Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| In terms of areas that are particularly of focus and things that we're having conversations about it, we're well positioned, the municipal portfolio, whether that's investment grade or high yield, the performance is stellar |
| Stated priority, where I'm pleased to say that we've made significant progress in building balance sheet strength |
| And finally, we believe that significant opportunity exists for even greater expansion of our fixed income ETFs and bank loan capabilities which are two notable strengths of Invesco |
| However, our unique positioning with deep client relationships, a strong geographic mix and a broad suite of investment solutions helped us deliver positive net long-term inflows in the third quarter |
| I just want to underscore, I mean, a lot of the flows that we're seeing, we're very pleased with what we saw in the third quarter |
| Our ETF business delivered record flows in the third quarter, which were concentrated in our leading factor-based capabilities |
| We've also seen very strong growth in Asia-Pacific, driven primarily by our success in China |
| Additionally, we continue to enhance the commercialization of our SMA platform and are seeing strong momentum in flows, particularly within fixed income, where we have posted 12 consecutive quarters of positive net flows despite the challenging market environment |
| Within these vehicles, we are well-positioned to meet the increasing interest around personalization and tax optimization that we're seeing by wealth management clients in both the US and around the world |
| Well, thanks, everybody, for joining the call today and we continue to believe that we have great opportunities at Invesco as we discuss today and that we have momentum from which to build |
| We continue to put considerable effort into further improving investment quality, product differentiation, and client engagement in these capabilities to ensure we are well-situated ahead of the eventual renewed demand in these important and higher fee-yielding asset classes |
| Our aim is to operate with more agility, improve our consistency of investment quality, create a more seamless client experience, and more efficiently leverage our size and our global scale to enable better outcomes for our clients and drive even greater profitability |
| Further, we now have a more diversified business mix, which better positions the firm to navigate various market cycles events and shifting client demand |
| The demand for passive and the weaker demand for active and we're certainly benefiting from one side of that trend |
| We have the track record to support our conviction with 18 straight quarters of net inflows prior to this quarter |
| We know as the 12th largest asset manager, we are well positioned to be a net winner, and we think we will benefit from some of these fee rate changes and the impact to some of the smaller players |
| As Andrew outlined, we like our position in this space and believe we are well-positioned to capture flows as investors put more money to work in fixed income products |
| So, the one thing I would say to that is while that is an impact to revenue upfront, we actually think this portends very well for our business in China as regulation seeks to just further strengthen the capital markets there |
| Our established infrastructure, brand, and innovation will enable us to continue to lead and bring both active and passive capabilities to investors in an even more personalized and efficient way |
| So, against the backdrop where clients are seeking to work with fewer asset managers to meet the breadth of investment requirements, fixed income is clearly an area of our business that is poised to continue to gain market share and drive even greater profitability as the eventual rotation beyond cash unfolds |
| Andrew Schlossberg Also, we're going to continue to have the expense discipline that Allison has been talking about in addition to these streamlining efforts playing through over time and helping us grow our revenue base but also be much more efficient with our expenses and be able to reallocate additionally to these growth areas in time as well |
| We view these as drivers of revenue acceleration, which will allow us to improve our investment quality, reallocate our expenses and capital base much more effectively, and deliver sustainable profit growth and margin expansion and time |
| Fixed income is a clear area of strength for Invesco and we're focused on ensuring we are well positioned to capture what we believe will be an outsized share of this reallocation |
| As you can see on this slide, our $500 billion plus fixed income platform has strong investment performance, requisite scale, diversity across asset classes and client geography, it spans public and private investments, and it has a robust offering of both active and passive products |
| The globally integrated institutional quality platform has been a consistently strong grower for Invesco, having posted long-term net flows over the previous 18 quarters and it's very strong top-tier investment returns across a wide range of fixed income capabilities |
| A few highlights to note on our favorable position that are on the page include our global liquidity capabilities, which have grown AUM by over 150% over the past five years, and we're now squarely in the top 10 of institutional money fund managers in the top five amongst nonbank-owned providers |
| Our stable value capability is well-placed in DC platforms and ranks as a top manager in the US institutional marketplace |
| We recognized it was quite a bit better than what the rest of the industry is seeing |
| Within our investment-grade capabilities, our relative performance has been improving since the recent mini banking crisis and our long-term performance strength has helped us nearly double our AUM in the past five years |
| Furthermore, our global and emerging markets fixed income capabilities of stellar performance and are very well placed for growth in the UK, European, and Asian institutional and retail markets |
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| GTR would have been one of the challenges we've been experiencing along with the pressure from developing markets and global equities |
| Outflows were concentrated in fixed income, where continued weak market sentiment and interest rate tightening has led to diminished growth across the industry this year |
| And I think we're just seeing with the interest rate tightening that's happening inside of China, a diminished appetite for fixed income overall |
| The slowing and narrowing investor activity has been a near-term challenge for our industry, but it also sets the course for an eventual reallocation and money moving back into higher risk-based assets |
| The result of revenue headwinds created by these dynamics has weighed on our results over the last two years |
| So, the actual investment advisory fee was a lot of pressure, but distribution offset kind of allowed the net revenue yield to be only down modestly |
| During the same timeframe, we've seen weaker demand for fundamental equities, driven in part by the risk off sentiment that was sparked in early 2022, coupled with the pressure we experienced in developing markets and global equity as well as the closure of our GTR capabilities |
| Fixed income net long-term flows turned modestly negative with $1.3 billion of net outflows with growth in investment grade, SMAs and global debt, offset by the outflows experienced in China |
| I think many years ago, you used to say the ETF business was a drag on margin as it hasn't scaled yet |
| So, it's actually been one of the challenges is it's been difficult to deploy just because the transaction activity, particularly in private real estate is relatively low, just given some of the financing dynamics that are going on |
| We are deeply saddened by the loss of life and devastation and the impact it's had on civilians across the region |
| And then I think it's a little more challenging on the domestic equity side, but the same comments I made would apply |
| Flows are negative in 3Q |
| Turning to Slide 7, AUM was $1.49 trillion at the end of the third quarter, $51 billion lower than last quarter |
| However, that quickly shifted to a risk of posture again as the quarter progressed and uncertainty grew, marking another volatile quarter for markets worldwide |
| In aggregate, our net outflows in these strategies are significantly lower than what we experienced in 2022 and have stabilized at around $1 billion in outflows each of the last two quarters |
| Although I do think this gives you quite a bit of color as to what's been going on over the last four years and a lot of the challenge in the results that we've experienced being increasingly captured |
| I'm still, I guess, a little surprised for everybody that flows haven't been stronger |
| On -- for my follow-up, you said that there was a big loss of a single account with GTR |
| Market declines, coupled with foreign exchange movements, drove the decline in AUM |
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