Eaton Vance Corporation (NYSE:EV) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
Ken Worthington – JPMorgan Chase: First, I wanted to dig into the gross redemptions and implementation services. You mentioned the rebalancing out of Clifton. Can you explain that further? What’s going on with the rebalancing away, how does it happen in an overlay strategy? And then maybe as a follow-up to that, can you talk about the cyclical nature of overlay implementation services? How market and economic sensitive is this business and are there better or worse conditions for the sales and the attractiveness of the strategies?
Thomas E. Faust, Jr. – Chairman, CEO, and President: It’s Tom. I think I’d first tell you that we’re learning these things kind of at the same time you are. This is a new business for us acquired at the end of December. So we are only getting, now starting to get a feel for how the dynamics in this business work, recall we had fairly significant net inflows, in January we’ve held our first quarter results and we had net outflows in this quarter which impacted us. As I said in my prepared remarks, this did not reflect clients firing them or moving out of the strategy in a total sense. But this is, we are – that’s fairly volatile business in terms of reported flows. Through some degree, we think there is a tendency that as markets move up, there is a little bit of a counter cyclicality to the flows that for example if you are using overlay to get equities through a certain target level, it may well be that you are doing mass overlay as the markets moved up. I can’t say that’s true in all cases or even fairly most cases. But we do think there is some connection between what the market does and how clients respond by rebalancing. We think we are getting it right as to how you think about market action versus flows, so it’s less straight forward than it is for many things, remember these are overlays where it doesn’t take $1 to produce, $1 and to produce $1 of flow or of the $1 out, because there is built in leverage in the derivatives. It takes much less than a $1 of actual cash movement on the part of a client to produce $1 of inflow or outflow. So probably not a very helpful answer, but we are learning. We look at the business primarily on the same basis that the management of Clifton does, which is what is it producing in terms of revenues and profits. And I think it was – it’s probably worth noting that when Clifton was a private company, or part of a private company, they didn’t really think in terms of flows. They thought in terms of revenues and profits, because the volatility of the market can cause the value of managed assets to go up in the same way that would apply to the rest of our business, but also can have impacts on flows, because clients are really taking advantage of the flexibility and the low cost of moving positions using futures to make this a more volatile part of their asset mix just in terms of flows than we would normally be expecting in our business. So, unfortunately we view going forward as the Clifton overlay business is likely to produce the (indiscernible) in terms of our flow numbers that we’re all going to have to get used to. These are relatively low fee assets. I think we’ve said in total our implementation services is about a 11 basis points, but we’re also looking at are there ways we can enhance our flow reporting going forward to maybe isolate that effect from what we think that was more traditional longer term flow drivers.
Institutional Cash Management Business
Michael Kim – Sandler O’Neill: I guess in terms of kind of the institutional cash management business, I know it’s still early days, but can you just give us and update on where you stand today? And then assuming the SEC, goes ahead and implements kind of floating NAVs for prime money market funds, how quickly do you see that business ramping up? And then any color on sort of the underlying economics of that business would be helpful?
Thomas E. Faust, Jr. – Chairman, CEO, and President: This maybe a background for those, that, aren’t as close to this. We did hire a team of five people and organized what we call Eaton Vance Institutional Cash Management Services. What was the timing of that? January, February…
Daniel C. Cataldo – Treasurer: I think February 1.
Thomas E. Faust, Jr. – Chairman, CEO, and President: February 1, thank you. So those guys have been here for three and half months. They started in earnest contacting potential clients probably in April, so we’re about six weeks into that. There is – I wish I could tell you there is great success to report from that. I don’t think that would be reasonable expectation. So, we did not have meaningful success in terms of gaining actual client mandate that has been awarded and funded. So, it’s a little early. We’re certainly not in a position to declare victory. I see a weekly report from them as to their activity and their assessment of their Canada business between cool, warm and hot and we don’t know quite how they are interpreting the word hot, but there are some that show up as hot on there every week. So, we’re working to build a business. The impact of the floating NAV that seems to be more likely coming at least for institutional funds, we think could be a catalyst for business growth there, but it’s really too early to say that we’ve had success building business. So that group, I should point out, is not always focused on building new institutional business. We have $2 billion or so of cash sweep assets and a small government money market fund that we offer to third parties. We have cash that underlies securities lending. So, those guys are involved in that as well, so we’ve got things for them to do, while we’re looking to build the institutional business. Also, one of the members of that team is essentially a risk manager, and we have ability to apply his skills not only in the very short-term and the cash end of our fixed income group but also more broadly across fixed income. So it’s still early. Maybe next quarter we can report that there’s some of those (hot leads) have been converted into clients, but can’t say that as yet.