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In the US, fears that have been present all year, including the risk of a Fed policy mistake and expectation for moderating economic data due to continued trade tensions with China, finally tipped the markets into a steep decline. Equities moved sharply lower as the S&P 500 posted one of the worst quarters in the last 50 years. Nearly every asset class posted a loss and we saw the worst performance across asset classes in more than 100 years.

Risk assets like equities remain susceptible to bouts of volatility as late cycle fears linger and upcoming events, such as a conclusion to the Mueller Investigation, the March 1st trade deadline with China, Congress mulling ratifying the new US MCA report, Brexit, and other events, will inevitably be a distraction and potentially disruptive to the markets. Ultimately, we believe the net impact of these actions will continue to shift the investing landscape toward a more bifurcated market where losers are identified and punished, and winners prevail. This landscape benefits active managers as does higher volatility, which provides more mispriced securities and asymmetric reward risk outcomes to invest in and lines up well with the way we've managed money for 35 years.

Our US value products were not immune to market pressures with our larger market cap strategies doing better than our smaller cap strategies. Our Large Cap value product outperformed against its primary benchmark, the Russell 1000 value, for the 8th straight quarter. It finished the year 300 basis points ahead of the benchmark with strong top quartile peer rankings for the year as well as over the last three- and five-year time periods. The strategy is in the top decile of peers since inception after completing another strong year.

Concentrated Large Cap, which we recently renamed Large Cap Select, completed its fifth year with 400 basis points of outperformance in 2018 relative to the Russell 1000 value benchmark. Large Cap Select's peer rankings are very strong with a top quartile result for the year and 1st percentile since inception among its Large Cap peers. As mentioned last quarter, we're excited about the prospects for new business growth and our marketing and product development team is developing new presentation materials for a big push in 2019.

Our SMID Cap strategy was slightly better than its Russell 2500 value benchmark for the quarter, but nicely ahead for the year. We believe the SMID asset class continues to be under-owned globally. Our long-term ranking since inception are very strong at the top 1% of peers, and we recognize the mid-term rankings need improvement. But we believe we have the opportunity to grow this strategy again in the years ahead as relative performance improves.

Our Small Cap strategy, which has produced strong returns for several years, was behind for the quarter and for the year against the Russell 2000 value index. It ranked in the top half for 2018 and top quartile over the trailing three and five years, and in the top decile over the seven-year and since inception time periods. Small Cap's long-term record was validated earlier in the year as Morningstar selected Westwood to sub-advise the Small Cap sleeve for their newly launched Morningstar US Equity Fund.

The lower volatility profiles of our income-oriented products had a positive impact on their performance in the fourth quarter. Income opportunity captured only 40% of the market's downdraft this past quarter and our mutual fund, WGHIX rating, was recently increased to four stars. We continue to invest in our multi-asset platform to fill out our product line up and recently launched our newest multi-asset strategy, flexible-income.

Flexible-income targets of 6%-7% of current income with a stable asset value and a mutual fund was launched in December. Our flexible-income strategy finished the year in the 4th percentile among its peers and has a strong three-year track record in the 2nd percentile.

Over the years, we've built a series of products across the risk and return spectrum and now have an array of products tailored to a client's specific risk profile. Multi-asset is an area where clients value professional skill and judgment. More importantly, it is a difficult area to index and provides a moat against the competitive pressures all active managers face from index funds. Multi-asset is an important area of growth for us and we're pleased to announce the addition of Adrian Helfert, who joined us last week from Amundi, to lead our multi-asset group.

Adrian comes to Westwood with an impressive track record, having built and worked on collaborative global teams and has vast experience defining strategic investment direction, developing, launching, and pitching new products, all while building a great reputation in the industry among clients and consultants. He will lead our Multi-asset Strategies group, which includes Income-Opportunity and Flexible-Income, as well as our global convertibles and Fixed-Income strategies.

We are building on our history as a pioneer in the multi-asset space, having started balance portfolios in the 80s, enhanced balance as Westwood Trust in the 90s, launched and built a successful Income-Opportunity franchise, now mature a flagship product for Westwood, and finally, launching Flexible-Income to provide clients with diversified income. I believe taking multi-asset to the next level will help us build our desired outcomes and display both skill and judgment that clients will value.

Emerging markets continued to present a challenging environment for investors for both quarter and the year. Our high-quality bias helped us to lose less than the emerging market benchmarks and to perform well against our peers. We are working hard to put together another good year and improve our longer-term rankings. The Emerging Markets team is focused on identifying high-quality companies and thoughtfully constructing portfolios that adhere to our disciplined process. Our avoidance of heavily crowded trade, such as the benchmark heavy Chinese technology companies, was an important source of Alpha in 2018 when these markets were declining. We expect that markets will remain on edge until concerns surrounding trade tariffs and China's growth prospects ease. The last few years have been rough on emerging markets, but the market volatility has unearthed some attractive opportunities, and we believe valuations are compelling given their superior growth potential.

In global convertibles, the environment of slowing growth and increased equity volatility focused attention on some of the primary attributes of our convertible strategies. That is, they performed extremely well compared to equities by capturing only a portion of the domestic and global equity declines and outperformed an array of credit embassies. Our global long-only convertible bond strategy enjoyed a solid year relative to its benchmark overall, with peer rankings in the top half of its universe.

The fourth quarter was somewhat behind the benchmark, but its peer rankings during the period remained in the top half. Our US long-only convertible bond strategy strongly outperformed its benchmark for the quarter and year and finished the year with a peer ranking in the top decile ranking.

Market Neutral-Income was a standout performer among all asset classes as it was down only 52 basis points last year. This relatively flat performance was exceptional given the worst year for asset class performance in over a century. As we look ahead, the fund is positioned with Albatross positions that should benefit from persistent high equity volatility and yield orient securities, which will benefit from widening credit spreads. It is times like today when the strategy demonstrates its highest value as a low correlation, diversifying investment and a welcome addition to a risk-averse multi-asset portfolio.

Shifting now to sales, we've continued to recognize and add to our sales, service, and infrastructure support teams. We recently hired a new Head of Intermediary Sales, Harvey Steele, who joins Westwood with a successful history of building intermediary distribution at several firms. Under our new structure, we are investing in retail and institutional distribution and shifting our sales focus to utilize data and analytics to make our sales process more efficient and proactive. The team has also begun to roll out a new sales campaign and an innovative pricing structure for Large Cap select. Large Cap Select and Small Cap strategies will be key areas of sales focus in 2019. We're excited to see the impact of our sales teams in the latter part of the year.

Our Small Cap strategy recently won a new mandate with a large state pension fund worth approximately $125 million, which is not yet funded. And as previously mentioned, we were pleased to have been selected to sub-advise the small-cap sleeve for the newly launched Morningstar US Equity Fund. This fund is a multi-strategy, multi-managed fund and available to clients of Morningstar Investment Services. The account funded in the fourth quarter and we have some additional flows already this year. We've not yet gauged the near-term flows for this new fund, but we're optimistic that our portion of the fund could reach $200 million in the next few years.

Net outflows for the fourth quarter were $2.3 billion and primarily institutional. We anticipated losing a couple of large institutional accounts, as mentioned in last quarter's call, due to the sale of the fund complex we were sub advising and to a new consultant reallocation to passive investment strategies. But we were further disappointed to see terminations in our SMID Cap and EM strategies. Near-term performance has improved in both of these strategies and we feel well positioned for a volatile equity environment this year.

We have added a new, strong professional to our Institutional Sales team, Peter McCarthy, who started late last year, and we're looking forward to the contribution to our institutional sales effort.

The balance and the outflows was in our mutual fund business and mainly in our income-opportunity strategy. We are hopeful that the recent increase to four stars will result in stabilization of flows this year.

On the private wealth front, our Houston team had the best year for new business in over a decade. They also did a great job of client service by increasing the client retention rate to 96%. Our Select Equity strategy, managed out of the Houston office, performed well and posted a respectable down capture ratio of just 80% during the sell-off of the fourth quarter. Assets in the strategy now have reached nearly $600 million, and we're finding it to be a popular strategy across our taxable account base.

We have several events planned in Houston this year and have secured exclusive naming rights to the Society of Performing Arts talk series, which will be called the Westwood Talk Art Series. We continue to hire opportunistically to build our Houston office and feel like we have good momentum into the new year with several new relationships started in January. The pipeline is strong and increasing in both volume and potential relationship size. Most of the new business is coming at the expense of big banks and we're optimistic that our high-touch service model will exceed their expectation.

In the Dallas private wealth business, we have expanded our array of services and our pipeline of prospective high-end customers is higher than it has ever been. We continue to focus on personalizing the Westwood experience and we've hosted a variety of new events that align with our client's interests. Our primary area of focus is to attract a younger client base, and to do that we must be viewed as an indispensable, holistic, and trusted financial advisor across all aspects of their life.

We are building a digital platform to provide friction-free and easy to use applications. Clients can use all or a portion of our services, which will include asset management, banking services through a partner bank, simple or complex financial planning, estate planning, and private equity wrapped in a state-of-the-art digital platform using technology from our partner in BestCloud. We believe that adding these capabilities and focusing on solutions that truly create a unique experience will help us reach our ultimate goal: a Westwood client for life.

While we've been disappointed with our outflows last year, we are not standing still, and we feel good about where we are going. We are meeting the challenges head-on as our investment teams are working diligently to ensure they hold their best ideas and maintain and improve performance across our actively managed strategies. We are thoughtfully building out our distribution teams with new hires in both institutional and intermediary sales. We're using data and analytics to help us be more efficient with our prospecting and we're introducing innovative pricing to roll out our top performing Large Cap Select product.

It is likely to become more and more difficult for smaller firms to make investments in technology, compliance, human capital, and infrastructure to compete in the disrupted world of asset management. We can be a helpful partner and we believe we will have many opportunities to meet high-quality firms in the years ahead.

I will now turn the call over to Terry Forbes, our CFO.

Terry Forbes -- Chief Financial Officer

Thanks, Brian, and good afternoon everyone. Today, we reported total revenues of $26.1 million for the fourth quarter of 2018 compared to $33.9 million in the prior year's fourth quarter and $29.9 in the third quarter of 2018. The decrease from the prior year was due to lower average assets under management resulting from net outflows, market depreciation, and the sale of the Omaha based component of our private wealth business. The decrease from the prior quarter was due to lower average assets under management.

Fourth quarter net income of $5.4 million or $0.64 per share compared to $2.9 million or $0.34 per share in the prior year's fourth quarter. The increase primarily related to a $3.4 million incremental tax expense incurred as a result of tax reform recorded in the prior year fourth quarter, coupled with current quarter foreign currency transaction gains, lower compensation costs, and the decrease in the federal tax rate.

Economic earnings, a Non-GAAP metric, was $9.5 million for the current quarter or $1.12 per share compared to $7.6 million or $0.89 per share in the fourth quarter of 2017.

Fourth quarter net income of $5.4 million was flat with the third quarter of 2018. The current quarter benefited from foreign currency transaction gains and lower employee compensation expense offset by lower total revenues. Economic earnings was also flat at $9.5 million or $1.12 per share in the current quarter versus $1.11 per share in the third quarter.

For fiscal 2018, total revenues of $122.3 million compared to $133.8 million in 2017. The decrease was due to lower average assets under management during the current year, partially offset by a $1.6 million increase in performance-based advisory fees earned in 2018.

Net income of $26.8 million or $3.13 per share compared to $20 million or $2.38 per share in the prior year. The current year benefited from foreign currency transaction gains, lower employee compensation expense, and a decrease in the federal tax rate, as well as a one-time legal settlement expense in 2017 that was not incurred in the current year.

Economic earnings, a Non-GAAP metric, was $43.9 million or $5.14 per share compared to $38.9 million or $4.63 per share in 2017. Firmwide assets under management totaled $16.6 billion at quarter end and consisted of institutional assets of $9.3 billion or 56% of the total, private wealth assets of $4 billion or 24% of the total, and mutual fund assets of $3.2 billion or 20% of the total.

Over the year, we experienced net outflows related to our ongoing business of $5.2 billion with the remaining net outflows related to the sale of our Omaha based private wealth operations and market depreciation of $1.4 billion. Our financial position continues to be very solid with cash and short-term investments at quarter end totaling $118 million and a debt-free balance sheet.

I'm happy to announce that our board of directors approved a quarterly cash dividend of $0.72 per share, payable on April 1, 2019, to stockholders of record on March 8, 2019. This represents an annualized dividend yield of 7.8% as of the closing price on February 1st.

That brings our prepared comments to a close. We encourage you to review our investor presentation we have posted on our website reflecting fourth quarter and fiscal 2018 highlights, as well a discussion of our business, product development, and longer-term trends in revenues, earnings, and dividends.

We thank you for your interest in our company and we'll open up the lines to questions.

Operator

Ladies and gentlemen, if you have a question at this time, please press the * and the number 1 key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the # key. Again, that is * then 1 to ask a question. To prevent any background noise, we ask that you please place your line on mute once your question has been stated.

Our first question comes from Mac Sykes with Gabelli. Your line is now open.

Mac Sykes -- Gabelli -- Analyst

Oh, good afternoon, everyone.

Brian Casey -- President and Chief Executive Officer

Hi, Mac.

Terry Forbes -- Chief Financial Officer

Hey, Mac.

Mac Sykes -- Gabelli -- Analyst

So, I have two questions mainly around your Select product. Can you just talk about which channels you're currently in with that product? And then, as you expand distribution next year on the back of the performance, which channels do you hope to see the most traction?

Brian Casey -- President and Chief Executive Officer

Okay. Well, the name Select could be confusing because we actually have two products. So, one of the products is our taxable select product and that is a product that is managed out of our Houston office. And it is designed for individuals and it is a high-quality, low-turnover tax-efficient portfolio.

The second version of Select is our formerly known as Large Cap Concentrated products. We have had that in the garage for the last five years incubating alongside our traditional Large Cap products. The results have been spectacular. They're in the top percentile over that five-year period of time and we're excited to roll it out. So, it is really not in any channels currently.

Where we do intend to roll it out, first and foremost, is with what we will call sensible pricing which will be a performance-based fee type of structure that we'll announce here shortly. We're working on white paper, and you'll see more information on our website during the next few weeks. We also intend to introduce that into the managed accounts channel as Harvey and his group starts to get rolling in building our intermediary sales effort.

Mac Sykes -- Gabelli -- Analyst

Okay. And then on that intermediary channel aspect, you certainly satisfy in terms of performance. But how should we think about other aspects that you may need to bring to the table in order to get further penetration in terms of maybe enhanced marketing, certain scale model delivery, technology, etcetera? So, any color on that would be helpful.

Brian Casey -- President and Chief Executive Officer

So, Harvey has only been here a couple of months, but he has a really grand vision of using data and analytics to help us be more efficient in our prospecting effort. He intends to add up to four more wholesalers around the country to help build out the intermediary sales effort. And any time you bring in somebody new, they tend to have connections at places that you have not been previously. So, we're excited to see what he's going to be able to build over the next year, and we should have much broader effort in terms of marketing our products.

Mac Sykes -- Gabelli -- Analyst

And then the last question just on capital allocation, I saw that you bought back some shares in the quarter. And it looks like the cash balance stayed consistent quarter over quarter. Should we think of that as being opportunistic or kind of to balance out some of the potential grants that may be coming to the new employees?

Brian Casey -- President and Chief Executive Officer

Yeah. Well, two questions. I guess I would view historically our cash, we've always been very conservative. We've never had a penny of debt. So, it's always been a conservative standpoint. And we've been criticized over the years when the market is roaring straight ahead that, I think at times like the fourth quarter, it's nice to not have that debt clock ticking in the background.

As far as comp, we've approved comp throughout the year, and we'll pay that out in February here in a couple of weeks. We did pull back our comp approval in the fourth quarter by a meaningful amount, so that's part of what's in this quarter's earnings.

Mac Sykes -- Gabelli -- Analyst

Great. Thank you very much.

Brian Casey -- President and Chief Executive Officer

Thank for your question, Mac.

Are there any other questions on the line?

Operator

As a reminder, ladies and gentlemen, that's * then 1 to ask a question. And I am not showing any further questions at this time. I would now like to turn the call back over to Brian Casey for any further remarks.

Brian Casey -- President and Chief Executive Officer

Okay. Great. Well, thank you for listening to the call today. If you have any further questions, please feel free to follow-up with me or Terry or visit our website at westwoodgroup.com. Thanks so much.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program and you may all disconnect. Everyone have a wonderful day.

Duration: 26 minutes

Call participants:

Julie Gerron -- General Counsel and Chief Compliance Officer

Brian Casey -- President and Chief Executive Officer

Terry Forbes -- Chief Financial Officer

Mac Sykes -- Gabelli -- Analyst

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