We've achieved six straight months of net long-term inflows, totaling nearly $18 billion in the second half of 2020 with progress across channels, geographies, asset classes.
We saw net inflows in Asia Pacific, totaling $17 billion in the second half of the year and improving flows in EMEA within the Americas over this timeframe and net long-term flows in the fixed income remained robust during that period.
We had net long-term inflows and then nearly $10 billion during the quarter, long-term inflows in the fixed income capabilities continued while we saw client demand for equities within ETFs, quantitative and index strategies in particular.
I would like to spend a few minutes on slides 5 and 6 to talk about our competitive strength and key capabilities in areas with high client demand and our focus for 2021.
We have been managing dedicated Chinese products for nearly 40 years.
Moving to slide 7, we had 61% and 70% of actively managed funds on the top half of peers on a 5-year and a 10-year basis, reflecting strength in fixed income, global equities, including emerging market equities and Asian equities, all areas where we continue to see demand from clients globally.
Looking at our AUM on slide 8, we ended the quarter with $1.35 trillion in AUM.
Of the $132 billion in AUM growth, approximately $95 billion as a function of increased market values.
Turning to flows on slide 9, our diversified platform generated long-term net inflows in the 4th quarter of $9.8 billion representing 3.9% annualized organic growth, which we generated positive net inflows in active AUM of $400 million and passive AUM of $9.4 billion.
Our ETFs experienced net inflows of $6.1 billion including $4.7 billion in long-term ETF and $1.4 billion in our QQQ.
We saw net long-term ETF flows in the US focused on equities in the 4th quarter including a high level of interest in our S&P 500 equal weight ETF which had $2.7 billion in net inflows in the quarter.
Two of our top 5 end-flowing ETFs were ESG related.
Retail net outflows were $800 million in the quarter, helped by the positive ETF flows.
On the institutional side, we had net inflows of $10.6 billion.
Looking at flows by geography, you will note that the Americas had net inflows of $2.2 billion in the quarter, an improvement of $6.6 billion from the prior quarter.
Our global equity products improved by over $1 billion or 37% from Q3 driven by our developing market fund, which returned to positive net flows in the 4th quarter following negative net flows in the first three quarters of the year.
The UK experienced net outflows of $100 million in the quarter, as positive flows into our institutional quantitative equity capability were offset by net outflows in multi-asset in UK equities.
EMEA net outflows were $1.4 billion driven by institutional lumpiness and ETF outflows largely in our S&P 500 and Nasdaq-100 use ETF.
And finally, I noted last quarter that Asia Pacific delivered one of its stronger-strongest quarters ever with net inflows of $8 billion.
In the 4th quarter, net inflows were even higher at $9.1 billion.
$4 billion of these net flows were from Japan, $3.8 billion arose from our China JV, and the remaining $1.3 billion was generated from several other countries in the region.
It's worth noting that we continue to see strength in fixed income across all channels and markets in the 4th quarter with net long-term inflows of $8.2 billion.
This following net long-term inflows of $8.8 billion in the 3rd quarter and $6 billion in the second quarter.
It's also important to note that of the $26.1 billion in fixed income net inflows in 2020, $25 billion of these net inflows were from active fixed income capabilities.
Our institutional pipeline remains robust at $30.5 billion on the heels of strong pull through in the institutional pipeline during the 4th quarter.
Turning to slide 11, you will note that our revenues increased $135 million or 12.4% from the 3rd quarter, driven by higher average AUM in Q4, as well as a meaningful increase in performance fees.
Net revenue yield at performance fees was 36 basis points flat and flat at the, at the Q3 yield level.
We recorded performance fees of $78 million in the 4th quarter, $48 million of these performance fees arose from our real estate business and $21 million from our institutional business and our China JV, two of our key growth areas.
Total adjusted operating expenses increased 8.3% in Q4.
The $57 million increase in operating expenses was driven by higher variable compensation as a result of both market growth and compensation related to the performance fees in the quarter.
Through this evaluation, we will invest in key areas of growth, including ETF, fixed income, China solutions, alternatives, and global equities while creating permanent net improvement of $200 million in our normalized operating expense base.
In the 4th quarter, we realized $7.5 million in cost savings, $7 million of these savings were related to compensation expense as depicted on slide 12.
The remaining $500,000 in savings were related to facilities, which are shown in the property, office, and technology category.
The $7.5 million in cost savings were $30 million annualized is 15% of our $200 million net savings expectation.
Of the remaining $170 million in net savings, we anticipate we will realize roughly 50% of the savings through compensation expense.
The remaining 50% would spread across occupancy, tech spends, and G&A.
As it relates to timing, we still expect approximately $150 million or 75% of the run rate savings to be achieved by the end of this year, with the remainder recognized by the end of '22.
We estimate that we will realize roughly 75% of the anticipated compensation reductions in 2021, roughly 50% of the anticipated reduction in occupancy expense also in 2021, and all of the reduction in G&A this year.
In the 4th quarter, we incurred $104 million of our total estimated $250 million to $275 million in restructuring costs.
We expect the remaining transaction costs for the realization of this program to be in the range of $150 million-$175 million over the next two years, roughly two-thirds of this remaining amount occurring in 2021.
With respect to Q1, after improved market performance and asset inflows in the 4th quarter, we start the year with ever $1.3 trillion in AUM.
Turning to slide 13, adjusted operating income improved $78 million to $485 million for the quarter, driven by the factors we just reviewed.
Adjusted operating margin include 230 basis points as compared to the 3rd quarter to 39.5%, demonstrating the operating leverage in our model.
This helped drive a 19% increase in adjusted earnings per share to $0.72 a share.
Non-operating income included $31.9 million in net gains for the quarter compared to $15.2 million in net gains last quarter.
Interest expense of $24.4 million was 28% lower than the prior quarter.
Our tax rate for the 4th quarter was 21.7%.
We estimate our 2021 non-GAAP effective tax rate to be between 23% and 24%.
As Marty mentioned, we reduced revolver balance by $90 million to 0 in the quarter, consistent with our commitment to improve our leverage profile.
To that end, our balance sheet cash position improved to $1.4 billion in the 4th quarter from $1.1 billion at the end of Q3, $764 million of this cash is held for regulatory requirements.
I will note, we paid $117 million earlier in January to settle a portion of the forward share repurchase liability with the remaining liability of $177 million to be settled in April.

Summary:
Turning to flows on slide 9, our diversified platform generated long-term net inflows in the 4th quarter of $9.8 billion representing 3.9% annualized organic growth, which we generated positive net inflows in active AUM of $400 million and passive AUM of $9.4 billion.
Our global equity products improved by over $1 billion or 37% from Q3 driven by our developing market fund, which returned to positive net flows in the 4th quarter following negative net flows in the first three quarters of the year.
And finally, I noted last quarter that Asia Pacific delivered one of its stronger-strongest quarters ever with net inflows of $8 billion.
This helped drive a 19% increase in adjusted earnings per share to $0.72 a share.