Greetings and welcome to AMG's Second Quarter 2025 Earnings Conference Call. This conference is being recorded. It is now my pleasure to introduce your host, Patricia Figueroa, Head of Investor Relations. You may begin.

Good morning, and thank you for joining us today to discuss AMG's results for the second quarter of 2025. Before we begin, I'd like to remind you that during this call, we may make a number of forward-looking statements, which could differ from our actual results materially, and AMG assumes no obligation to update these statements. Also, please note that nothing on this call constitutes an offer of any products, investment vehicles, or services of any AMG affiliate. A replay of today's call will be available on the Investor Relations section of our website, along with a copy of our earnings release and reconciliations of any non-GAAP financial measures, including any earnings guidance provided. In addition, we have posted an updated investor presentation to our website and encourage investors to consult our site regularly for updated information. With us today to discuss the company's results for the quarter are Jay Horgen, Chief Executive Officer; Tom Wojcik, President and Chief Operating Officer; and Dava Ritchea, Chief Financial Officer. With that, I'll turn the call over to Jay.

Thanks, Patricia, and good morning, everyone. It has been an exciting and very busy 2025 for AMG so far. In the second quarter, we reported strong results with year-over-year growth of 15% in economic earnings per share and more than $8 billion in net client cash flows, driven by another record quarter of inflows into alternative strategies. From an organic growth perspective, the second quarter of 2025 was our strongest quarter in 12 years, reflecting the ongoing execution of our strategy to allocate our capital and resources to areas of secular growth. In addition, our results this quarter showcase the accelerating pace of our ongoing business evolution toward a greater contribution from in-demand strategies in both private markets and liquid alternatives. And we expect our results going forward to continue to benefit from this increasingly attractive business profile. In the first half of 2025, AMG has added approximately $55 billion in alternative assets under management, increasing our total alternative AUM by 20% in just six months, including a record $33 billion in net inflows into alternatives and four new partnerships with affiliates operating in private markets and liquid alternative strategies. Today, more than 15 affiliates manage $331 billion in alternative AUM, contributing approximately 55% of our EBITDA on a run rate basis. As we look ahead, given the substantial growth in alternative AUM this year and the addition of new affiliates, together with the positive impact of our ongoing allocation of capital to share repurchases, we anticipate a meaningful increase to our full year economic earnings per share in 2026. Stepping back, we are seeing several compelling trends that we expect will drive further growth across a number of our affiliates managing alternative strategies. In particular, these tailwinds include the acceleration of alternative flows into the wealth channel, driven by growing demand for secondary strategies across private equity, private credit, and infrastructure, and new strategies and liquid alternatives designed to deliver superior after-tax outcomes for high net worth investors. Two of AMG's largest and longstanding affiliates, Pantheon and AQR, are capitalizing on these trends by leveraging their scale, innovative cultures, and differentiated expertise. Their strong organic growth is having a pronounced impact on AMG's business profile and earnings, with each affiliate expected to be a double-digit contributor to AMG's earnings this year. In addition, AMG's strategic engagement and collaboration on capital formation initiatives will enable many of our new and existing affiliates to access the full potential of the rapidly expanding opportunity in the wealth marketplace. Turning to new affiliate investments. We completed our investment in Veritio in the second quarter, and we recently announced a new partnership with Montefiore, a leading European private equity firm focused on mid-cap companies in the services sector with a track record of delivering exceptional returns for clients over the past two decades. Through its differentiated value-added approach, which focuses on accelerating profitable and sustainable growth by closely collaborating with management teams, Montefiore has successfully scaled portfolio companies from local players into sector leaders across Europe. The firm has excellent forward prospects, and AMG's strategic partnership solutions can magnify the firm's long-term success as it continues to execute its European expansion strategy. More broadly, we are in the midst of one of the most active periods of new investment activity in AMG's history, having announced four new partnerships with NorthBridge, Verition, Qualitas Energy, and Montefiore so far in 2025, each underscoring the ongoing demand for AMG's differentiated partnership approach, our unique ability to source new opportunities, and our focus on investing in areas of secular growth. Looking ahead, our new investment pipeline remains strong with active ongoing dialogue with prospective new affiliates operating in both private markets and liquid alternatives. We also completed the sale of AMG's minority stake in Peppertree, more than doubling our initial investment and further demonstrating our ability to create shareholder value by maintaining alignment with our partners and supporting our affiliates' long-term strategic goals. We were very pleased that the Peppertree partnership culminated in an excellent outcome for all parties, and the significant gain highlights the embedded value of our private markets businesses. Each element of our growth strategy, including investing in new affiliate partnerships, investing in our existing affiliates, and investing in AMG's capabilities to magnify our affiliate success, is driving the evolution of our distinctive business profile toward greater participation in secular growth areas. And given our strong capital position and diversified business profile, we have ample flexibility to continue to execute on these growth opportunities while simultaneously returning capital through share repurchases. Finally, as you can see from our excellent results in the second quarter and for the first half of 2025, AMG's business momentum has accelerated as a result of the discipline and continuous execution of our strategy. Yet, as we look forward, we believe that the long-term impact of our strategy execution is only just beginning to materialize, and we see meaningful potential for substantial value creation ahead for all shareholders. And with that, I'll turn it over to Tom.

Thank you, Jay, and good morning, everyone. In 2019, we set forth a strategy to evolve our business mix toward secular growth areas with a primary focus on alternative asset classes. Our strong results demonstrate that our strategy is working and underscore the growth potential of AMG's differentiated model as well as the unique value proposition of independent partner-owned firms. AMG delivered more than $8 billion in net client cash inflows in the second quarter, representing an annualized organic growth rate of 5%. This was our strongest net flow quarter in more than a decade, powered by record net flows in alternatives with $19 billion in client cash inflows, reflecting ongoing momentum in private markets fundraising and rapidly growing client demand for a number of liquid alternative strategies. Our strong net inflows into alternatives more than offset $11 billion in outflows in active equities, reflecting industry and near-term performance headwinds in multi-asset and fixed income strategies. I'd like to spend a few minutes talking about alternatives and the strength that we are seeing in this area as a result of executing our growth strategy over the past six years. Our private markets affiliates raised $8 billion in the quarter, reflecting investors' conviction in our affiliates' specialized investment strategies and the impact of ongoing secular growth trends. These trends include the increasing role of private market solutions in investor portfolios, benefiting firms like Pantheon and the significant opportunity we see ahead of us in private markets in the U.S. wealth channel. Since 2022, AMG's private markets AUM has grown by 50% and now stands at $150 billion, driven by high teens organic growth and the addition of seven private markets affiliates through new investment partnerships, three of which have been announced thus far in 2025. Earlier this week, we announced a new partnership with Montefiore. With a 20-year track record of consistently delivering top-tier returns, Montefiore has become one of Europe's best-performing private equity managers, with strong net IRRs and attractive MOIC profile and compelling DPI across vintages. The firm has raised six funds as part of its flagship series, launched two additional complementary strategies, and today manages $5 billion in assets. Montefiore's two-decade track record positions the firm for future success, and we are excited to welcome our new partners to AMG. In liquid alternatives, our affiliates' value proposition is increasingly resonating with clients and this quarter generated nearly $12 billion in net inflows, driven primarily by tax-aware solutions and supported by positive contributions across a number of affiliates. This is now the second consecutive quarter of strong flows we've seen in this category, and client demand remains substantial on a forward-looking basis. Over the past year, our affiliates have generated approximately $20 billion in net new flows into tax-managed liquid alt strategies serving U.S. wealth clients. This innovative breakthrough speaks to the entrepreneurial spirit of independent firms like AQR, which has a long history of developing new strategies to meet the ever-evolving needs of clients, and we see significant opportunities ahead. More broadly, AMG's diverse group of affiliates managing liquid alternative strategies comprises firms with excellent long-term track records across both beta-sensitive and absolute return strategies. And with the completion of our investment in Verition, one of the industry's premier multi-manager businesses, we have further enhanced the diversification and stability of our earnings profile. Taking private markets and liquid alternatives together, since 2022, we've grown assets under management from alternative strategies by $110 billion or approximately 20% per year. That growth has been fueled by a combination of new partnerships and strong organic growth, aided by innovation, excellent investment performance, and AMG's product development and distribution capabilities. And given that a significant portion of the growth we're seeing in alternatives is coming with a combination of longer expected duration and, in many cases, the ability to earn performance fees, the EBITDA impact from the growth we are experiencing can be meaningful. AMG partners with our affiliates to magnify their long-term success, including through product development and capital formation initiatives. As the U.S. wealth landscape evolves, we continue to collaborate with our affiliates to develop and offer high-quality, innovative investment solutions in vehicles and wrappers that meet the needs of clients, including through mutual funds, SMAs, limited liquidity evergreen vehicles, and drawdown funds for alternatives, and now with the filing to register the AMG GW&K Muni Income ETF and recent launches at both Parnassus and Tweedy, Browne active ETFs as well. AMG's entry into active ETFs marks a milestone in the ongoing expansion of our U.S. wealth platform with the goals of broadening our affiliates' reach by connecting them with a wider range of U.S. wealth clients and enhancing client access to our affiliates' differentiated investment capabilities. Our ongoing investments across product development, distribution talent, technology infrastructure, and marketing and education programs designed to drive lasting client engagement together underscore our commitment to building a scalable and enduring wealth business on behalf of our affiliates at AMG. Importantly, the success that we are having in the wealth channel is resonating not only with clients and existing AMG affiliates, but also with new investment prospects as accessing this attractive market requires scale and is difficult, if not impossible, for independent firms to do on their own. As we continue to invest in new partnerships with alternative firms, we look forward to collaborating with additional affiliates to broaden their reach and expand their platforms. We have strategically evolved our business profile toward secular growth areas by investing in new affiliates, investing in our existing affiliates, and investing in our own strategic capabilities, growing the contribution from alternatives to AMG's earnings from approximately one-third five years ago to more than one-half today. As we continue to execute our strategy, we expect the contribution from alternatives to further increase, enhancing our long-term organic growth profile and our earnings profile. With that, I'll turn the call over to Dava to discuss our second quarter results and guidance.

Thank you, Tom, and good morning, everyone. As Jay and Tom described, the first half of 2025 has been one of the most active periods in AMG's history. And in terms of capital allocation, we have committed nearly $1.2 billion in capital across growth investments and share repurchases. Our business continues to generate strong momentum, demonstrated by improving organic growth, increasing assets under management and the continued evolution of our business composition towards greater participation in areas of secular growth. These factors, coupled with the strength of our balance sheet and the underlying health and diversity of our business, enabled us to successfully execute our growth strategy during the first half of 2025, and we are well positioned to continue as we head into the second half of the year. I will start with our results for the quarter before covering the positive impact of this capital activity on the forward earnings power of our business and conclude with a discussion of our balance sheet. In the second quarter, we reported adjusted EBITDA of $220 million, which grew 1% year-over-year and included $5 million in net performance fee earnings. Fee-related earnings, which exclude net performance fees, grew 4% year-over-year, driven primarily by higher average AUM resulting from the positive impact of investment performance over the period and organic growth in our alternative strategies, partially offset by outflows from fundamental equity strategies. Economic earnings per share of $5.39 grew 15% year-over-year, which incrementally benefited from significant share repurchases over the last 18 months. Now moving to third quarter guidance. We expect adjusted EBITDA to be in the range of $230 million and $240 million based on current AUM levels, reflecting our market blend, which was up 1% quarter-to-date as of July 30 and including seasonally lower net performance fees of up to $10 million. This guidance includes a full quarter of FRE contribution from Verition, the final quarter of Peppertree contribution and no impact from our recently announced investments in Qualitas Energy and Montefiore, both of which are expected to close before year-end. Both Qualitas and Montefiore are within our typical size range for new investments, between $100 million and $250 million, and are expected to be modestly accretive to earnings in 2026, with meaningful forward growth potential as they continue to scale and generate carried interest. We expect third quarter economic earnings per share to be between $5.62 and $5.87, assuming an adjusted weighted average share count of 29.4 million for the quarter. Q3 EBITDA and economic earnings per share guidance does not include any book gain from the Peppertree transaction. It is important to note that our four new investments will only have a partial year impact on our 2025 earnings. And as a result, we expect a step-up in earnings for 2026 as we experience the full year impact of these new partnerships as well as the growth at our existing affiliates managing alternative strategies this year. We will provide more details around 2026 earning expectations in the coming quarters. Finally, turning to the balance sheet and capital allocation. With our new investment and seed activity through the first half of the year, we continue to maintain leverage at recent historical levels. And given our annual cash generation and embedded growth in our business, we expect greater flexibility on leverage levels as we scale. Importantly, this robust level of deployment activity does not limit our ability to continue to repurchase shares or complete further growth investments as attractive opportunities materialize. Our balance sheet remains in a strong position to execute against our opportunities with long-dated debt, significant capacity from ongoing cash generation, and access to our $1.25 billion revolver. Additionally, we received pretax proceeds of approximately $260 million from the sale of our stake in Peppertree, which closed on July 1, that further enhances our flexibility. We repurchased approximately $100 million in shares in the second quarter, bringing year-to-date repurchases to $273 million. For the full year 2025, we expect to repurchase approximately $400 million, subject to market conditions and new investment activity. As Jay and Tom highlighted, we are really excited about the momentum building in our business today as we are experiencing record levels of alternative inflows and near record levels of new investment activity. Looking ahead, we remain well positioned to execute our growth strategy within our disciplined capital allocation framework to create meaningful long-term shareholder value. Now we are happy to take your questions.

Our first question today is coming from Dan Fannon of Jefferies.

Jay, you mentioned the contribution from EBITDA from AQR and Pantheon this year, I think, being in double digits. So I was hoping to get some context around that in terms of what that's been, say, a year ago. And then as you think about management fees versus the potential for performance fees, what does that incorporate? Or what is that mix?

Yes, thanks, Dan, for your question. You heard me right; we expect both Pantheon and AQR to contribute double digits to our earnings this year. Historically, both have been significant contributors to our earnings. Particularly, Pantheon has shown consistent performance, and with the organic growth tailwinds, they are experiencing substantial growth. AQR has also been a major contributor to our earnings in the past and is returning to that level, with significant growth expected as well. Before I delve into specifics, I'll refer to my prepared remarks concerning the compelling trends around organic flows in the wealth channel, positively impacting both affiliates. One notable trend is the increasing client demand for tax-aware solutions, where AQR has established itself as a market leader. For high net worth individuals, there’s a shift from evaluating returns on a pretax basis to focusing on after-tax returns, which we believe is a transformative trend in the wealth space. This shift means wealth advisors need to consider how strategies affect their clients' tax situations, as taxes can disrupt compounding. The change in focus among advisors and high net worth investors is still in its early stages, which benefits AQR. AQR has been an innovator for over 20 years in liquid alternatives and excels at introducing new strategies and products. In recent years, AQR has developed a leading capability in tax-aware solutions investing, creating a complete suite of products, including separate accounts, limited partnerships, and mutual funds. These products generally yield higher management fees than their average fee rate, and many, being liquid alternatives, also generate performance fees. This gives us both increased management and performance fee opportunities. Furthermore, these assets are part of a comprehensive wealth and estate program, making them stickier than average assets. Given this momentum, we wanted to highlight it, which is why we provided that extra disclosure. To put it in perspective, AQR's assets under management have increased significantly, growing from $100 billion at the start of 2024 to $143 billion now, largely driven by liquid alternatives and strong investment performance. I’ll let Dava provide additional detail on the tax-aware business, as it’s a major trend for us.

Great. Thanks, Jay. So I can give a little bit more detail as to what we've seen with AQR and what's been driving that. So our liquid alternatives net inflows in the first half of 2025 were really driven by AQR, which has had more than $20 billion of positive net flows into liquid alts year-to-date. AQR continues to focus on growing these products, which have had excellent performance and have been building strong momentum with investors and distribution channels. As of June 2025, AQR manages about, I should say, north of $30 billion in long/short tax-aware AUM. Currently, the largest and fastest-growing element of this is their Flex series, which was launched in 2022 and has grown quickly to north of $20 billion in AUM, and there's significant capacity to grow from here. Flex series charges a management fee consistent with liquid alternative products, which can really tailor volatility that fits the client goals. And their long/short commingled product has both management fee and performance fee eligibility. AQR's growth over the last five years has really been anchored by excellent performance and innovation. And as a result, they've generated performance fees, attracted significant capital from clients, and scaled their products by employing disciplined expense management. Importantly, this growth has shifted their business profile to being much more absolute return oriented and less beta sensitive. And so given the combination of these trends, the organic growth profile, higher fee rates on inflows, strong performance, that's how we're getting to AQR's overall contribution being in the double digits for 2025. And maybe just to bring this back to the original question as well, both Pantheon and AQR are large FRE contributors. Both have some of that performance fee capability as well, but I would say a large portion of that is driven on the FRE side.

Thank you, Dava. Dan, I want to expand on Pantheon as it was part of your question. Pantheon represents an attractive growth opportunity; since establishing our partnership in 2010, it has increased from approximately $25 billion in private market assets to $85 billion. More importantly, during this period, our partnership has helped transform the firm into a top secondary investor across various asset classes, including private equity, infrastructure, and credit. Currently, Pantheon holds a strong market position in the secondary sector and in the wealth channel for semi-liquids. These factors are significantly contributing to their business growth, with revenues and profits accelerating at mid-teens rates or higher in some cases. We're excited about their role within AMG. Pantheon's unique characteristic is that it operates as an investment-led organization in the secondaries market with substantial scale, allowing them to provide liquidity through their funds to GPs and LPs. As we've mentioned before, Pantheon and AMG have successfully collaborated on multiple products in the wealth space, including the original P-PEXX, the AMG Pantheon Fund, which is currently valued at $6 billion. Their newer credit secondaries fund, P-SECC, is also on the rise, and they’ve just introduced the P-BUILD infrastructure fund. The opportunities here are promising. Both AQR and Pantheon have potential for revenue growth through management and performance fees, as mentioned by Dava, and the fees are expected to be incrementally higher than their historical averages. They also have the potential for operating leverage, particularly now that both firms are operating at scale, and AMG benefits from their profit growth as well. We anticipate significant growth rates from both firms. Thank you, Dan.

The next question is coming from Alex Blostein of Goldman Sachs.

I wanted to build on that AQR discussion for a couple of more minutes, and thank you for all the incremental color. Obviously, it's an important part of the story. When you think about the $30 billion in tax-advantaged strategies, and I heard you talk about capacity bid, maybe walk us through in a bit more detail how you're thinking about capacity constraints for something that's growing so quickly. And while I totally agree that the end market demand for a product like this appears quite robust, I was wondering if you could also speak to the competitive advantage AQR might have in this area that could sort of help them sustain their moat, so to speak, in this business relative to other potential incoming competitors.

Thank you for your question, Alex. We'll try to provide some clarity on this. Discussing affiliate-related topics can be challenging for us due to our model, but you’re right that it plays a significant role in our growth. Tom and I will share some insights that might be useful. First, I'll mention some competitive advantages, and then Tom can elaborate on capacity and growth considerations. AQR has always been an innovator, excelling in this area for the past 15 years. Their ability to innovate paired with strong trading and risk management systems allows them to provide liquid alternatives in the wealth channel. This creates a significant competitive edge. They have a three-year focus on post-tax outcomes for wealth advisors, especially with market-neutral and S&P-oriented products, which gives them a substantial first-mover advantage along with their solid systems. We are very enthusiastic about their leadership position and continued innovation, like their new Fusion series—a mutual fund that is long-only and tax-aware. They are maintaining an innovative edge that few firms can replicate. We regard the growth potential as substantial, and I'll now hand it over to Tom for a broader perspective on this.

Thanks, Jay, and thanks, Alex, for the question. There are a lot of different flavors, as Jay talked about, and also a number of factors that certainly contribute to what capacity looks like. But I'd say there's a tremendous amount of runway from here. Also, I think you have to think about AQR a bit, right? It's a very large, diverse, well-resourced, and incredibly innovative firm. Certainly, they see the opportunity ahead of them. They're understanding the demand trends and just how quickly this has turned into such an exciting opportunity. So they're very focused on building here for the future, not only building the appropriate level of investment capacity, which again is something they've been in the business of doing for decades, but also, importantly, building the appropriate operational capacity, the appropriate distribution capacity. So I think we've got a lot of runway from here. And ultimately, AQR is very focused on making sure that they're able to put this product in front of their clients and really provide a solution that, to Jay's point, on the competitive dynamics, we and they and ultimately, their clients believe is very advantaged relative to other offerings in the market.

The next question is coming from Bill Katz of TD Cowen.

Maybe just some big picture kind of questions maybe integrated to each other. I was wondering if you could talk a little bit about just like portfolio management now as you continue to scale your affiliates, and I appreciate you continue to migrate into the faster growth area of alternatives. Is there an opportunity to accelerate that by potentially disposing of anything on the traditional side, where I think lead indicates they're probably not good just relative to the alts platform? And then as you just think about buyback, your share count is getting rather small rather quickly. Is there any sort of natural limit here in terms of how low you want to let that go?

Yes, thanks for your questions. Let's break this down among the three of us. I’ll start with the overall strategy. Tom will assist me with that, and then Dava can discuss the buybacks. As for the strategy, we have been focusing our capital and resources on areas of secular growth for about six years, as Tom mentioned earlier. We have put considerable effort into identifying where secular growth exists in the market and have invested in evolving AMG towards the highest growth and return areas. I believe we have achieved this successfully. In addition to the two affiliates we mentioned, we have invested in over ten private markets and liquid alternatives firms during this time. These firms are also experiencing growth, which is why over 55% of our EBITDA is now coming from alternatives, and we anticipate continued growth in this area. We are currently in the most active investment period we’ve seen in over a decade and expect to add more firms in private markets and liquid alternatives. Over the next three years, we envision our business being composed of about two-thirds alternatives, with a balanced focus on private markets and liquid alternatives. This mix is beneficial because having liquid alternatives alongside long-only strategies and private markets is complementary. In fact, they provide diversification that enables us to invest through market cycles. For example, in 2022, our liquid alternatives business performed well, generating significant performance fees that offset the market downturn experienced by other asset managers. This year, with markets hitting near all-time highs, our long-only businesses are generating substantial cash flow, which we are reinvesting primarily into private markets and liquid alternatives. This evolution feels natural and is being accelerated because we are not constrained from making new investments, and we have a strong, diverse group of long-only affiliates. The balance among all three aspects is unique and distinguishes AMG in the marketplace, allowing us to continue growing our business. Tom, would you like to add to this, and then we can have Dava discuss the repurchases?

Thank you, Jay, and Bill, for your question. I believe you accurately highlighted our strategic and differentiation aspects, which are crucial. Additionally, I want to emphasize that we do not operate our business like a securities portfolio. Our approach is based on human capital-driven partnerships, which is vital to us. We do not engage in trading stakes in our affiliates; instead, we commit to being long-term partners with those businesses. Importantly, we do not have the unilateral right to sell an affiliate or our stake in one, which is a key aspect of our value proposition and sets us apart from others in the market who invest in asset management businesses. We see ourselves as partners with leadership teams at all levels. For instance, when you look at affiliates like Baring, Veritable, or Peppertree, their decisions are driven by their leadership, aiming for what is best for their clients and businesses. We strive to be supportive partners in these scenarios. We remain open to opportunities as the industry evolves, but we're not actively managing our portfolio in the way you might think.

Thanks, Bill. I’ll address the buyback situation. To give some context, over the past five years, we’ve generated about $1 billion in cash flow, which we’ve utilized for growth investments and share repurchases. Approximately 60% of that cash flow has gone towards repurchasing shares, while 40% has been allocated to new investment opportunities. This year, however, we’ve shifted our focus, deploying nearly $900 million into growth investments and guiding to repurchase around $400 million of shares. We’ve expressed a desire for a more balanced approach moving forward. It’s challenging to evaluate this in terms of a single year, but over multiple years, we aim for a balanced capital allocation. Regarding the natural limit on share count, we’re closely monitoring our liquidity. Our stock is performing well, and we see ample liquidity, making share repurchases an effective tool for returning capital to shareholders while allowing us to remain flexible in our investment strategy. We will continue to evaluate this as we progress, but we believe it’s a beneficial tool for our shareholders within our capital allocation framework.

The next question is coming from Brian Bedell of Deutsche Bank.

Great. Regarding private market fundraising, we've had a really strong quarter. This area can be more unpredictable in terms of how much is raised. Can you discuss your confidence in fundraising levels becoming more consistent over time as your portfolios grow? You now have $150 billion in assets under management. Additionally, could you provide some insight into the breakdown of fundraising this quarter between assets moving into fee-paying AUM and overall fundraising?

Brian, thanks for your question. I'm going to have Tom take that one. Thanks.

Thanks, Jay, and thanks, Brian. Maybe I'll kind of take a step back and just talk about our overall organic growth profile and kind of what we're seeing in the business, and then I'll provide some more detail specifically around private markets. Really, if you think about a high-level framework in terms of what's driving organic growth trends, it kind of comes down to three things. The first is really the alignment of our overall AUM base with client demand trends today. That's sort of the baseline that we're working from. Then second, how does that AUM mix change over time, and it can change through the relative growth rates across asset classes and affiliates as well as the investments that AMG is making to form new partnerships in growth areas as part of our strategy. And then third, and finally is, how are we enhancing flows at our affiliates through our own product development, distribution, capital formation. Those were kind of the three guiding elements that inform the strategy that we put into place several years ago. And our execution on that strategy has made a real meaningful impact on where we stand today and our trajectory for the future. And Brian, to your question, private markets are driving a substantial part of that. On that first point that I made, alignment of AUM with secular trends, if you just go back a few years to the end of 2021, at that time, about 55% of our AUM was in long-only equities and about 30% was in alternatives. Today, the long-only side is about 40% of AUM. So it's come down from 55% down to 40%. And on the alternative side, combination of liquid alternatives and private markets, that's grown from 30% at the end of 2021 to 45% today. So the alignment of our overall business with client demand trends has changed, and it's changed materially. And effectively, what that means is the baseline in terms of where we grow from here and the growth characteristics embedded in our business is just in a much better place than it was several years ago. And that kind of takes me to the second and third points that I started with, which kind of tell you both how we got here and also where we're headed. So our last nine new investment partnerships have all been in alternatives, and that dates back to late 2021. And again, Brian, to your question, eight of those nine have been in private markets. And of course, that's been very intentional as a focus of our strategy. Also, over that same time period, significantly more than 100% of our net flows have been in alternatives. So you've seen that piece of the business also growing organically significantly faster than our overall business. And in the same time frame, we've managed to grow the private markets AUM on our U.S. wealth platform from $1 billion to now more than $7 billion. And that's another driver, Brian, to your question around consistency and visibility into flows continuing to grow going forward. And you're seeing the cumulative impact of all of those things on our business mix evolution in terms of the AUM, on our fee rate, which continues to increase, on the contribution of our EBITDA that's coming from alternatives and coming from private markets, on gross sales and net flow trends and ultimately on the EBITDA impact of those flows going forward as well. So maybe just to hit a couple of your questions on private markets specifically. This past quarter, we raised about $8 billion. Those flows were led by another strong quarter at Pantheon, and Jay talked a lot about some of the tailwinds that we're seeing there. And we also saw positive contributions from Comvest, from Aura, and from EIG. So when you see kind of the diversity and where those flows are coming from, in this case, this quarter across private market solutions, credit strategies, private equity, infrastructure, we really have a number of different engines that are firing in terms of where we're seeing growth in private markets overall. So maybe the other thing it's worth spending a moment on, and I'll turn it over to Dava to walk us through that, is what's the impact that these flows are having and, in particular, some of the growth we're seeing in alternatives overall, but private markets specifically on our EBITDA growth opportunity going forward.

I think we may have lost Dava there for a second. There were go. Sorry. Yes, go ahead. Sorry, sorry about that. I apologize. So Tom, just building on sort of your answer there, given that overall evolution of the business profile that you just talked about with greater participation in alternatives, particularly around private markets, the impact of our growth on the EBITDA basis that we're seeing is expected to be meaningful. Most importantly, we've seen an improvement in asset-based net flows as we move from a business that was shrinking organically around 10% a year to a business today on an LTM basis that's near flat and grew about 5% annualized this quarter. And of course, that turnaround is the biggest driver. And when you then drill down further on the changes at the asset class level that we've seen, we've really seen a bifurcation of strong organic growth on the alternative side and headwinds on the traditional side. The growth in alternatives is moving the business towards higher fee and longer locked strategies that, in many cases, have future performance fee and carry potential, while the outflows have been more isolated to lower fee open-ended equity funds that AMG tends to own a little bit more of. So you do have some offsetting factors here. But all that being said, as we continue to execute on our growth strategy and build significant exposure to areas of secular growth, our top-line momentum is beginning to flow through to EBITDA more clearly, and you're seeing some of that in the guidance that I gave for the third quarter.

Our final question today is coming from Patrick Davitt of Autonomous Research.

Most of my specific questions have been asked, so I have a higher-level question just on client discussions and allocations. Obviously, the chatter on this has died down since April, but still hearing large European institutions talk about reallocating to European managers from U.S. managers or simply cutting U.S. exposure, either because of concerns around commitments to ESG and/or frustration with the administration's policies. Did you see any of that in your 2Q flow trends? And/or are you hearing more of that in your discussions with European clients?

Yes. Thanks for your question, Patrick. Maybe, Tom, you could start with that one.

Sure, Patrick, thanks for your question. The world is changing rapidly, and trends that seemed evident in April look quite different now in August. Jay touched on this when he spoke about our overall strategy and the importance of diversification. One of the strengths of AMG is our broad diversification across asset classes and geographies. Recently, we've made two new investments in Europe, specifically Montefiore in private equity and Qualitas in infrastructure. We have observed that the dominance of U.S. markets over the past several years is beginning to balance out. Trends in Europe and Asia are looking more positive. As we consider our overall business and our discussions with clients, we appreciate our capability to operate globally in various ways, and we are engaging with those trends diversely. While we haven't seen the specific trend you mentioned impacting our second quarter results, it appears to us that the discussions are more focused on what the future may hold as geopolitical and economic factors unfold in the year ahead. Therefore, we didn't perceive a significant change reflected in our second quarter, but we are definitely keeping an eye on this trend.

Yes. And I concur with Tom's comments. When you think about the investor behavior, there are so many different cross currents here. And I just think that at this point, we haven't really seen much movement within our affiliates. But we are well positioned, as Tom said. I just note that Pantheon has historically been more of a European client-centric U.K.-based entity. And we also have Forbion in Europe and a number of other managers long-only and others in Europe. So we've got a really good position to the extent that European investors only want European managers. But I think at the moment, we're not really seeing that really impact our business. So maybe one last thing, if I may, just before we wrap up. I do want to restate from my prepared remarks that this has been an incredibly productive period for AMG, really an output of our strategy that we've been executing over the last six years. AMG's organic flow profile and the EBITDA contribution from that flow profile driven by alternatives, it's been improving for some time now. And the $8 billion in inflows this quarter illustrate the building momentum that we're seeing. Our strategic engagement with affiliates, collaborating with them to magnify their long-term success has generated meaningful results at places like Pantheon, AQR, Artemis, Comvest, Garda, and many others, where we're working on business development initiatives to enhance the value for all stakeholders, including AMG. We're very excited about our progress there. And then I also mentioned that this has been one of the most active years in terms of new investment activity in our history. We've announced four new partnerships. We have a robust pipeline. And we also had a successful culmination of a partnership with Peppertree, which realized significant return for us, which we can redeploy into our opportunity set. And all of this activity, the organic growth, the EBITDA contribution, the new investments, it's going to have an effect on the second half of 2025, but it's really going to impact 2026, and Dava mentioned that in her prepared remarks, we see a step-up in our earnings going into 2026. And today, I'm very excited to report that more than 55% of our EBITDA on a run rate basis is in alternatives, and we see that increasing to something like two-thirds in just a few years, as we believe we are going to continue to see sustained organic growth firm-wide in new investments in these areas. And then I think you also heard Dava say finally that capital allocation is critical for us. We're very disciplined in our capital allocation. We'd like to orient ourselves towards growth investments, but it has also resulted in repurchases of $273 million year-to-date and nearly $1 billion over the last 18 months. We think that this is additive to compounding for our shareholders over time. So I'll just leave us where we started, which is I'm very excited about this year, and I'm very excited about our future as we continue to drive the business towards areas of secular growth. So there's just a lot to be excited about here at AMG, and thank you for participating today.

Ladies and gentlemen, this brings us to the end of today's conference call. We would like to thank you for your participation. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.