For the first quarter of 2017, diluted earnings per share were $2.13, compared to $1.90 for the same period of 2016, and Economic earnings per share (“Economic EPS”) were $3.21, compared to $2.92 for the same period of 2016. For the first quarter of 2017, Net income was $122.5 million, compared to $104.0 million for the same period of 2016. For the first quarter of 2017, Economic net income was $183.2 million, compared to $159.3 million for the same period of 2016. For the first quarter of 2017, Adjusted EBITDA was $243.8 million, compared to $215.7 million for the same period of 2016. For the first quarter of 2017, Revenue was $544.3 million, compared to $545.4 million for the same period of 2016. For the first quarter of 2017, Aggregate revenue, which includes revenue from consolidated Affiliates as well as Equity method revenue (which represents asset-based fees and performance fees earned by Affiliates accounted for under the equity method), was $1.4 billion, compared to $1.0 billion for the same period of 2016. (Economic EPS, Economic net income, and Adjusted EBITDA are defined in the attached tables, along with reconciliations to the most directly comparable GAAP measure.)

Net client cash flows for the first quarter of 2017 were $(1.3) billion. AMG’s aggregate assets under management were approximately $754 billion at March 31, 2017.
AMG repurchased approximately $80 million in stock, or 0.5 million common shares, during the first quarter of 2017. The Company initiated a cash dividend in the first quarter, and yesterday, announced a second-quarter cash dividend of $0.20 per common share, payable May 25, 2017 to stockholders of record as of the close of business on May 11, 2017.

“AMG had a strong start to 2017, including year-over-year growth of 10% in our Economic earnings per share, which were $3.21 for the first quarter,” stated Sean M. Healey, Chairman and Chief Executive Officer of AMG. “Through successful execution across all aspects of our growth strategy, our assets under management have grown 17% since the first quarter of 2016 to a record $754 billion – reflecting positive organic growth from net client cash flows over the period, the long-term track records of alpha generation by our Affiliates, and the addition of excellent new Affiliates.”

“Our positive net flows into alternative strategies were offset by elevated outflows from U.S. equity strategies, resulting in modest outflows overall for the quarter,” Mr. Healey continued. “Our Affiliates generated excellent investment performance across their industry-leading product sets, particularly in alternatives and global equities. We continue to see strong client demand across a diverse array of liquid and illiquid alternative strategies, and while our Affiliates’ equity products saw overall outflows during the quarter, client appetite remains robust for differentiated equity strategies focused on non-U.S. markets. Lower correlations, higher volatility, and the shift from monetary to fiscal policy worldwide will favor the abilities of skilled active managers, providing an increasingly constructive environment for performance-oriented managers running truly active strategies to generate excess returns. As global clients continue to seek outperformance from value-added strategies for the alpha portions of their portfolios, the best alpha managers will gain increasing market share, and given their long-term records of investment outperformance in attractive return-oriented areas, we expect our Affiliates to benefit from this trend.”

“Finally, we have an outstanding ongoing opportunity to enhance our earnings growth and the diversity of our business through accretive investments in new Affiliates. With our unique competitive position and track record of successful partnerships, our opportunity set remains unmatched in the industry. Through our disciplined commitment to prudent capital allocation, consistent return of capital to shareholders, and enhancing the organic growth of our Affiliates, we are positioned to generate substantial shareholder value ahead.”

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Sean Healy

Affiliated Managers Group, Inc., a global asset management company with over AU$950 billion in client assets under management, announced that the group has reached a significant milestone in celebrating 10 years in the Australian funds management market.

Over the past decade, AMG has more than doubled the number of Affiliates it represents in Australia, to include Artemis Investment Management; AQR Capital Management; BlueMountain Capital Management; First Quadrant; Harding Loevner; Ivory Capital; Pantheon; Trilogy Global Advisors; Tweedy, Browne Company; ValueAct Capital; and Yacktman Asset Management. As of September 30, 2016, AMG’s Affiliates managed over AU$43 billion for Australian clients across a wide array of performance-oriented equity and alternative strategies.

“As we look back on a successful decade in Australia, we are pleased to have strengthened our commitment to clients in the region with increased professional support and an expanded array of investment strategies across a growing number of diverse Affiliates,” said Gregor Rennie, Managing Director and Head of Distribution, Australia & New Zealand.

“Initially, AMG covered only institutional investors in Australia, but over the last decade we have also become active in a number of additional channels, including family offices and high net worth individuals, as well as wholesale investors such as financial planning dealer groups and licensees, research houses and platforms.

AMG’s presence here has coincided with a growing investor appetite for global assets, and given their expertise and outstanding performance track records in alpha-oriented products, particularly in global and emerging markets equities and a wide range of alternative strategies, our Affiliates are well-positioned to generate excellent returns for Australian clients.”

“AMG’s success in Australia reflects our success globally; the 2006 launch of our Australian distribution strategy marked our first step in extending the marketing reach of our Affiliates in key markets around the world, and today we look forward to our next decade in the region,” added Sean Healey, Chairman and Chief Executive Officer of AMG.

“Through our global distribution strategy, which combines Affiliate-driven marketing efforts with the platform and resources of a global franchise, we offer Affiliates the benefit of scale in global institutional and retail markets on a basis best suited for, and complementary to, each Affiliate’s own distribution strategy and efforts. Our
centralized global distribution platform is an important aspect of AMG’s unique partnership approach, which ensures aligned incentives through direct retained equity ownership and, importantly, preserves the entrepreneurial orientation that distinguishes the most successful independent investment firms.”

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Sean M. Healey, Chairman and CEO

Affiliated Managers Group, Inc. (NYSE: AMG) announced the release of “The Boutique Premium,” a comprehensive study evaluating the performance of boutique investment management firms.

The analysis incorporated data from more than 1,200 investment management firms and nearly 5,000 institutional equity strategies comprising approximately $7 trillion in assets under management.

The study found that active boutique investment managers have consistently outperformed both non-boutique peers and indices over the past twenty years, in many cases by a wide margin.

Key highlights from the study

The analysis found that over the last twenty years:

• Boutiques significantly outperformed non-boutiques: The average boutique outperformed the average non-boutique in 9 of 11 equity product categories, by an average annual 51 basis points. Investing exclusively with boutiques across all categories would have created 11 percent greater wealth for clients over the last twenty years, as opposed to investing with non-boutiques.
• Boutiques delivered significant value as compared to primary indices: The average boutique strategy outpaced its primary index in 9 of 11 equity product categories, by an average annual 141 basis points after fees.
• Top-performing boutiques generated exceptional excess returns: Top-decile and top- quartile boutique strategies added 1,133 basis points and 589 basis points, respectively, on an average annual basis after fees as compared to their primary indices.

“Our comprehensive study demonstrates that boutique investment managers have outperformed non-boutique peers and created significant value for clients over the long term,” stated Sean M. Healey, Chairman and Chief Executive Officer of AMG.

“In addition, top-performing boutiques added 55 basis points more value than poorly performing boutiques detracted on an annual basis, illustrating that these strong returns were not simply a function of higher risk,” said Andrew C. Dyson, AMG’s Executive Vice President and Head of Global Distribution. “The top-performing boutiques also created exceptional net excess returns, with top-quartile boutique strategies outperforming their primary indices by an average annual 589 basis points after fees. These results support our belief that the alignment of interests fundamental to the boutique model creates significant value for clients.”

Several core characteristics position boutiques to deliver consistent, superior long-term investment performance, including:

• Principals have significant, direct equity ownership, ensuring alignment of interests with clients;
• Presence of a multi-generational management team, fully engaged across the business;
• Entrepreneurial culture with a partnership orientation, which attracts and retains the most talented investors;
• Investment-centric organizational alignment, including careful management of investment capacity; and
• Principals have a long-term orientation and are committed to building an enduring franchise.

“The primacy of a boutique investment manager lies in its focused, entrepreneurial culture and ownership structure, with principals maintaining significant, direct equity in their business,” Mr. Healey added. “We believe that these core characteristics give boutiques a competitive advantage in generating consistent outperformance. Our research clearly demonstrates the significant value that boutiques have generated for investors over an extended time horizon.”

To review this analysis in full, download The Boutique Premium at www.amg.com.

Methodology: The Boutique Premium

The study incorporated data from more than 1,200 investment management firms around the world and nearly 5,000 institutional equity strategies comprising approximately $7 trillion in assets under management. The study analyzed rolling one-year returns for the trailing 20-year period ending December 31, 2014, across 11 broad institutional equity product categories, on a strategy-by-strategy basis.

The classification of firms as either “boutiques” or “non-boutiques” was based on AMG’s proprietary analysis, while the MercerInsight® database was utilized for return data.

Primary indices for comparison included MSCI Emerging Markets, MSCI World, Russell 1000® Value, Russell 1000® Growth, S&P 500®, Russell Midcap® Value, Russell Midcap® Growth, Russell Midcap®, Russell 2000® Value, Russell 2000® Growth and Russell 2000®.

The study estimated boutique net excess returns as compared to indices – incorporating boutiques’ available published or “rack” fee rates in the MercerInsight® database – in order to assess net value creation for investors.

The classification of investment managers and their corresponding strategies as “boutiques” in the study was based on four criteria. First, principals were required to hold a significant amount of equity in their own firms, defined as at least 10 percent ownership. Second, investment management was the sole focus of each firm; investment managers captive in broader financial services platforms were excluded. Third, firms with assets under management greater than $100 billion were not eligible for inclusion. Finally, exclusively “smart beta” or fund-of-funds platforms were removed from consideration, as the analysis concentrated on active boutique investment managers with distinct investment philosophies and highly-focused investment processes.

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“Australian investors are looking for ways to diversify away from local equity markets and invest in high-quality companies in emerging markets,” said Scott Crawshaw, a member of the Strategy’s portfolio management team.

The Emerging Markets Equity Strategy seeks long-term capital appreciation through investment in equity securities of companies operating in emerging markets countries. The Strategy is led by its Co-Lead Portfolio Managers, Rusty Johnson, CFA and Craig Shaw, CFA, who together are responsible for all investment decisions. Johnson and Shaw are supported by the three additional members of the portfolio management team, Scott Crawshaw, Pradipta Chakrabortty and Richard Schmidt, CFA.

The investment strategy is built around in-depth analysis of individual companies and the competitive dynamics of their industries. “We look forgrowing companies with sustainable competitive advantages, where management has been able to deliver returns above the cost of capital. Many of the portfolio holdings operate dominant franchises – the type of firms that typically perform ahead of their peers when the broader market indices are underperforming,” Co-Lead Portfolio Manager Rusty Johnson noted.

“The hallmark of our investment approach is to identify and invest in companies that average higher profit margins, generate greater return on assets and equity, and that carry lower debt levels.” Johnson said.

“These holdings also display faster and durable growth attributes over time in sales, earnings and cash flow. We think that if we gain insight into a company’s fundamental quality and growth, pay attention to valuations, and stick with our investment thesis over time, we will be able to generate excess returns and do so with less risk.”

According to Johnson, the Strategy’s focus on the fundamental quality of individual businesses has led to a portfolio significantly different from its benchmark, the MSCI Emerging Markets Index. “We build diversified portfolios, but we start with our company thesis first.”

Crawshaw added: “This approach has resulted in a track record that has performed very well through time, with low stock turnover, and a portfolio that tends to hold up better than the market when markets decline.” The minimum initial investment amount is AU$25,000.

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Following the transaction, AQR’s Principals will continue to hold a majority of the firm’s partnership interests and operate the firm independently.  Founding Principals Clifford S. Asness, David G. Kabiller, and John M. Liew, as well as the firm’s other 18 Principals, have entered into long-term commitments with the firm.  In addition,all of the net after-tax proceeds from the transaction will be invested in AQR strategies.

Founded in 1998, AQR is one of the most dynamic and innovative investment managers globally, with approximately $115 billion in assets as of September 30, 2014 across a diverse set of alternative and traditional investment strategies.  AQR has a long track record of innovation in developing systematic investmentstrategies based on fundamental economic concepts for institutional investors and financial advisors.  The firm has 21 Principals and over 450 employees in offices around the world including Greenwich, Chicago, London, Sydney and Bermuda.

“We are very pleased to strengthen and deepen our successful partnership with AQR,” said Sean M. Healey, AMG’s Chairman and Chief Executive Officer.  “Cliff, David, John, and the rest of the AQR management team have been outstanding partners over the past decade, and have built a tremendous franchise – one of the fastest-growing, most successful firms in the industry – and our increased investment reflects our strong belief in the firm’s long-term growth potential and future prospects.”

“AMG has been a great partner to us over the last ten years.  We thank them for their unwavering commitment to our firm, and look forward to continuing a long and prosperous partnership,” said Mr. Asness, Managing and Founding Principal of AQR.

Following the transaction, AMG will hold a minority interest in the partnership and will continue to account for AQR as an equity method investment.  The transaction is expected to close by December 31, 2014.  While the terms of the transaction were not disclosed, AMG expects that the additional investment will increase Economic earnings per share by approximately $0.60 in 2015.

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Founded in 2003, Veritas is a leading independent global and Asian equity manager with award-winning investment strategies that seek to deliver long-term real returns through both long-only and long-short mandates across both funds and segregated portfolios.

With offices in London and Hong Kong, Veritas serves institutional and retail investors in the United Kingdom and around the world.

The firm has generated excellent long-term investment performance through the Veritas Real Return Approach, an investment philosophy focused on protecting and growing the real value of clients’ capital, always analyzing potential investments through fundamental research with a strong value discipline, and on an absolute basis rather than relative to any benchmark or index.

As part of the transaction, Veritas’ senior professionals have agreed to long-term commitments with the firm. The terms of the transaction were not disclosed.

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