stay?

>> Yeah. Um it's been our home uh since

Tero Price was founded in 1937.

>> Uh I I think Baltimore is a special

place. It has a number of unique

advantages. Right. We're we have right

right on the Chesapeake Bay, right? You

have the inner harbor right here. Yeah.

Uh 40 mi from the nation's capital. We

have an international airport. Uh we're

on the Asella corridor. Our investors

can be on a train and be in New York in

2 hours and 20 minutes. Um you have

great healthc care institutions,

Hopkins, University of Maryland Medical

Center here. Uh so I I think it's it's

you know has tremendous potential. Um

and you know, as I said, it's it's been

our home for a long time. We're

committed. Um we have 7,000 plus

associates globally uh and a number of

other locations where we can access

talent but you know I think our

leadership team is is really committed

to the future of Troll Price in

Baltimore.

>> All right and obviously the future of

Troll Price actually helps uh the city

of Baltimore and the economy here and we

really appreciate you uh hosting us here

uh on your home turf Rob. Thank you very

much.

>> Thank you. Rob Sharps there, the

chairman and CEO of Troll Price.