CNS AR24 Digital - Book - Page 29
with our growth strategy, may in some cases be based on anticipated legal, regulatory, financial or accounting treatment that
may not be realized within the timeframe or in the form expected, or at all.
The success of our business strategy and future growth is contingent upon our ability to continue to support and invest
in the development of new strategies and products, to generate sufficient assets under management and fee revenue at the
levels and within the timeframe anticipated in order to support the compensation and other costs and expenses underlying
such new strategies and products, to expand the availability of our existing strategies and products and to successfully
manage multiple offices and navigate legal and regulatory systems both domestically and internationally. The effectiveness of
our operations outside the U.S. may also depend in part on our ability to identify, establish, launch, adequately staff and
properly license new or alternate foreign office locations, either opportunistically or in response to regional conditions. The
upfront and ongoing costs of adequately supporting our growth and initiatives will have an effect on our operating margin
and other financial results.
Changes in market and economic conditions, including elevated interest rates, could reduce our assets under
management and adversely impact our revenue and profitability.
Changes in market and global economic conditions, including elevated interest rates, volatile equity markets, slowing
growth and rising inflation as well as client and governmental policy responses thereto, as well as geopolitical risks such as
regional armed conflicts, could adversely affect the value of our assets under management, which would reduce the fees we
earn and our revenue.
Investor interest in and the valuation of our real estate investment strategies and preferred securities strategies can be
adversely affected by changes in interest rates, particularly if interest rates increase substantially and quickly. Investor
redemptions or a decline in the absolute or relative performance or value of such securities, or the attractiveness of portfolios
or investment strategies utilizing such securities, would have an adverse effect on the assets we manage and our revenue. In
addition, higher interest rates would increase any debt service costs incurred under the Credit Agreement, which bears
interest at a variable rate that tracks interest rate changes. Although we may enter into derivative instruments to mitigate the
impact of interest rate fluctuations on client assets, there is no assurance that such derivative instruments will be effective.
Our assets under management are concentrated in the U.S., Asia Pacific and European equity markets. Equity
securities may decline in value as a result of many global, regional or issuer-specific economic or market factors, including
changes in interest rates, inflation, an issuer9s actual or perceived financial condition and growth prospects, investor
perception of an industry, geography or sector, changes in currency exchange rates and changes in regulations. In addition,
national and international geopolitical risks and events, including the armed conflict between Russia and Ukraine and
ongoing conflicts in the Middle East, tensions between the U.S. and China, deglobalization trends and changes in national
industrial and trade policies and national elections in countries such as the U.S., Taiwan and India, have caused and may
continue to cause volatility in the global financial markets and economy. Such volatility has led and may continue to lead to
the disruption of global supply chains, tariffs, sudden fluctuations in commodity prices and energy costs, greater political
instability and the implementation of sanctions and heightened cybersecurity concerns, any or all of which may create severe
long-term macroeconomic challenges, limit liquidity opportunities or lead to higher costs. Any declines in the equity markets,
or in market segments in which our investment products and strategies are concentrated, could reduce the value of our seed
investments and/or our assets under management, revenue and earnings.
During 2024, the Federal Reserve Board began reducing the federal funds rate, which had been raised significantly
during 2022 and 2023 to combat rising inflation in the U.S., and while further interest rate reductions remain possible,
continued inflationary pressures and elevated interest rates may negatively affect our investment opportunities, the value of
our investments and the relative attractiveness of and demand for our strategies, including our preferred securities and fixed
income investments and strategies.
Our industry is subject to rapid changes in technology that may alter historical methods of doing business, and
technologies we incorporate into our processes may present complex and novel business, compliance and reputational
risks.
The financial industry continues to be impacted by innovation, technological changes and changing customer
preferences, including the deployment of new technologies based on artificial intelligence and machine-learning that are
becoming increasingly competitive with and may disrupt more traditional business models. If we do not effectively anticipate
and adapt to these changes, or if our competitors implement artificial intelligence technology more quickly or efficiently, our
competitive position may suffer, and these impacts would adversely affect our business and financial condition. Our business
could also be affected by technological changes in the industries or markets in which we invest that negatively impact the
values of assets in which we invest and adversely affect our business and financial condition. Additionally, our business
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