Invesco (IVZ) 28 Oct 172017 Q3 Earnings call transcript

Company Profile

Participants

Marty Flanagan	President and CEO
Loren Starr	CFO
Dan Draper	Global Head of ETFs
Brennan Hawken	UBS
Bill Katz	Citigroup
Craig Siegenthaler	Credit Suisse
Glenn Schorr	Evercore ISI
Michael Carrier	Bank of America Merrill Lynch
Ken Worthington	JPMorgan
Alex Blostein	Goldman Sachs
Dan Fannon	Jefferies
Brian Bedell	Deutsche Bank
Chris Shutler	William Blair
Michael Cyprys	Morgan Stanley
Kenneth Lee	RBC Capital Markets
Chris Harris	Wells Fargo
Andy McLaughlin	KBW

Call transcript

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Unidentified Company Representative

This presentation, comments made in the associated conference call today may include forward-looking statements.

Forward-looking statements include information concerning future results of our operations, expenses, earnings, liquidity, cash flow and capital expenditures, industry or market condition, AUM, geopolitical events and their potential impact on the company, acquisitions and divestitures, debt and our ability to obtain additional financing or make payments, regulatory developments, demand for and pricing of our products and other aspects of our business or general economic conditions.

In addition, words such as believes, expects, anticipates, intends, plans, estimates, projects, forecasts, and future conditional verbs such as will, may, could, should and would, as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements.

Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. There can be no assurance that actual results will not differ materially from our expectations. and to to on described carefully most Form not and forward-looking in investors filed recent you XX-Q urge consider XX-K caution rely SEC. any unduly statements our with We the forms subsequent the risks

reports to to You obligation forward-looking Web site disclaim the statement if be any information in later the at may from SEC’s out We inaccurate. www.sec.gov. obtain expressly disclosure turns these update any any public

Operator

be Conference conference Welcome listen-only in recorded. to will Quarter All session. a Today’s Results until Instructions]. Call. Invesco’s call question-and-answer the mode participants Third being [Operator is

If you time. have disconnect at you this any objections, may

I Now, and Global begin. Head President to Flanagan, and over call CEO Flanagan, of of ETFs. Dan to Draper, Mr. Starr, the you Officer; your would Invesco; may for Financial Marty like speakers today; Loren turn Chief

Marty Flanagan

actually very will And us. quarter. minutes on for the ETF the much results Q&A. couple Loren acquisition we’ll business, to of around to I’m financial Guggenheim’s the into going is to everybody and open the of Thanks of spend a give course, further And just going up and joining for review. context go spend time thanks to Dan

margin up – and XX.X% in very up quarter-over-quarter The rate It to quarter. institutional organic strong QX meaningfully compared of all five-year as XX% highlights income me were ahead continued Page of peers for We So during channels, a This and the $X.X so adjusted at quarter. a both are XXXX. assets in of basis. strong and and was billion XX% resulted long-term this XX% the be operating flows, increased third hitting this touch growth in which let and very X. quarter quarter. operating saw during adjusted XX.X% results, the by to and very operating in retail the X.X%; performance few during on Long-term in came the strong three quarter. on resulted

So let’s flows, on on spend Page and a that’s few minutes X.

during August. the know, the for did see in demand we you as So acquisition And solid ETF completed quarter. and capabilities of business Source many passive of both active we

contributed a continue to the business, in of addition it close our inflows be our to greater to is and EMEA to has going meaningful competitive ETF Source ETF the the net and business globally. since positioning acquisition,

look net you If also the alternative and strongest at saw equities the as look XXXX. capabilities, equity. we third strong fixed international and commodity a well saw sales flows taxable quarter and since take passive, active income solid flows growth as a at the flows We with international in of income Taking capabilities. were currency fixed

on So on both grow flows fixed taxable would return saw imagine. solid by And into by demand. strong flows see retail consecutive you continue fifth note. quarter not as driven but we $X equities led European remain income cross-border as robust. of were risk quarter, we positive this institutional institutional highs, test And given and income Taking literally, the clients. net very the active particularly fixed capabilities and also a being broad And institutional strong, again Slide demand very strong retail channels funded both for new mandates institutional flows X, saw pipeline passive, EMEA, channels which will again during was in one we into And also that of look and institutional in to by continues and as demand an saw both markets the of remain target strong We investors, investors. at of mitigating did set global among by ETFs. to billion very flows nearly example, you strategies and

if XX, Guggenheim of minutes a spend on of be you happen following. putting Investments, to context around acquisition let’s the and So Page couple I’m

firm have achieve notion clients we very their the as investment needs. objectives. So entire focus in are we And mind, helping built clear, we on focused this helping meet their with very, intensely on single clients made the

you client and capabilities, so make comprehensive in to past investing the strategies. $XXX have position XX this as in we over to are to imagine, and expand years of we’ve grow, factor organization we come. and example to billion over of capabilities investments real in business the take And us of set at active, a strong ahead our a be part years resulted demand. the experience. expect which would alternative capabilities, if look designed continued An decade, very that And we of the range is of passive you the the continues of broad has and a factor and in have It that deep

draw to have digital is our Jemstep and us our focused to our platform experience. to be of also strong our client And our example on enhancing growth. which We in advice is advisers. it’s Jemstep an positions for really continues of marketplace on robust. And ability The demand very the capabilities the long-term which range solutions Invesco and really that, for differentiates for application for provide clients, comprehensive

to to our while will elements placing in beta Turning smart also and further really diversifying the provide beta ETF ETF I Page growing scale few and XX. growth in our in our marketplace while ahead. competitive the States. the smart on highlight that The two years our enhancing of acquisition business and relevance breadth expand number like of the quarters the provider ETFs as a the would of Guggenheim, acquisition, strengthens business position also firmly traditional while the globally. United global the from We’ll depth accelerating Invesco’s U.S. ETF offering and will that us strengthen Invesco’s additional the Guggenheim it in platform

Dan? to the over investments, a going drive is go brings Lastly, operations, and and Dan turn momentum about benefits as business that to going help forward. that and Dan, in acquisition our financial that addition enhance to With build ETF business platform talk ETF Guggenheim’s and Invesco. how our for from performance begin also existing as backdrop, the positioning it the to will scale I’m upon the we further will distributions in will

Dan Draper

Marty. you, Thank

As Invesco, in complementary has Guggenheim really we’ve past, that’s reviewed to us to something to business the as some ETF stood a the always been time. possible ETF acquisitions for out of us interest

assets. ability talked crucially think business billion Guggenheim’s you management. business about growth Marty’s in with look if the I is So beta Overall, global ETFs they I’ll further five detail franchise half products flagship platform on under and couple slides. at have of the the which today their a and will for ETF the smart $XX.X of go the some continue that more in help of current this XX that us assets product suite, is us about through about, XX% in About to top help those in

really out looking you ability and fixed us, pricing to margin, as If space. This mentioned, kind at solutions and Marty to especially across line across build multi-asset – continue in help very to equities, beta smart alternatives. acquisition capability in capability. the brings us our income of Also their look with class ETF much

you X strong look the of very or their look performance quarters also we track net just very you flows. rate strong ago. record years. of have at I three Around think at transaction And across growth ratings the XX.X% Morningstar the higher. ETFs we weeks since to products, platform a announced past few performance. the And the organic had then the over of We continue five of a the also, If see seeing annual currently good platform inflows on compound

of to the moving a presentation, and the on is synergies where in. Slide following of products you’re additional really where addition the If into XX, get lot some the this come I’ll

we beta S&P investing, this years, has if and Invesco’s for number had is So Equal you ETF flagship of beta products platform, have smart on really in global where factor at and that’s the Weight. a a of one high XXX the look smart ETF with focus Guggenheim

we So going ETFs going the icing very, is where will this areas today really offer. for many to some Also, biggest a bring the solutions, complementary. of there. fit they in already see business, Invesco’s that we distribution where to benefit very which very Invesco’s most to single acquisition. a portfolio to some those openly, income ahead again, we starting lot digitally, very but years built, very is is and ETFs, important really the again a of we’ve market that potential senior ability to capability, ETF, the additional educate utilize one to products, of to partner pure factors an maturity fixed model again able be to look consulting equal the the and ticker, We going access style in of cost be platform. of quite in complementary like for we’ve Weight at bank our line XXX as world particularly working in our to Also, the this with therefore, Jemstep we clients. key additional engage ETF Invesco’s and our be our us products through the is of Invesco’s and important us. [ph], we factor four business We defined, looking continue markets, strong through Slide are very franchise, self-indexing. we able of simplest extremely the income the focuses we’re who organic individual able the again at which beta to see to continue position didn’t time, give feel Overall, to smart really ability solutions Invesco fast leadership in this vehicles to even we XX, fixed is that, believe we solution and bring Invesco. where loan a are to lot income again first think, believe have extremely form firms, like of is with to third actually then years bonds. really the the licenses Also, as also ETF solutions that overall, want more of see had that of closer to to extremely interested better increasingly, others. particularly These investors institutional single weighting, move beta at looking offers notably going for be have us be think have BulletShares of And much, the complementary for this the have or a strategies. the allocation industry, allow clients this much very if the those see going S&P utilization up leading BulletShares to leadership but is And world-class segments, experience asset to look really previously our you at strong we types acquisition. are to in capabilities again Also our having secular well help growth positions manage the the Marty the fixed ETFs, there. but maturity able we at CurrencyShares we capabilities where ETFs, product PowerShares ETFs. particularly not mentioned portfolios, moment, to were around And in of capital listed wrap the very, but, the really most to you the customized just total that this we looking to feel of very to rebalancing accelerate one to at And getting also acquisition Equal exposure again Invesco we well-known terms the capabilities. in one with available, through Guggenheim been a If value leverage our number ability think defined these in will think are growth fixed in of these new be, experience, is capabilities, can smart additional also powerful of the factor again, And clients are also that to then been like Guggenheim we income income XX synergies Particularly fixed of ETFs. that a and team. effective that ETFs Alongside we Equal quite in in Weight growth the believe around ability this sell-side particular, category. bringing us at And

to I emphasize Looking ahead to wanted here. just XX, Slide

loan mover of first first quick a We getting And really talk real over categories, bank the FTSE importance of innovations continue really been of high-dividend, the looking just across the business like including debt, some at our a in low-volatility preferred, at to where has range the bringing at looking variable-rate cetera. pioneer like advantage ago, about senior market areas decade low here’s PowerShares alternative RAFI the volatility, to in ETF, sovereign commodities, into ETF market and et space. looking important lineup

I Guggenheim track what record of think I type to more of that. this now we’ve So have Guggenheim, lot that S&P such the the really and going Equal innovation even strong in to and for add from pioneering think XXX us to the think ETFs demonstrates I Weight layering as it just is a built

the that which assets in I raised we’ve $XX XXXX, demonstration is is products of the from actually net the new highest since think industry. third more showing billion

the really add synergy forward in build to is for a I to think continue to and clients be So going this us innovation going ability to crucial ETF.

XX around over ETF But track again been to increase – acquisition flows beta help position XX% you AUM shows ETFs issuers having that to incrementally smart going the market really class also and having to they we category AUM years with the importantly, have that industry’s and On you of beta issuers continue having increase we in income a or well XX% XX% to And very to under growth records the and our is again mover since metric, very focus XX% core for past Having investors. can the those market absolutely XX, where should same remain period. solutions, Slide XX% net entry, of factors, to well equities, longest smart also very, puts believe entered actually track largest market the share industry while really to of targeted number in at in is I us does there area, as the record XXXX think comparable record to in ETF beta five time to believe alternatives, of then the advantage, market see in more or crucial fast-moving than track can record this first And our in of positions issuers just strong XX% go as and months smart I you track legacy, being products say on over gone worth with out belongs high. this segment. may that beta. XX, XXXX barriers or which it success again as to XXXX. segment having who’ve a smart of before. belong very by XX% of U.S. low, – able multi-asset believe us offer of as a since barriers very, prior of the do point I beta, a see least brand, as similar the our XXXX smart the story We that think And to move we flows fixed we be very are Slide again who

So quarter. operating I’ll that, to going the to Loren? Loren Starr for it over the with results back highlight who’s turn

Loren Starr

Dan. you much, Thank very

the AUM AUM. total XX billion our see externally of XX quarter-over-quarter, of which Source-managed increased driven ETF, or and So that billion, X.X% billion acquisition AUM you’ll XX.X was X including that added and by managed of approximately billion Source

translation capability inflows X.X of of We quarter. quarter. net our billion. from X.X the by the X.X XX of factors long-term QQQs in We billion. a billion, these X.X outflow in X.X% for gains our of was small to inflows rate offset quarter compared in had positive came up billion somewhat Average were XXX.X second QX markets into from negative X.X X.X% AUM the also third annualized billion. organic money and And benefited the second FX market of versus growth at billion, long-term And

on turning the this one or line and reinvested gains any long-term I yield, change being wanted inflows in were periods, losses reported. to are In just gains funds and market were included capital dividends how update Before quarter net quick previous in a item. highlight to revenue our that

will the periods, and So flows inflows be included third industry long-term beginning in quarter these flow now future reporting within for our with conform Invesco’s general to practices.

particular included note in the item this As from you also amount related inflows X.X the was Slide billion. to on footnote XX, long-term the

So now turn analysis. let’s next net yield the to revenue

excluding was You’ll XX.X X.X yield yield, basis see was That points XX.X quarter. that second fees, revenue at our net basis increase points basis revenue performance and came of the in over net our an points.

were, one Now we basis impact QX and added looking at we X.X FX X.X additional had of also what day points. the and added causes that points the saw positive sold in mix basis

are impact quarter, also positive factors X.X reduced by other yield we by the which these by as last basis which the So our in yield saw X.X of ETF points. Source in reduced discussed somewhat business, we points. the within decrease basis dilutive offset revenues a And

X.X% of So X.X% are on Slide positive to Source. million. average today, that found to as X.XX AUM, as higher next adjusted you’ll which fees U.S. management the decreased is comments net average or quarter-over-quarter our variances incremental acquisition well rate million, to from measures, presentation. XX.X and FX which Within however, – additional that see number, on an management QX on investment impact revenues revenue XX by a XX.X going XX. of billion, fees during increased million Slide our that My XX non-GAAP focus day adjusted our reflects GAAP by related to Net exclusively presentation the our million XXX.X are or included

revenues FX Adjusted distribution adjusted by and in and by XX.X X.X million. our quarter X.X fees million and our million. investment revenues higher distribution by reflecting Foreign increased exchange adjusted average AUM service service or X%, increased management the increased

adjusted XX performance variety million from came obviously, higher a XX.X investment million they notably earned Invesco’s fees most capabilities, level, of fund. Our in QX. in a were mortgage at by And much recovery but

or by And Our of from the revenues service and FX and was day million quarter by revenues advisory FX with from impact the additional FX quarter. other million expense increased increased third-party expenses AUM adjusted third-party X.X third prior other by which X.X million XX.X distribution quarter. million and increased consistent related million X.X increased was the that’s in that derived adjusted we gross X% a positive. that were against adjusted decrease revenues, net the performance the in retail XX.X X.X million. our distribution quarter. revenues and service The next, and in advisory adjusted on fees the

to let’s move Now expenses.

our was see at down by non-cash adjusted employee million well employee adjusted The as primarily expenses driven plan. operating or X.X%. relative by of XX.X FX QX. operating a and you million. adjusted or As and X.X slide, we to related X.X move XX.X and the FX was were an And quarter. at compensation, increased higher expenses charge million came you’ll quarter. expenses brought compensation X XXX.X million million. or compensation million in technology the marketing office came the That fees UK adjusted FX service. our defined-benefit projects line during X.X% this increase increased million, increased million. X.X adjusted X tech XXX.X that The marketing expenses expense X.X related increased X.X% X.X% and in increased XX.X performance That million long-term that property, tech QX that to by the FX over to increase The in reflected by depreciation variable company’s by property, million. million. was adjusted guidance million provided on million cost increased at up the second of increased the office adjusted with recently into this last XX.X by quarter in an expenses slightly X.X adjusted to

the that estate down last of driven adjusted in and by the X.X earnings our million on to the that million. came FX was quarter. our line tax, in And with QX to adjusted bit see in expense we from to came tax tax our a tax lower G&A at G&A, up, equity to XX.X%. that compared our real somewhat to and guidance by an X.X non-operating on We operating $X.XX margin net That adjusted rate do rate, moving drop G&A increased increase higher increased million. of again XX.X%, rate of from us XX%. provided or income then investments our little adjusted roughly income than guidance. page, And you’ll at Next earnings offset going private on net XX.X by X% effective the pre-tax was believe adjusted forward increases that investment. million should X.X that QX in was EPS brings in That then going

let effort. me business just optimization. on is quickly touch ongoing of multiyear This an So kind

million largely we’ll October very to flows net strong do as flat. through inflows Europe good some are questions, we’ll well were as robust Pacific. roughly retail know obviously side, As Marty somewhat Quarter-to-date, opportunity offset savings. rate savings about XX pipeline. I XX optimization the million, deliver get quant, October we we finally, institutional by around actually end as those XXXX run just We by we picture. the office then rate on QX continue savings to net the rate of flow the mentioned up. run from an U.S. because Asia of heard, expect the early functions, the savings U.S. the on outflows And achieved the which initiatives, in of in very from additional total back sub-advised is about it. given days, of had a and our well These see or address expect including you’ve original for as feeling outsourcing target work run exceed We’ve a number of to

it think continue. with that, I’ll the going over to trend is turn to Marty. So again, we And

Marty Flanagan

Operator, so we’ll open please. up Q&A to

Operator

you. Instructions]. Thank [Operator

from Hawken your Brennan is open. UBS. Mr. from is question first Sir, Our line

Brennan Hawken

adjustment letter an the Wondering SEC really given morning. I updated what applying question. it And any notice, on we early that via on really, a impact, on of reads apply? view [ph] action base that this comment get short Hi. know if in the no might have you could but kind the RPAs. did you the maybe out of for it’s taking Do for relief Thanks and the

Marty Flanagan

comments in. This Loren chime can of is Marty. I’ll and make a couple

is it the at moving the know be. target going a state moment. We clearly So is where end to

from MiFID So XX-month has impact financial back very like mean stocks, happens the liquidity there. I missed we’ll Europe, on to is industry good The it topic. topic a in which take bigger paying around small a early stocks, But Europe. it so impact negative the it is not Europe, cap I an of that markets think clearly but it’s a perspective is our This have will would notion to a in impact cap what on topic. capital attention do contained the manageable. be looks U.S., read that’s to see a to review – have I it’s mid been thing.

formation So hopefully, And around does capital strong. think the firms us, topic. financially we’re is like of this will I’d it U.S. impact very market capital and what say also

analysts world. XXX the have throughout We

analysts ongoing and cetera, just necessary have It’s a challenge, firms smaller they onslaught to a everything like to et It smaller resource us costs advantage We regulatory in will competitive that on put of continue need. et every ensure cetera, cyber to costs, our have the firms. real firms.

up stronger a Loren? end in So competitively as us will position. again this evolves, like just firms

Loren Starr

Yes.

target is. what of much it’s impact terms quantifying, a think the very moving of terms in In I

do All tens we’ve taking and as therefore speak of last really of kind XXXX, it’s there target clear through in of get sort I indicated of it’s expectation of think moving in. a is negotiations of sort price happening sort XXXX. we pricing. we setting you’ll was locked think going material, I – it into not that the maybe place no one we have around to a as because the view as get be without millions even sort But is of

it’s topic time. be over think evolving I an to going

Brennan Hawken

come firms reference some lead I you going then the see that’s you this for And the now to you to two fair. firms do deals, And of opportunities – disadvantage broadly, that smaller and as that continued though you made this to completed you’re smart we Thanks. you’ve beta guess, at very pressure? you would point? all as That’s the going feel appetite ETF that fact Europe. have some space, for to think satiated smaller also of under follow-up, of after should assume or is course acquisitions more more do Sure. more in in that

Marty Flanagan

think this I question the answer I’d way.

than in organic the about all day. we cetera. changing Our be is more do level been impact et because in the be the us the smaller businesses believe et the talking a clients at now before the we an and the we seen there inorganically strategy pressures involved, think we beta gap – that at right in very end manager lead They in that It is you’ve in just to lineup. you the effort complicated and money of sense the greatest dynamic. organically investments. is then particular, gaps We And market. focus capability organization continues see spot no of very, of the strong the last somewhere within smart regardless some first investment And past. opportunity our or would organically the to And acquisitions where very put ETF really in anywhere to in the fact that a world, are are value of for have The approach different when you few factor see Look, a or to these are if to nature platforms. that continue two cetera, and ETF the common of people there a you should would fiduciary combinations. be that never the have

pick organic the firms, will there probably But the been for you growth The pace smaller have more could up see thought. also at firms quite of what people more. frankly competitive frankly. So than has expense slower be quite

Brennan Hawken

and fair That’s helpful color. Marty. Thanks,

Marty Flanagan

Thank you.

Operator

Thank you.

question Mr. is Katz is from Sir, your from line next Citigroup. Our Bill open.

begin. may You

Bill Katz

pro if you apologize a It’s on I is few commentary bit I margin the impact Okay. was for you much. ahead spend this if about with minutes margin Guggenheim this from busy wondering optimization last that. time and join a you’re your a did versus quarter? late. the are all where very MiFID together 'XX How tie we I 'XX little so that at forma been running the could Thanks both redundant. Loren, and investment morning, contribution of the incremental of were sort thinking

Loren Starr

question, Bill. Good

had very points impact call to also that has range. the that the thing XX% percentage going provided, indicated stronger from benefited to we original Guggenheim positive to the probably certainly was in to which we XX So was helpful. on which We’ve our That’s been add XX% that markets, a margin. last itself guidance incremental

Foreign as well. The quantification, mentioned, exchange a positive II as generally is a been I moving has target. MiFID impact

And at the it be hesitant sort think would gave just real probably we’d things to be numbers If I about. of around case, good give a that. point, this of reasonable we to were offset you worst some so the talking we

to case. We’re not hopeful that’s that be going

that incremental more But that guidance the I’d in into better positive say the maybe as more to that one guidance. after next position incremental negative relative around to or much So been our than margins. sure get is we for and overall a thought trend year-end to solid margin we’d has be the call provide original

Bill Katz

you’d just little a bit are your in a maybe the more being little little that better, your active and I That’s surprised be bit else given helpful. little depth? have talk peers little a the equal. your seeing for around Some would more a of maybe just and go Okay. quarter. about And Could repositioning, you product mix passive flow versus back bit commentary robustness and a your all and maybe a little then thought peel regions by

weakness So strength? the where some versus the seeing you are of

Loren Starr

right? October, about talking You’re

Bill Katz

quarter-to-date. thought Correct. I I heard flat

Loren Starr

it’s Okay, a month. partial

again, into I wouldn’t it. didn’t, too strength Europe. about people So was read even into very I much actually and But knew if it. hesitant I good would misread I to seen talk We’ve

We’ve coming flows EMEA flows also a about Asia think on X.X seen very into into I of basis. billion just Pac. long-term solid long-term

bond, across GTR, Europe in a all Europe, same Pan-European that range the it’s very, flowing is coming in ever. pipeline have think helpful. the corporate very highest again, been So Institutional before it it’s wide I where equity, is elements been well

success. had And so they’ve really great

we so that thing. And an is positive accelerating think

they had particular, slow into we down little just a third The of mentioned that a again quarter. earlier, the to be lumpy. sort in U.S. bit recovering but Asia as a little seem from we’re bit of

So I about sub-advised. talked

sub-advised So seen that as we’ve times. termination of there was one a that lumpy sub-advised happen to client few kind as went was index, one

elsewhere. So I in sort trend, outflow that’s we’ve then of a would some by episodic, but And quant on that’s U.S. quant, the offset been say. inflows seen not quant

it’s think timeframe draw soon too anything. I again, just a conclusion a about really really to So

we’re pretty the so optimistic about And into said, as I flow picture QX.

Bill Katz

Thank you, Okay. guys.

Operator

Thank you.

is Our Craig Suisse. next line is from Siegenthaler Sir, your Mr. open. from Credit question

Craig Siegenthaler

morning. Good Thanks.

Marty Flanagan

morning, Craig. Good

Craig Siegenthaler

you building acquisitions You capabilities time. there completed have two pretty are other I’m the scale alternative just guys in or a the space? wondering, you’d via still to period of And add, looking ETF space like maybe short at technology in are M&A? in

Marty Flanagan

that Guggenheim as record the about, the you that And track feel talked put ETFs a don’t Dan gaps. if quite in look at mentioned us have of very ago, many minute see and and spot really us long-term a just really position combination uniquely. I and both we important strong the Source we of number very, As we

to in factor very it is work of response our Dan is strong, very development back and platform client the needs XX capability that very does and and the applying the to product so that robust. in does to strong, heritage go off of to And And ability this years product team of some development. that

a that obvious market. seem do, but always mention likely that very, comes strong. it from need don’t around – up, technology Jemstep to we very If for Jemstep is like attention in of continue product the So something we did perspective. see demand the I participate to doesn’t pay to we earlier. as continues much be

And with not said, United advisers be that solutions the start as I’ve estimate business, very, will applications right XX,XXX probably of they’re as our business. model of to be see year we part next that next It year, working probably We will very from in of States because latter we our middle the long-duration now, all supportive before. installations we’ll financial would impact are. have

analytics big early cetera. in and continue possible that’s our predictive indication strongly And to we research time. data the what’s things of in So like technology, cetera, invest et et for teams,

more I Its So do use and do that. continued evolution we we continue of Dan? than add that of technology what to Can else. you as core to at look Would anything to we’ll just that? add anything

Dan Draper

Marty. No,

absolutely think right. that’s I

Marty Flanagan

Okay.

Craig Siegenthaler

the fee the a lot And rate you business across us it the could your to then your When How there look year. pricing, of rule. year? this about concerned some fees, difficult a up you been pressure consider at pricing? on I you as And think were of for be product And tweaking have Marty. really over you fee last think a products pricing? that do Thanks, as breakpoints been reducing follow would much just given DOL hasn’t year

Marty Flanagan

by because I to really pressure think Yes. priced why it is about And all there that’s way Look, starts we��re the it. not fairly. think

way would you’re results the expect And delivering that I end, just a think investment and cap-weighted imagine to are indexes. one of about at do continuum capabilities the sort it you you going have you rate, If to at a of is think well. competitive

very They’re alpha there’s toolbox, get By formed. pay much. important no don’t definition, you but an don’t the much generation. in tool You

go highest higher If in factor the to actives, you in you’re be at alpha to and follow be alternatives. that The In would will more end. would two the they between that outperformance. going and expect fees than

clients more makes the a institution. you so alpha would an sense expect, market pricing result trying clients. just And firm’s to and that performance But is with of is a and pay clarity as think fee that’s And meet about very be fair what ability how over I to the resonates any you more it that it which cycle, we willing important. are it to think expect

Craig Siegenthaler

Thank Thanks, you, Marty. guys.

Operator

you. Thank

Schorr Our Sir, Mr. line is Evercore question your next open. from ISI. is from Glenn

Glenn Schorr

Thanks.

Marty Flanagan

Glenn. Hi,

Glenn Schorr

Hello. side. further Guggenheim question on A the

a pricing not of it’s it’s BulletShares, those the there’s actually like a just question products. So and race pressure And that that pure of a on side. side. the of Plenty ETFs style lot but I get and on the current constant zero, people like that on price to the feel Weight Equal

just with follow-up, adjustment for And price you now. as right the how the I’m I price comfortable I’ll ask get if curious So on a could. recent

Marty Flanagan

Dan, you want to take that?

Dan Draper

Yes, sure.

two to the businesses obviously operate that under they’re review upfront state as regulatory continue separately. to Just

the board. So that’s kind of on executives pricing discussion Guggenheim really their side, fund any adjustment done there’s by in –

you So that SP, But been ETF that in Particularly to a the have we’re openly, net say into there thinking in broader outside more has rebalancing in you this you’re while product. indexes about if since with our performance. inflows pricing response you differences. “pricing,” not always that quite said, may difference if clients of positive think made strongly a feel you was institutionalize involved which about adjustment look lead Number price is is one, pricing methodology, similar, actual very is that construction mentioned, substantial to or sound stage. start if performance. And context. can will, the that in the I’d index sophisticated, in But ETFs at we overall,

clients, with we do always first. we as So performance with start

get different cost, a you Secondly areas are of cost. then to when of couple there

lot ETF because of take – really scale, mover move work liquidity emphasized the we’ve the think to with very the as first obviously exit think the across being AUM of where cost monitoring make not trends that’s to the sure of really partners And where an entry really making always enhanced. this ETFs annual is think And third, just where the When grows, ecosystem. within I and I becomes and fee. And – we’re First, everything other possible. you management is but the advantage, liquidity. adjustments Invesco, a build to the diligent, sell-side area to liquidity our it cost able i.e. there’s and I crucial time is

excited, for total, to little at risk, I those So where and and we the is benefits around we’re clients at solution, we’ll especially obviously capital the see bit we those the think asset liquidity, products right and that’s But we then and to where have also especially really Equal from allocation, then with in excited. response going XXX pricing. the And hope to we’re we place diversification markets ability enhancement in thus us in a at of I think a this adjustment monitor S&P around think we’re positive continue look Weight bring we’re the look who far. in with performance clients good looking clearly a feel now

Glenn Schorr

appreciate that. I

don’t I right, inflows into September the could flipped super back quickie did have math might the equity first feels thoughts at if long Another but a like in know but we equity that’s on time. performance know great if on something it side, I income. it a be short your side. the the don’t on, time the for timeframe, equities it’s I count in if curious equity can

Loren Starr

continued up our picking that which equity. we seeing, probably interest are you’re amount think in I Glenn, fair of is a a something certainly

as If side the necessarily And we’re Europe, that you’re capability. in well. going talking probably Asia on case then the to about in in seeing our PowerShares than it’s value be also the U.S., absolutely more and

U.S. and So outside I strong in think of the the most most the interest a globally perhaps in stronger equity bit terms seem active little

Marty Flanagan

Glenn, I add. just would

broader hitting but something there’s You’re on topic, specific here. a

very a strongly this So like to we XXXX, manage the it people investment since when pay very combination feel period is management. That’s a active you cannot and return markets attention use the in create active of it for has role will their a hit active, passive, of and that best alternative. how unique objectives been starts hopefully time portfolios it. Clients without of and and really to it’s the important these that, risk very turn

Glenn Schorr

Thanks. right. All

Operator

Thank you.

is Michael of from Bank question line America Merrill Our Sir, Mr. from Lynch. Carrier open. next is your

Michael Carrier

at consistently I technology Good Asia you’re of those on what doing like morning. the couple markets. When obviously, in more Europe, have it out I should been next challenging. pretty look years U.S. market have side, given ETF you seems look retail Thanks, it’s When had on you part the the side, the growth the healthy and guys. momentum. more over the of In

product we’re passive. time to healthy, time been still just And I offering? kind some pressures you’re active So wanted it’s like where bit then just of offset seems from it spotty the going get core institutions little much across take to in but can how on side, industry your demand that U.S. of a institutional seeing from the seeing to the that from the

Marty Flanagan

Yes.

through market probably – U.S. is going in So, the changes is in the most look, the retail market probably particular.

a their are change. providers it they’re is of changing businesses, period how reforming As

to think important I are is going manage to go the the thing not assets away.

those range the And so believe And this are range products it’s of capabilities, is we of transition broad we’re active-passive winners. one, a firms, those alternatives, the it good performing have that period. and

out it, And talking headwinds are intermediate in, so insurance of company some that is the So us. movements we think things we do the strong And call term. solutions again, we’ve the headwinds The to and for half want But we are in the of What are with or been positioned the what the and our heading look about very year so, capability real. sub-advised, and are those talked next some them. a It’s very, Loren way. meaningful has you about? well. UITs very some

good in about to one do and mention, U.S. able ever along capability by growing And include distribution the would that is quite the Loren as region for materially. the way. to it’s tool region placed Europe to as and us. is The very in very the partners, probably as important tool And U.S. uniquely behind thing team We’re Asia strong institutional we’re funded the but that. important Jemstep development not be is our feel for is a is seeing an same probably been there. We its started

look the we our to opportunities part see very business we are. are we where a client the and at of So we’re U.S. important material, and the think as managing needs

Loren Starr

terms multi-asset draw. offering and value, around interest. Real income think continued in it’s past. as then well interest big things normal a certainly see estate seen GTR-type would And the in our in capabilities we’ve been U.S. We some continued be I capabilities Yes. including of of increasingly has the stable the clients, fixed of

it’s So a from Europe of – U.S. Asia. and third certainly the a third coming pipeline from is a minimum, rest our at the least and

Michael Carrier

on just And Okay. Loren, just quick – a follow up the then P&L.

given expense the it’s the fees and So it whether like any fairly just performance which forward normal, in nuances into been, fourth outlook. any just expect 'XX. or fees seemed products terms and were or – to how performance anything I of fee indication of given performance backdrop’s lines just quarter going guess the strong then what have going just ex-comp because

Loren Starr

know good how forecasting am fees. you at Mike, I performance

support alternative So something continue side. fees quite some on yes, is I that certainly the we think performance the been and we good XXXX may idea up. performance The has see into to would good offer

In down. terms hit, when nail hard of they that really the to actual very guidance for us and very,

is performance obviously we happen recovery offerings as going equity would of fees, as some into private to is large think necessarily one loans offer does little to fee isn’t this I well. again very a something performance bank I’d say continue and the fund unique with that unusual mortgage that have the certainty I bit estate But real XXXX. coming and from say

than I million other kind X said we helpful, – great but certainty I would with fees know offer it’s into not seen I what offer I performance what in And I build something QX. And think million guidance. to can sort that’s year. line particular the a think just for of the again, level next we’ve have mortgage don’t you is ex recovery So QX, X maybe I certainly of for that is the into should this sight of again of thinking

Marty Flanagan

And context quarter. and I bigger back put just beyond questions come of a in your to might

– it of the as the by rate so the – of seeing firm, Europe. X. growth evidence leader; total. 'XX, – to 'XX, anticipate 'XX, it a Asia; back in the always it was; strength – starting look firm XXXX And you’re And rotated. has we of to with market, above growing to if year, a It’s the at U.S. it leader; if at was see last net since market back and fundamental go strength sort by if and see 'XX look shock again UK we without the now you’re the of we’ve organic this quarter. the organization flows inflows a region, you XXXX Europe you been 'XX, you was a in If

Michael Carrier

All lot. a That’s helpful. thanks right,

Marty Flanagan

you, Thank Michael.

Operator

Thank you.

from Our Worthington Mr. Sir, is line next from JPMorgan. is open. your question Ken

Ken Worthington

My distribution. question’s on Hi. Good morning. ETF

can been of maybe So you talk distribution in interesting distribution expectations pay your access platform to Vanguard Europe? of eliminated number its unwillingness seemly It’s particularly U.S. how to and about how platforms, due see evolves, the evolves to a based ETF sort to and for fees. from ETF

And for subsidizes payment the so a or context an having to of platform ETFs, DOL any Thanks. MiFID, secure is evolution of really directly active for rule or helps in the about talk which RDR, space there shelf lot of either in changes. extent rules, maybe distribution ETFs. So indirectly even

Marty Flanagan

Let and then the pick me last question Loren. the of Dan part take can up maybe and

really is to you more because or with We capabilities institution those right? easier large think for distribution leadership firms world. of what changed, firms like depth of believe ourselves, or that’s thought whether a clients firms can attractive not has get that strongly differentiated. to platform clients, from looking a much intermediary way around are it the whether view work be that a basic more experience our So the be a it client consultant and a or A firm has it’s and

a success and passive there’s an to revolving landscape reinforce it on range your uniquely that pick is ongoing the maybe you no evolves, do want alternatives question mind takes distribution that up business thoughts where – organization. But are in firms of ETF and on success so the have of that the my distribution? And does you placed, as those Dan, active,

Dan Draper

Thank much, very Marty. you Yes.

question. think great it’s a I

the start just me Let from top.

kind think think I whether positives all clearly previously if reasons. of retail the at in ETFs had have I it’s distribution you Europe, for II global for different of you DOL, MiFID UK, regulations review net look been in those

that like areas to I seen the has DOL RIAs. out But management focus particular is intermediary Wirehouses, stronger space, of the the by In from, strength the Invesco’s more distribution, educate, for and I those to particularly example, at leverage those see. to with the like more think in long-standing That’s we grows, moving the as what many home position ability be offices and those but by covering advisory those always just wealth in segments and other we’ve having a market IBDs business now U.S., and it’s accounts, in the separate products important is think as EMEA. heavily that’s Europe areas I huge been wires on advantage look there, advisory our long-term able kind particular, U.S. to the and where clients, U.S. relationships. you fee-based access, really As areas say, dominated not focus think

portfolio I of model best on think and in really to this combining fee-based focused the said, overall the others continue alternatives. see, new active, Marty U.S, builders in world the and of passive as we

to that So that adapting of think there’s working amount and in Invesco. the at I huge and obviously we’re a on leverage way midst

Europe different. XX% I is If the would has to very in space. you institutional ETFs of Europe, demand probably move Europe, over estimate current for

crucial scale why but absolutely we Now portfolios to private by that include is that’s discretionary would banks in Europe. definition, institutional in definition,

to retail have yet You see broad-based in ETFs for emerge Europe. demand

transparency big I think is ETFs MiFID particularly lot II, fees, ETFs, original a including were on MiFID. a this By quite but with of from advantage. the actually focus the clearly, omitted ETFs. for actually of

and the now going requirement market actually of have ETFs. to – You’re have for to reporting, pre for makers post-trade example,

bigger is So around the Europe. more getting retail in demand transparency important eventually liquidity, to lot an block a step which building

step think platform, platform, before have Europe, in because that’s bigger the They investors normally. that’s to think concentration us limits ETFs, can where the to bigger they positive, engage have bigger bigger scale really but for these we get the Source with to So buy provider. I institutional they crucial need bigger

that with helps that hopefully So overview.

Ken Worthington

you great. very Okay, Thank much.

Operator

you. Thank

is line is Sachs. question from next Goldman Alex Sir, from open. your Our Mr. Blostein

Alex Blostein

remains around question seems guys for you guys. you Good Hi. of morning, for Jemstep. Great. everybody. investments pretty It it like a Marty, big source

say lot to kind increased making earlier Can FAs anything the that Guggenheim progress platform, product platform respect color XX,XXX platform? could you but a guess kind and further to there element of hope here percentage supposed are to that better Invesco access there. a time, seems I and guys growth yet. where FAs onto really of of You you with us of could you profitability? get I of profile in have what headcount help without assets and to the obviously that’s substantially, like supposed an heard and track the in is understand go when ton you enhance over of those break sort that that ultimately those It come and important is

Marty Flanagan

We’ve purpose. not colored it on yet

the demand So through from of is standpoint again, as moving the we’re high. this – very

the organization, are We, on much what’s what an opposed job but telling better happening. a answers as predicting, We do taking clients. of to here’s are you as

So you’re seeing It’s time. that and is the growing a is very challenge the lead pipeline strong install. application and

So tail. nine I a large months the think institution, six months to for that’s

So mutual range you invest and get to open capabilities, come can for to application have have of to platform It the line. on use is a funds. – ETFs

it be levels those than could part asset materially firm seeing So or out market more Invesco’s what likely of platform is relative very share And not what – of models the like of secondarily, of our is And default you Jemstep, a a we will think a it firms. those model for of are a number market a digital existing if strategy different share could models portfolios. attractive you on of happen see that versus in portfolios.

an strategy much of we part are. communication of a first we Day will are deeper the So we next that anticipating and where year Investor give

Alex Blostein

that. been give an a that for Got growth on it. outflows U.S. then could wondering guys stand guys bit and Obviously sort for of GTR could where just of update initiative you you a there? the drive big Thanks And if things outside it’s

been U.S., in things a think have little slower. the bit I

a now, the right think don’t I track big three-year yet. record been it’s to a just but I has product contributor flows think

and reception the U.S.? see just So growth what’s do you been hurdles sort Thanks. need maybe and the channels accelerate different what the to product, guys to GTR to of speak in to the of

Loren Starr

much Yes, right we’ve than in U.S. the grow U.S. really outside seen rapidly the GTR more now.

actually side you and on take in I’d U.S. on that last so side say see the beginning robust, on year than institutional get we’re maybe it’s faster hopeful to has rated been and to institutional know, retail The even the the growth the over quite as going Although the plus. extremely we’re side

good. launching if performance put expect been marketing is of GTR UK see to a midst that’s in new We to are income-oriented that fair is going the has which GTI, in amount the the effort and flavor takeoff we’d some in of the and of product QX, be behind

wider using the big some been in of much in door of has has in now terms we’re and the Asia really GTR places terms like use opened GTR. of and that China wins seeing Australia

retail been side, slowdown still which and a as a the get GTR the in through product better retail the gatekeepers think been for understanding the that, that sort the say it take-on of I well has seeing still the alternative slow, of alternative generally retail case but is UK. of of it’s offerings but product. known I’d we’ve of seen in the it’s On get or kind story as is think not around generally, excellent, probably the we’re And I understood

think opposed I that’s GTR-specific an so And in theme the with as story. somewhat overall a consistent to U.S.

Marty Flanagan

for the And I by that think reason is twofold.

the derivatives’ that. like of what – impact a what the was would’ve been role, headwinds is on the Some product

were and cautious platforms the of moment, secondarily at are it not focused was to then very take That on headwinds. product And additions. platforms most slow So on. one of the product rationalization the the

again, basic States in intertwined very so in success good very, to and somewhat too. two time And we’ll anticipate we But are have strong there. we a the headwinds continue capability it’s that again think United

Alex Blostein

Thanks, great. Makes guys. sense,

Operator

you. Thank

is question from Dan line Mr. open. Fannon Sir next your from Jefferies. is Our

Dan Fannon

was can talk a I kind that I the about and quarter. think about how guess they perspective, to And of the How an with the then Source three it sales from talk traction you close distribution should early about we with what contributed and might know brands Can you Thanks. flows? doing link you’re partial effort? integration now change? for with what

Loren Starr

on and to to the Dan, me part want a then flow handle bit talk do the do you aspect? little you can me you want – Draper, other

Dan Draper

great. that’s Yes,

Loren Starr

Okay.

been So it’s the charts probably in good, good. off not terms of flows,

which X.X in months, two XX% the rate. think about I is contributed last they growth about billion a organic

and has some being new are pipeline, of contemplated. brand the going sort launches there so the efforts the will forward there. reboot in think slowdown integration think been I of repositioning forth as of the the is number just I product really the degree which and has help that been a There are of growth and

there’s taken products the place. lineup of And being we talking sort competitive lot Source. done really right of accelerate explicitly the now of sort the have So a and that’s opportunity around the improve some of positioning the of been that synergies about certainly, growth to haven’t work and

play of way. in the I of making a business, originally of profitability all positive so sort come said wasn’t And it to think beginning into terms in the is really money, we as

So you a get Dan, a don’t some basis. are little things to know on repositioning overall explicit want happening I the brand that more kind about global if of around of the of

Dan Draper

Yes.

Guggenheim upfront, clearly through think funds. going I be remain business example, clearly state will is and Guggenheim, reflected has Asset think to just one UIT for one it’s the I Management intention, mutual Invesco think ETF to area. – I they’re brand. another in So

So that’s most the probably apparent.

business. overall the for name that keeping clearly they’re So

more of The you’ll a time next closing probably into see kind strong a have to on year transition. Source, rapid little obviously again, lead we a a longer So But of that. bit transitioning currently see PowerShares. They’re and from again we’re you’ll in within Source the co-branded But emerge brand having middle that space, into single that in this XXXX. a but brand again, of XXXX.

integration, think, looking I into and actually quite Source sales going strong the the process. a pipeline overall, how at Source, even had

first the strong continue really year, take had deal execute preferreds. weeks and And are no August they and the also to have fixed product them fairly particularly was development close bit Europe Source. couple joint inflows What looking is first since process of joint, on the net in our at on sales income, ago but equities. focused pipeline up XX, diversified, or There So launched not with we been we we a in in we – usage mentioned, been good Loren have development. flows and capability during start. product commodities preferred fund off of on Europe, this the those to really launch in picking and to where U.S. product the kind a gotten and it That’s slowed that’s well, for offering were our since announced a closed well and the able as

the to new with think continue product pipeline income I fill fixed you’ll up being headline. us a see

momentum more in to with So I EMEA. integration in is has Invesco big those Europe, just Source priority getting a continuing think the in continual products I really clients that larger and then think built clients

Dan Fannon

you should balance from buyback That’s perspective, about And we thinking as – you the capital XXXX, capital looking and helpful. about then return? can at just think sheet Great. look how return into a Loren,

Loren Starr

the that spare Dan, I think similar thanks with program to to also of the we pay largely we’ve what for acquisition Again, credit now through as we in described to facility Guggenheim our buyback as building we’ve order right the respect through cash. asking question. and curtailed Source for the are the done financing acquisition cash acquisition, to up related use and

going present that are thought end be, the acquisition. certain we largely, to want line course sure is where – our the So curtail continue our XXXX, to through XXXX, we’re to make with they still by pre-Guggenheim are But themselves. buyback, situations going of of opportunistic curtail buyback if in the the being leverage ratios to

I ratios So terms if those any, get would course through of line. XXXX expectations the in minimal, put generally, back leverage of buyback until say, in in

Dan Fannon

Thank Great. you.

Operator

Thank you.

Our is next question line Bank. Sir, open. from Bedell is Brian from Mr. your Deutsche

Brian Bedell

question Great. Loren for Thanks and in for short one the then longer very term Marty. A much. a

know higher Just if you seasonally have that. fee know on did can full – non-comp ex-performance total for you your of also into -- quarter overall X And have gave expense missed might flows, a inclusion – quarter, but fourth of what – color I appreciate outlook if dividend I free on XQ? the some with Loren, you these. billion an quarter Source? give the then on be don’t core of your I then in And just be also the But rate, would don’t fees, I the fourth

Loren Starr

right. All

the question didn’t full last quite of I part thing. your get the So

clarify one. you the just get last and me Let then the first can parts

deviation guidance, to was of to The only in in in was we’re performance to respect the we outsized I sort the the really So due fees. with quarter line last guidance relative of provided before. terms roughly think this some what quarter of with compensation, which

So of we XX again provided it the guided, XX. which marketing to I would of so XX need XXX, was of with expect. adjusted XX line was G&A if range to other in the we to prior on elements XX. guidance around tech We the in then that’s roughly was, property, and adjusted originally and office XX was, and what we kind you said think where are All

that all and inflation FX So is of of barring obviously kind a right, things, which little line, levels. have other factor on some in roughly those bit a

that sure kind of So Could two? I cover the just make was you your first question. other

Brian Bedell

– fee for quarter? rate Source the fourth for that quarter the now of Just have we full the

Loren Starr

Yes.

second was was product to the quarter. half fee sort we in going had coming play. said other There be of I So some second – to growth passive fee and going off. lower think the into line market with more it’s was money largely in rate slightly the Obviously,

is with right guidance line ex-performance So the of I now. sort current for in levels fees think probably

Brian Bedell

Is it XX.X point? basis the

Loren Starr

Yes, exactly.

Brian Bedell

to bit obviously application SEC broader going the little non-transparent if bit strategy I Precidian approved commented if Okay. predict does bit view a guess if the the for sort view with little in is what the your ETFs PowerShares regulators I would loud guess I’m that. then I for night optimistic Legg approved, – a out And active a not on little question what’s does nontransparent angle factor-based active that more Marty, growth industry? but do. different that for embarked you’ve But – be But ETFs? were as that thinking application longer get tough than are to get longer-term what Always a upon. But of think mistaken. the getting broader, term included – Marty. I last closer, the and on moving your with potential And on that think they

Marty Flanagan

track traction – could it’s there. Yes, is a maybe imagine can I’m take-up because to point that it. on make lose our just to then you Dan comment, of at going – experience behind but no Look, time, predict. active At them I’m ago, the now I time ask you say to a we eight more Dan where spent to there I’ll ETFs years launched all. going hard level, one

And don’t can to Dan, why is so all you comment? point historically. But we our experience

Dan Draper

Thanks, Marty.

we well. yes, We know an earlier So Precidian – filing. were we had very in included

SEC As to them previously kind you are aware, has the remove of filings. asked

at been this if you past. swings, will, there’s couple the of So a in

to We engaged if if around would we it’s you’re are But to seeking the see those continue to of capacity-constrained, with do I to remain there’s feel particularly But in though, where that the – going or of point really ability driven in going to for that anything security financial you today out in space. Invesco some active – think and have kind strategies still out have we’ll don’t – that clearly, discussions. [ph] urgently One same going monitor it I I think situation closely that’s thing for being selection. happen the be development participate nontransparent be active because you evolve, evolves.

the ETFs particularly which much are and the really where larger an coming more scalable. asset more So you from I predominance see think of that’s allocation products

I of big out will, our to I engaged again, Yes, really much continue don’t demand, the and engage. be think adjust imminent we’ll we monitor more ETFs we’ll in scalable short think, see that more and So products at the But really again, quite and the Again, But again, absolutely being core range. approval technology in continue you that. asset stage and build term. clearly in But we to be the there nontransparent we, remain large of and should frankly, could bigger I that’s the if requirement products, transactions, active, part transparency this a more approved? necessary. is a allocation-focused. the to the be just be participating Guggenheim we we’d the One though if But mentioned the self is business business. much say in model, from our becoming and see would of the go as away ability thing indexing do see we growth

we think us obviously transparent. really probably excited think bring piece As about. and we indexing more I the We to mentioned, is parties growth forward that active we’re for a self Marty do third with opportunity work immediate leading

Brian Bedell

color. Okay, you. that’s great Thank

Operator

Thank you.

your Blair. Our next William question Chris Shutler is open. from is from Mr. Sir, line

Chris Shutler

questions. Two guys. Hi,

adviser to us equal at institutional? the Guggenheim. Can a or what those are sense percentage of give on in today retail of First channel weighted ETFs relative you the assets

Marty Flanagan

Dan, do you know that?

Dan Draper

percentage retail have intermediary you space, – a a other I the we’d of but a Yes. some RIAs what high today. I and high the in can’t would is is specific percentage to give number, the very be high wealth home say what going very management platforms, you. in call hands But offices, of particularly a

Chris Shutler

question. Okay. And then secondly, different a

– one give us a retail and there. there I are On talk performance standpoint update seeing the flow numbers it’s three-year Thanks. UK retail have are mainly maybe a think What franchise, challenged. long-term but you just they just and the franchise, on an institutional? equity about great but from

Loren Starr

picture seen come – as levels as we they’ve accelerated all. The that Chris, in it’s terms benign. bit. at of may down been good a history. ever not those the just product, in Sales flow flows are is of But have in actually quite haven’t outflows overall, products

they and smart are the going people think team their have believe have Mark Barnett rationale. I of some are that So understand holdings to and ultimately they described his pan position why and out. the

periods underperformance through been that the following have significant and it. through they’ve with past so of in And outperformance gone

So patient basis. are short-term being reacting sort I think a and on people not of

Chris Shutler

guys. Okay. Thanks,

Operator

Thank you.

Stanley. next your Michael Sir, is Our Mr. one from Morgan line Cyprys open. with is

Michael Cyprys

morning. Good Thanks Hi. taking the for question.

of us to the in your you’re over the initiatives wanted and could place? update positioning back of putting the that the circle next some particular some side couple on terms Just evolving how front of just making that you investments in on of and institutional that the business, in see you on business you’re if in that years

Marty Flanagan

repeat. Yes, so little a bit a of

of that at that first we market institutional way the you So to business wants. all, set capabilities have have a of the look is, the

the And the alternative area, a reputations. in strongly; strong a the lot fixed decade, so income lot in has very, that strong over developed last very performance, area,

first of block the critical that’s the whole thing. So building

that regions, has had – as business I rapidly spoke would use the Now that the be of to not are I in some proof each so need so to been it’s happening grow, right an it’s a it of really would And organization. some as and of aspiration, absolutely leaders see think actually say as we’ll important pipeline leaders industry. strongest three I’d We it where they’re it an they be, a our and point. the we have people would but look part in we funded we’ve success been years now beyond higher most had contributor globally we’re strongest the not the that say leaders I of, and or the talented they’re we now our to an Loren and in place back see won ever as if never and with want to have think in of the from growing three continues

Michael Cyprys

years? hearing and look asset in AUM your of over us guess back structures circling seeking to evolved and particular I evolving, you and of years of those of strategies equity couple here, we’re And can do on just past couple with performance strategies, how fees kind out is Maybe owners and just next outside more how if of see of outside better how from over Okay. alternative in to were performance that’s changed more and private alignments. that the the then subject you sorts estate real you of performance fee remind some much traditional

and curious you share any color Just could that on front.

Marty Flanagan

at very if There We not. are there don’t look have assets, are you And where it a performance topic vehicles it sense. of this does percentage not at large others large all. where makes fees, – of

really back of the You some things talk do emerging, earlier. and interests to my get of I’d interests all. they at are align comment think not alignment about that I

I process a think philosophy performance where think them measures issue against always the economics you competitive downturn because misalignment you is hold or so calendar measure quarter with need organization and to The fees would index really you on time. do investment that are of have and personally. really being come, based quite decisions what counter to risk but manager the a of want is their manager not, really making to by portfolio and almost difficult – to or they does organizations, do. to the bad and performing the fair period how the on various based over that and a an benchmark in the accountable what hope the fee of because what you want do it dangerous, I the And goes to what is investment are

Loren Starr

way think performance of one terms I trend, fees. of or the not. a we’re other side, on retail the significant Certainly in of trend don’t seeing In the use terms

with on overall growing our capabilities, think business. it’s side institutional institutional in our we probably the out line as build to I continue

as we fees let’s sort institutionally-oriented. don’t So think see that more a may deliver become philosophy of generally I where it’s performance. has saying But more more performance we something just

Marty Flanagan

sense. clear. – be me makes real Let it be whether makes the on. in of point that is clarify vehicles Loren it to equity, the the in or I are estate, private where number There it and want strategies sense alternatives, in

It it’s retail tends the alignment. environment to have makes happen. do supportive fee countercyclical You the in that happen is it. get makes a sense, of sense. fulcrum you that We To what of to typically notion lot that. want very this It me to really

So thanks for there. the point

Michael Cyprys

Thank you.

Operator

you. Thank

next Lee Kenneth your line is from Markets. Mr. Our RBC question open. is from Sir, Capital

Kenneth Lee

taking my question. Thanks for

Guggenheim Just before focused sounds want be to traction more it is you the retail done us expansion would institutional mainly on focus customers? on ETF earlier Maybe the for side? can side. business that the What opportunity like tell the comments, need to on start business. to about getting From the

Marty Flanagan

Dan, will you take that?

Dan Draper

Yes, sure.

looking of strength I that’s thus and think focus legacy at seen just success that’s lot kind distribution, think at Guggenheim, you’ve the on and where So far. – of their strength I a

we of institutional growing have wider business just this plays I at have mentioned, business I bigger, both think our the strength think think I Invesco Loren opportunity that into as and Marty distribution in-house. taking

So income. particularly in think I I more think education, fixed frankly getting

that these products, but liability So clearly if matching, plays asset example. unique. space, open-ended for maturity allows a look on the for fund BulletShares final which at you as the very an date is ETF Having very maturity, strongly a having such insurance final things with into

building front don’t importantly, strong to So insurance new perhaps of I able products for some really kind particularly some get those. that hope want limit existing of we’d but more be And in relationships to even of I the with Invesco’s BulletShares that. products of

particularly I have areas think institutional. smaller would pensions, in with the BulletShare also endowments, other interest,

So in that’s look looking decades through of we’re been do keen factors that you I exposure us some the many longer why additional factor at introduce really if look wrapper. for really for or ETF to institutions to the at this have that. way of really synergies also think kind for

the So helping, fixed we with on we the the Invesco. leadership my them, think new institutional is wrapper may be definitely papers, and that again area I’d income thought educating institutional clients pretty the finger BulletShares leveraging but capabilities at research, put overall to to start with exciting. probably white as But expanding

Kenneth Lee

in be in before as in sales due sounds It transparency. increased structural ETFs? changes could are rapid see European ETF the II, ETF if question still post-MiFID on of a a some pickup that just there Thanks. And more we retail Europe. be market statement to or that material are there additional needed Great. adoption follow-up fair some sales Would the

Marty Flanagan

Dan?

Dan Draper

Yes.

growth overall that look was in at So Europe I that behind is probably growing ten where the growth obviously but U.S. you rapidly. our seven growth maybe think we AUM in trends, to view years if believe overall curve, quite

have not As mentioned, yet we is broad-based retail demand present.

II long will impact, significant, to and it beneficiary. a think do the MiFID term, be ETFs we think I will medium with be

change boost conflicts product for fairly – modest. a review there of had similar, the it with a in look so of if transparency, but example, in very in retail interest, an distribution at However, was short get bit you term, was Kingdom, did ETFs areas. certain eliminating XXXX regulatory United impact, a

it grow. continues think to I

hopefully therefore particularly is the is this I I On-screen under liquidity improving for change MiFID think MiFID II of liquidity. crucial will think sooner happen that a our ETFs II. cornerstone expectation

market As pre makers requirements I were Europe and reporting. for in put up mentioned, there post-trade no to

So those to are encourage really important liquidity. indications

I moving ETFs their for and you’ll with if get then more think think retail earlier, confidence, get more So liquidity visibility advisers. you investors I

that’s on built very medium just a think that manage short where, So the probably largely this of in good come. with retail the demand through track kind distribution ETF they’re where be for institutional out crucial scaled is demand really that been that liquidity retail when expectations, but come, platform long doing products, we it’s Europe that’s the we’ll everything But to business when business, of we’re brings, based is think be demand again, Europe And has do really record. Source gate, where, the it continue positive. UK RDR in the modest the to to with scale term, I does having But experience, going to that does now term, will monitor. looking

Kenneth Lee

very Thank much. Great. you

Operator

Thank you.

from Our Fargo. Mr. Wells open. from next question Harris Sir, your line is Chris is

Chris Harris

Thanks. Hi, guys.

a Just of couple follow-ups on Jemstep.

there. going are well things So

of You kind, highlighted that. Yet believe. I Jemstep don’t only the its platform isn’t

over talk guys market another few that? what Jemstep, as about to choose evolves, offerings, expect lot you fragmented advisers do adviser guys why can us just of a little more or related coalescing to the So digital a these an And a would you market do to you the than Jemstep that, then be offering? differentiates bit envision around

Marty Flanagan

all, know is in years of this being complicated all quite are unique. robustness being adopted are the characters necessary first really robust the be industry, in is unique different throughout ways. of that broadly it’s and strong. piping the becomes, all eight would Jemstep Jemstep, technologies that industry to development and was to So in of digital in our the It industries the infrastructure The and

so is it’s directed really, nature it and of the it advisers architecture So open only. to that’s But one. –

to consumer. So is it available not direct

use an in no there is business, of capability, of that’s unique, like. funds and to so ETFs, and attractive. can competing Those be clients’ which embedded unique. range It ability support its channel So the a most and our mutual very more It also to is is infrastructure are organization’s absent is conflict. the vehicles, in

a So it’s black not box.

of that So characteristics unique. those make some it are the

– And a we’ve been think so of it it. as all through

we it it’s are application of these more believe. You installing one hard than an hard to in time. that and all have is an would organization work, know takes notion The

back and there we out And possible be never that. mover long about think just a how a has the strong demand very tail. being just in to really advantage impact, Coming strong big it it first the but suggest And a question the our the to to very makings we like, firm. we’re is very, would of all a there and so and put to speculate position prior it the a contributor it’s chin of can

Loren Starr

robust can unique really we got alongside thing I we’ve one more solutions The the fact incredibly would just add that bring that models offerings too, and is it. this that around makes it even

it’s clients’ a some that part valuable So it’s offered, the to – solution needs is a technology to being at is the not price. just of tailor most actually models very ability the attractive

think and And integrating actually box, that is does I way not the offering. it’s black fact a unique things into in it – a you architecture, it a out systems, people’s we’ve when almost models in we’re got the stand the so all in, add open that make this terms positions of as those and

Chris Harris

Very good. Thank you.

Operator

Thank you.

is Sir, open. Lee Robert KBW. Mr. your line from from last Our is question

Andy McLaughlin

think Andy had been have for Hi, should one question, optimization. the lot and how I in This McLaughlin investments see line year of the I balancing mine update optimization of morning. is into quick you Rob. needed a about the might everyone. you between for we gave items business but already, appreciate Kind those taking just Thank on question. what my Good actually asked next going we in? in particular

Loren Starr

helps ultimate again, or the for the need incremental investment. for I into savings boosts guidance the I margins. on – think So of investment, in of that offset need built-in think, guidance More terms our we’ve some already the

positive future. of a still a the thing that’s going and we’re some key change things it much incremental in at our and the firm there’s again, on need of of and so So improve margin think criticality much that you that are in the behind in trends as for investing only But once We a do terms situation outlook. these invest help industry in the so there’s the well. that can success actually

So why our that the story. thinking that’s context are some kind of generally about for to talking things helpful margin we’re incremental

sorry, -- other In terms the of you that – was question I’m had

Andy McLaughlin

see -- might Just kind we of where

Loren Starr

large where then moving at because so office, do outsourcing a into savings. payments moving really has property, outsourced looking – it the …see with we which services. of that part tech, out the in to expenses them of have and third-party all is the Yes, of compensation for

a into that it expenses, movement would really of And into be so category off comp.

Andy McLaughlin

much. Thank very you Great.

Operator

like floor Thank our you. to back the hand speakers. to I’d

Marty Flanagan

to and the future. Loren On forward and good look thank to time interest just much you behalf rest of in for very of engaging Have day. your and and Dan the a myself, want

Loren Starr

you everybody. Thank

Dan Draper

Thanks.

Operator

you concludes you. and today’s all joining. call, conference that thank Thank for And

disconnect. now may You

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