IVZ - Earnings call transcript Q4 2019

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Unidentified Company Representative

Good morning and thank you all for joining us.

As a reminder, this conference call and the related presentation may include forward-looking statements, which reflect management's expectation about future events and overall operating plans and performance. These forward-looking statements are made as of today and are not guaranteed. They involve risks, uncertainties and assumptions, and there can be no assurance that actual results will not differ materially from our expectations.

For a discussion of these risks and uncertainties, please see the risks described in our most recent Form 10-K and subsequent filings with the SEC. to forward-looking obligation no makes update statements. any Invesco financial today's. may also during non-GAAP discuss We measures these financial of of Reconciliations non-GAAP our the found earnings end at presentation. measures may be

Operator

Instructions] Fourth Conference Quarter Welcome is to Call. Invesco's [Operator recorded. being Today's Results conference

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

Now, like Greg Investments. Starr, Loren Chief the Officer; and to call speakers Director, to your Invesco; I today, CEO Marty of Senior would McGreevey, Managing for Flanagan, turn over President and Financial

Mr. Flanagan, you begin. may

Marty Flanagan

and for Head is CFO, you're joining. much, Americas. Marty thanks want along with our we we quarter remarks get the is though. brief on if before along. shorter prepared very Starr, into Flanagan, if you and to get much can you overview Thank presentation everybody did website so results inclined, questions And of last follow This will the That going Loren of Schlossberg, format said, Andrew we're get so where we the Q&A. to to Loren follow business a the that the the

scaled we've - ever that. And growth this business and with dynamic the view and clients combination the our to of benefit market the previous clients, meaningfully we're This already our environments. enhances our achieve offered we both with increasing calls, shareholders, multi expanded capabilities globally, and very on that for Invesco in growth results, Oppenheimer's relationship story multi-year discussed compete seeing business, expansion deepened grow the ability our strong operating as

firm. the with trillion under increase we of a a power and management. signs year-over-year. $X.X a is the ended in high are That the long-term year combined seeing the That's this for growth firm. real over record assets XX% said, Importantly, story. That's just of meaningful We

all we regions We across also the channels higher management ended as year. assets and all under have

for the the levels improvement XXXX. levels year record the profits outflows and of year. of record revenue $XX XX% billion. a from were That's We operating Long-term for year prior hit ended

$XX of ahead $XXX significant synergy of ahead look at that XXXX. million And to target schedule We also we'll continue time more and delivering about expense at additional savings in the synergies the achieved combination. the talked of than million is for we

$X.X XXXX. ahead, Lastly, we path shareholders to and in billion XXXX. well And to to positive to looking return on we are move in flows did we continue believe make progress importantly, into the

institutional the China business, and ones who The are very on at we in ETF are continued Brexit clarity team, sales key strong solutions. a improving on demand, performance finally, U.S. investors will strong we've growing and where our see on risk help mindset factors looked income meaningful several the and fixed our they're momentum in away pipeline, strong and equity of And capabilities beginning to performance, progress high backs including that that. large very the integration

So, I'm going our over to to it results. turn to give Loren

Loren Starr

Thank Marty. you,

like to spend capital the minutes key for highlighting I'd and on some So, you topic management. expenses few the items of flows, the next of

inflow net can as year-over-year area. long-term EMEA and Asia-Pac So, regions ex-UK see starting our we're on X, and in improvements flows, seeing you Slide quarter-over-quarter the on of

The as as well QX EMEA ex-UK net flow was direct real by estate driven business. growth our ETF our largely in business

UCITS So in ETF $X.X we S&P in billion the real saw, for XXX $X.X example, estate. and billion

strong $X.X with JV followed centered classes asset in billion. billion across flows venture. flows by Greater is QX $X.X into in China income The contributing were is and The our largely balanced Asia-Pacific by $X.X growth joint fixed driven billion many

improvement quarter-over-quarter UK seeing business. also are in our We

billion but also in we income. in fixed positive $X.X by fixed We had in and estate flows had institutional estate driven where business, $X.X our real real direct billion and net that was income primarily

somewhat flows retail remain challenged. Our do

the in that of the retail net majority $X.X some the $X.X You'll the was funds, by the billion OFI OFI loans was in largest attributable driven billion the included. and billion. OFI billion of from to $XX senior business, legacy outflows in and some was outflows see of global there outflows $X.X a there Americas equities,

that We of our of billion billion $X.X International redemption maturity BulletShares. Invesco related see and we New came allocation. to value, earlier. I'd Growth, asset billion of Mexico discussed previously was to disclosed out XXX out like these deal outflows natural There a billion of plan. $X.X $X.X global stable didn't though the from from billion redemption activity. note that about due was is It from $X that $X.X a

bit net let's drill a Americas. the page, in down on next the inflows on little So,

U.S. AUM see the we and periods you'll includes net sales OFI and which post combined, Invesco close. and the pre X for active on both monthly show retail So of Slide XXXX flows products gross the history

another period, the the way, So, firms reflects two this over the together period. pre-acquisition entire including

few highlight tables points. a these So

yields the both across first, market. are So revenue have AUM timeframe. legacy levels OppenheimerFunds the the Invesco Net maintained aided stable by and

We've Schlossberg, post with close still below progress Q&A we with Andrew fully business pre-close to do provide of worked the Head the they We are we Marty to of call levels, hit ground during QX and have gross dip he'll here tools on sale integration able today they see did the session. in teams need the operational our sales stronger two see the are the not on a running with as this you'll to mentioned, elaborate Second, December. made and and Americas we well in did the be but us that the our although XXXX, teams the yet.

active And elevated of abnormally in conjunction net sales function have levels gross is, like our low Third the with we outflows point challenges performance equity some in a of been I'd close. to largely have this is post portfolios. make

QX, New As you the deal-related plan. can see billion XXX announced redemption of due previously $X the to impacted in chart on Mexico outflows were the

should be the our of levels redemption have net portfolios driven this on to and up get flows a by we sales significant investment XXXX, in moderating expect rates recently to U.S. performance. improved upward we of that an gross the on many half trend, seen As step be second and retail

P&L. expense So and let's management next, get the to

and X, out set expenses. our revenues we Slide on So,

You'll see revenues in our QX, from $XX.X fees estate largely million compared to in performance real was $XX.X included and the that business. in million period

particular Of several that we the was are driven quarter up the in a on million our factors, among note, management achieving in focus and significant rates synergy exchange by $XX our these movement last targets foreign which factors, global maintain discussed expenses the markets expense most quarter. quarter. expense Despite was and

our XX, drove the we provide Slide and above and levels. highlight market our to exchange expenses expense I'd through are the in run turning like that to you variances of expenses these items each on XXXX before Slide foreign walk So, to XX QX briefly these the impacts impact information additional of shown columns factors that on rate. QX on about other the

$XX and up of was market. saw quarter and up like both FX the U.S. in quarter. dollar X%, is by against euro a So, first, strengthening and in quarter. expenses X% foreign increased We the up pound Pound currencies during the renminbi other market exchange the also million. saw The the X%, the euro the we

MSCI up all our had Additionally, variable markets Emerging where X.X%, we Russell expenses. up impacted Country X.X%, the All increased XXXX Index XXX Markets XX.X%, X.X%, that up S&P up Index significantly MSCI

confirmed savings compensation there $X column in million was in we to of were the of departures next impacts and connection with the QX. to in the more result And largely exits in and million pool our integration transaction The our you'll quarter. savings $X in related the integration the is bonus see realized decline that in integration that related employees

in million get end away the savings, of operating to somewhat about a we office costs. step-up by These technology XXXX. related in will go admin were single however, period $X platform That's offset outsource costs, property, some by and in when the of the to which

QX of The third had spend. expenses talk fourth primarily to elevated non-recurring were item about then, operating expenses marketing million seasonal $X expenses. related seasonal due is to about to We And the items. our column in is

in the amounts and the product and were saw the office settlement, in quarter in These quarter that costs. area largely security-related occurred with small well expenses or $X regulatory, million we legal technology. as included as So, property, G&A in expenses that following expenses non-recurring, launch that's about

move XXXX rate. next me to the let expense run So,

we recall, the expense levels third expense that $XXX be assuming was that of million a and operating those XXXX, consistent would third the - FX in our the good you'll levels quarter end market in if So, of with QX but the run indicated rate for at quarter.

revised rate that's as comprised if with and per discussed rate of levels remain $XXX levels or $XXX run from quarterly XX/XX/XX of and add of full fourth from expense the baseline So, quarter million the XXXX third at of $X starting in or an of run expense of will XXXX. levels quarter, $XX levels year-end with million And million market the million quarter. the FX consistent be end-of-year the FX impacts the incremental quarter adding the market impact end FX market in resulting and

Then occurred happen that since since one related in in integration will QX of impact high expenses $X of million, again seasonal. the then you quarter and to the add of savings seasonally that probably the our

and million for mean, be resulting the for average. average realistically, $XXX So, some variation represents will rate there I quarterly the this an around operating expenses run XXXX, quarterly

million be payroll for increase always expect see, example variation taxes, compensation about expense QX of see, of we quarterly this often the in good the combined we million we'd seasonal organization to QX or year. the $XX the A to $XX is that to in which

confident So, this year-end cost year-end based ability to confident FX greater market - than more of that And ability to to billion. savings operating levels we're and more you And we as cost move ability to level with in and million. we XXXX expense through guidance maintain FX which update the our on with continue XXXX will and based targeted market means full our generate we're on XXXX. respect of achieving $XXX year $X.XX levels, XXXX expenses for our is our synergies

increase let line. So operating offset in XX Slide by the the quarter-over-quarter to below movements about and large was income that me next, some move talk

non-cash EPS driven expenses two In about for fact, large non-operating $X.XX quarter-over-quarter impacted in by part net our big items.

we first that in related adjustments marks lag. recognized $XX These CLO on - a one-month co-investments valuation holdings. million our was are So, on our to negative the booked

item. But saw the activity. on This just non-cash the in And we loan month reflected this was the is is not mark-to-market that pickup December actually results. really market bank of a in these importantly, so,

then our related our of the intercompany losses we the an the And dividend. transaction that But the the market FX economically expect might saw other in in settlement offset seed had quarter. additionally, of in place was we markets of on to you portfolio and cash gains as gains hedged impact with strength positive by

item. intercompany Basically an And represents the is FX then on this a about this non-cash loan. item impact just quarter-over-quarter. again, is swing This $XX-million a once really

to on move also me capital not XX, note our I did quarter. significant we think, credit that management, let see - and slide, So, that in to balance a buyback zero. paid we facility to you'll activity have I'd Slide did down that have like the

And see that then, you'll in completing on announcement $XXX management strengthening in deal capital we've of approach more a transitioned the Oppenheimer our million our XXXX, balanced greater balance after towards buyback about since with a focus October stock the to sheet.

say in remain So capital approach to summary in we let management. our and expense me diligent just

continue greater to the transaction. synergies to We related pursue cost Oppenheimer

we much are so need tools very the positioned to believe now sales succeed. U.S. and with in U.S., they focused are teams XXXX that sales on our for that the We increasing

up open that, to with I I'll Q&A. now operator, And for you think ask

Operator

comes from first Instructions] with [Operator question Lee Robert KBW. Our

may You your question. ask

is Your line open.

Robert Lee

about combined new of talked the I'm you've between sales Maybe think U.S. sales - trajectory I kind with you six start what's combine back and had maybe pre-deal. now really despite see long firms for, about in it the the mean, you out force is think where when between - just they get lag But you of lag get can start do talking on kind - out the together to guess, - the start and and the you've you the in the about of in the how curious obviously advisors the you performance. integration I forces product of going you to the get months that are field to you talking and

if drive kind could granularity you of demand, handful And could U.S. leverage then kind of more of think really you products that the in maybe little think the sales? you also have where that really a you kind of there's

Marty Flanagan

All right. Andrew?

Andrew Schlossberg

for back rather it's Maybe a of kind to important step take a minute.

getting then, we teams months the together And of as two it put kind companies ago, now. management transactions While on the putting largest was the one just did together we started of and them we're in asset you six field history, know. the

needs change strategic meet companies was to. took rapidly where of we the force important One the moving we integrated a to really client the decisions distribution that to when are

So a all at we of them fully took change to people. took sense urgency look try integrate and and a real very to our of holistic and make resources to systems

was something close. wanted at and right that swiftly So we to do

last we've six XXXX, - hit progress progress positioned see the of had months, in year. start So, a a to start since then, we to running here the of to ground ourselves we've lot made lot throughout the and the

we've And as real into there's though, about think little progress why get said, made. more three a the way. we're of key get confident specific XXXX reasons Loren your a Maybe half I to I back the question in in think

U.S. the industry. established firstly, wealth believe we've we distribution intermediary management think, is I the in leading force what

we've team that XXXX, that's single is product pretty to able a were by we line built I that out and end the As of second integrated do that. important said, fully reason and

lastly, And truly I wealth they're level. rapidly you that serve. relevant a consolidating relationships platform top pretty then, created at think the And we management know, asset U.S. managers those we for as

and color a I'll me each those, then your pause second little question. of to around get Let put just and

terms team Invesco. from establishing selected leading a close, force, and the of distribution from we XX/XX at about were In we Oppenheimer and

we've So, the top got talent.

you're the achieved firm targets synergy familiar that repositioned but we also also toward We trend. growth with, the

platforms. worth key dealers, towards data, well segments like positioned digital office or regional that, centers, we and So, high IVs broker focusing net on home like while core clients things

leading think that place we've team we got I towards things now, mentioned. the repositioned in resources So,

we've product line built I an think XXXX. like by out team feel we integrated and

We running milestone. announced in where and that going, our also in of the that XXXX. to the We've big products, lot mutual I We got ETFs I do. did clarity half to year get mergers that of for training our a funds place. was and products That during of think last back and thing analysts December. gave cover we're was territories on a important to

the the over wealth having then, With U.S. table. at ETF lastly, significant top with player managers, alternative wealth active a dozen of sort I greater of set U.S. with we mean, billion and AUM. AUM, XX AUM managers, the managers, largest client of fund now $XXX we terms in at client a $XX billion and categories seat half have have than And top a in relevant and we have the clients there. wealth we largest position beta out U.S. have

success got So, we've everything served up we XXXX. for into think

Robert Lee

a to kind XX a maybe quick I is of just fashioned always it. and at distribution know, old Maybe but that I've on some any mean you half thought drive. strategies I that way forces, look this number dozen, historically I really But little focus guess products

of of those a kind sense you are coming to just So, year? this trying get what think

Marty Flanagan

the to biggest and three first of that's passive. Probably Thanks. be both active U.S. and in going No. the in is driver the and I net Yes. things income fixed think our flows success mentioned, space I'd

performance particular muni can products and and the are quite fixed deck, see see and So, we ETFs, a space, as multi-sector capable the and think active board. income again the us our strong for in we'll across that's across Those is success. focus in big mentioned core of and area ready Marty where in plus you

continue strong had and flows momentum income net did to important both us is ETFs. the strategies, the is we factors. $XX in to mitigation we area. be billion around positive and believe say, by in second in and to volatility that We ETFs In general I'd XXXX second going globally

redemptions common the that slowing international And think be equity we mentioned, the in on strategies, improving and redemptions the performance certain focus side equity, should clarity that strategies equity then, team integration U.S. redemption just of XXXX. those improvement point coupled sales a on active product I'd say lastly, with is the and I that on

Operator

Our Davitt next with Patrick question comes Autonomous Research. from

You may your question. ask

is open. line Your

Patrick Davitt

you made said on the of confusion little today. and December a inflows been you on what there's think comment I kind in

or think more be help And view we year? little the over by that, coming how solutions the year months? few when inflow earlier pipeline frame end actually strong an I you you inflow specifically, is could a that a be next could billion through the of So, mentioned in you full within more maybe think and solutions Could specifically? bit should the about that the wins. $XX And XXXX

Marty Flanagan

Great question.

with of we're as year So, we've talking everything the that sight for the the look about end not We see the inflows year. line of about it We today. just XXXX. been talking at for

quickly to not it's see So here. you'll it pretty start -

Loren Starr

the about seen by haven't And driven or we're in we we've traditional think, Yes. being around continued pipeline. X% is pipeline, the in and now revenue estate in growth past. of grew but basis. AUM both in lot Quarter-over-quarter, RFP areas, other and in solutions of A institutional I businesses competing to that it X% the real terms opportunities that

result, a past. those as never seeing we're we've opportunities haven't than win - larger so, the - And ever in seen scale actually

one to $XX happen of that the year. the probably this you is quarter The referenced, billion, going second in

was in it the second as quarter. we it's think in the half, said to probably first more just happen I likely

to minus, similar opportunities be an also plus year. inflow generated of we We're expect in seeing similar like this or this as magnitude, that

past. the we hadn't but solutions come are really, significant more capability think, we I our on success So, way in seeing in a solutions, to now to clients bringing the that

Operator

with Our next Markets. from Lee Kenneth RBC Capital question comes

Your line is open.

You may question. ask your

Kenneth Lee

categories on as categories on any Just tailed property you longer And you there the for synergies. incremental on wondering originally office also well, update potentially follow-up such confidence gauge synergies? are want the and whether as have as when - have incremental potential Just G&A. as broke thoughts achieving relative some well expense a any out to synergies, you

particular incremental could potential those areas some Thanks. where whether see synergies? wondering are the you Just

Marty Flanagan

Yes.

So, Yes, back-office remember, when some the to that for of full Ken, these elements. as because transaction, integration thanks would and we very a they year about tail was long were first we through largely much said absolutely, related technology talked to asking. there the us you that XXXX. this And take

away And year really will referenced, expectation. I quarter and of get $X even through of obviously, cost, that in was end some we million admin this this go full to that outsource there - up the stepped as

in - that at of delivered. order it was Probably still that million magnitude order feel We the to of, million look $XX magnitude the $XX very is numbers So, generated. get something if could be possibly of will numbers, those sort there's there. of, confident you

I think, still absolutely as line, evaluating of getting much we are the give that sight going we course feel what guess But - the reinvested talked about to said that past, the versus to we reinvestment. digital. to full high are what you like drop we of as use versus in in we or some of the China to areas we've bottom think XXXX, growth might need how drop absolutely, of can for we line through

Kenneth Lee

if just may. one follow-up question, I And

the Thanks. Wondering yield recently. to relative from been on slide active rates? if you either impacts as shift pretty fees, retail changes stable showing U.S. give it's revenue fee looks that or ex-performance Just color us gross some it any net could on mix just

Loren Starr

would it's fixed don't mix mean, huge of really seen massive say to that amount going mutual This of isn't or material change, versus shifting a more just this is Again, ETFs. been thing I going between these mutual is This that with we fee Yes. so one the on funds. fund sale I has of don't a think happens just of the funds even types The products, I between core the shift have sort that products. income. impact think rates. to we've mutual is There additional ex-ETFs. the really the obviously biggest

But at impact do bigger sell and will probably, overall. continue as ETFs, look to that we a have

ETFs And a for to as do fee think a at some I there's continue rate. whole decline still as higher of so, we firm sell amount expected the

Marty Flanagan

of point correlate very think for important levels But is to us. often rates I fee an ETF profitable business Yes. The is, gets lost that profitability. don't very,

Operator

JPMorgan. with Worthington Ken from comes question next The

your You may ask question.

line open. is Your

Ken Worthington

or sheet? a you I down How the pay Loren, Can balance that you or aggressive us be facility balance of management. about mentioned does with you that or What of goals debt a that do on you the down little talk the any the want capital of would to pay with think you Are bit there reprioritizing be balance targets sheet? couple in to regard share can ratios, and the here great? mean? terms talked credit about sheet deleveraging

Loren Starr

Yes.

up completed buybacks, about, announced. I through expect should million about you when commitment got We've our billion. first talked live to think $XXX $X.X we So, which the of we've us to

year there's this $XXX So looking to in that some million XXXX. we're left complete

in it's or should buyback deal kind much of was we loaded were from probably just less normalized the how react. along Again, terms I'm a very But do front-end more you of depending pattern announced. mentioning markets steady can on of accelerated lines we when versus more us, sort what the doing the expect that buyback

do to up to want cash. be we some What is able build

of regulatory As yet. want $X we've there in billion excess levels. said, Generally not we're quite capital we

it. still financial to or debt flexibility potentially do be cash some there's is prudent. might paid But coming little more some cash. think allow we by due, XXXX continuing down we million Come to we there's roll is some build us having that to And $XXX to when build that for want to So flexibility. have opportunity

Ken Worthington

just up following earlier deal. questions Oppenheimer the on And on then, some

a was X% by to And channel target? get the for that growth? of I still how or growth recently sort say, from do realistic couple a target the products X% Is is, bigger seen maybe it big think flip for of we've through to the organic you original can distribution to XXXX. outflows of, more that like, us of you Oppenheimer walk that either X% organic if kind X% to

Marty Flanagan

Yes.

can then pitch Let and me make in. maybe a couple of comments Andrew

the one begin in over right? very think on So, The of will be is relative loans it's around headwinds international these came areas, foresee it's Loren two what you still international hit performance when funds. we issue you the is and improving. timing, - performance. important things that that bank really - typical So, can't are

about first to for - think I talking you look it was was redemptions. Andrew when slower

of when that United the what's you already retail platform, and the States in seeing And opportunities. opportunities on we're through of about totality look very also feel institutionally we also the outside confident EMEA. But

saw something beginning the still feel very is confident, So, that of at it's an to we we and again, what issue going be timing.

Andrew Schlossberg

mean, combining add Page two the companies. as saw we our through gross still things the I disruption the maybe we and some sales we're had forces, you mentioned I'd I is, distribution individual below earlier only - we that think of can two well at pretty X, look operating that back

that And just mode. us happen getting then level, we sort sooner will back later, into that which than of to go lets think acceleration

I think to on we're make see happen. I it think pickup gross it - going that the see side sale to you'll

a important stronger we've thing accelerator. U.S. mention with a been but are to And we energy really business force the the well. that more and going a be focused this other The growing I on ETFs against lot as is, page would have distribution active rapidly on lot retail position resource X, together,

Loren Starr

on of do think probably see we of of growth have realistically achieve probably it. a an good is we've at those help XXXX products Obviously example. path us with levels. to performance That's we X% X% to and some products. this a really or the But to I not point, getting And within to going realistic some international like improving core some seen continue has to obviously And the improvement. this the as trend

Operator

America. next comes question Mike Bank Our from with of Carrier

line is Your open.

ask may your question. You

Shaun Calnan

for is This Calnan Mike. Shaun actually on

we going this investors. there's going Just more and be to back - like more it industry product looks to in of offerings, competitors on pickup significant ESG saw XXXX, focus the flows in from a and

wondering just are going your current I'm what plans there and Thanks. what offering So your is forward?

Andrew Schlossberg

some in Yes. Andrew for Schlossberg. investing management We've many been, the the asset Hey. first in space, It's time. like in the ESG others I'll instance. jump space

look Most is focus So, as is sure that strategies exclusion. a from at. see sustainability ESG incorporated our active factor that of inclusion other into the like portfolios first they in Europe, demand factors clients, and our are not including really making places for we

make So, is that. to contemplating that we're our first protocol sure

note, things portfolios seeing some - Where platform. in We've we focus of it. space sort that's ESG running put we've And Marty ETF place is pick more our strategies since and can in XXXX. focused of place. U.S., entire of anticipate they and up ETF and are that fully, across sustainability but maybe then though the the One in incubated increased core in in the demand been area

have, of think, them, and or six demand. I more to starting see We seven we're

expect see in strategies of to set We more set listed And the we next a into challenges Europe, year. year address likewise to opportunities. demand same last of and

Marty Flanagan

If is, real, at where where it you the on it's been the look continent. impact been has

where you from more perspective pick conversation inclusion, problem you're in United on can engaged ESG my the you real And absolutely have - focused has been what not up. States If a and it. business of regardless of you a tell about think

a definitely industry real really say, is and going is whole it is throughout globally, to the opportunity a So, I'd good that be actually something thing. pervasive, frankly which

Loren Starr

we is focused some that just also particular, focused was being told about U.S. doing ETFs big had solution that's the new in that Yes. and just offering. ESG were around talked when I all that I we a QX. I actually we've focused know well. loan Europe ESG launched in mean, in ESG And we the have capability say, would in I mean, bank

have those. So, capabilities on we're and we actively pursuing ESG to the deliver

Operator

Deutsche comes with Our next Bank. Bedell from question Brian

question. your ask may You

Your line is open.

Brian Bedell

trajectory the positive organic timing of sort go put growth the and let's back to that. the of in just we Can

Marty, mentioned, you the So, institutional pipeline, what's strengthening.

different of as that's funding billion sort in Of could just the $XX think go it's course, mandate got if we've I second that. of you - components announced the into quarter, the

- the new positive can of think mentioned little first you and How launch products the that products that you're of situation favorable. maybe growth. given you a that the sales maybe in front. the can plan the And terms the mandate. is achieve that down there - possibly talk bit of combine launching the more seeing the quarter, of the the Brexit looks organic actually the little Obviously, Do to with in like is nuance more quarter about you a during you that can trends second bit the the you if funding then institutional euro achieve strategies trajectory plays year on It Oppenheimer certainly far? you into so you

Marty Flanagan

yes. is answer The

So try let to hit highlights. me the

continued Brexit, increasing. that important. see China, to about, seeing to round and business, ETF rapid expect very but positive in There's Andrew that we we talked continue. So, has more flows actually you're one been growth The globally what do in to continue

can already more positive You to start continent. the on activity see

see in our did just fourth the in You quarter. UK improvement business some

So, they contributors those ago, to sidelines. just areas real were as couple saw I incredible any real, very our years to Brexit a very off an mean, but drop business we are two became in as people of where the activity strong went

very are business along So, talked institutional the those with all that positive, about. you

- the quite area. So, to these starting you're broad, to again, not it's one show going start it's quickly up to is very in things And this see, numbers. here, all

Loren Starr

institutional mean, fastest a way, I part I what is, pipeline. solutions mean, growing we're And - of by the our is just seeing in far,

growth income loans are fixed see the would The real other areas bank parts be - are to as estate interest. we well direct continue that grow, and they and

Marty Flanagan

you about talked And the Oppenheimer.

continent it QX. were often on Oppenheimer in capabilities I right use the the now, into different four introduced of they think roadshows products So, and was QX

that beginning emerging States the equities, of equities, also institutionally. markets outside of debt, emerging the interest United markets we've is, So, and again, all seen global the where that's in

is So, engagements real longer asset again, classes. known, they're well well the they're recognized and for but institutionally there tailed demand

Brian Bedell

additional billion, in the market incremental $X.XX And about real the in does that just billion. quick. And get reinvest $X.XX I two you're you with that know then XXXX? when Maybe to then, the include principle, sales deal if returns I comment the wrestling incremental can cost XXXX re-highlight the cost you may on from cost, put missed maybe you them. still just expenses

from color if saves So improved just could and maybe that more a bit be additional by billion cost little on, Oppenheimer. X.XX

Loren Starr

XXXX. market the already you returns It have on so, Yes any that first had. include not in incremental does happened question

lift some levels on how what where, be XX December on through. may It's quarter there based year-end the really depending levels. and So comes

probably incremental opportunity there cost to of deliver see synergies. XX terms more in saves that to of easily we XX terms again, In is

is as bottom really as get of to through that as the how any we consistent drop we XXX not. through of, originally with able it to does not is But XXXX will about. talk mentioned something incremental saves so that this point, XXXX I could much And include talk the in that versus the that we be at sort line

Operator

Fargo. Our Chris from next with comes question Harris Wells

You may ask your question.

is open. line Your

Chris Harris

XXXX expense equity up X% the would the Just to how markets so effect say guide on affect or outlook? follow-up

Loren Starr

mean kind did I So can quarter we current equity happened - at again, of have a markets you where gauge of sort this look to get similar what in levels.

market So now of FX, there market was again parallel and about some there about half and half maybe the - that was FX.

to you X% an of could get are as showing sense So a we due the sort so million roughly lift. be XX that of $XX that can

Chris Harris

about uncertainties bit the new economy. hand little actually Brexit a additional guys a one regarding you to signing guess is of might but deal on talk I a to the the affect how wanted situation remove Brexit local so just uncertainty, layer there would then And

So, so I get or equities to are in we what's actually investors guess like you the what mean inks once can involved guys was uncertainty I some hey thoughts seeing I confidence driving deal again and look from your this of that is about get might seeing hoping hearing much are kind focusing, and there? you that remove

Marty Flanagan

out And to are all out. question. is that's people good part turn deal very and point how there - to a trade Brexit of second going it's quick the a Yes is

U.K. Brexit agreed. absolutely of could continent on being just one in but round sigh the with relief the incredible You of and sense

particular U.K. that of is how can on the there to, is fund to and relief on high are continent, trailing in in talk in the activity You continent. the the but that in see U.K., in cash would start pathway sense that everybody total levels again Yes forward. of a it's just the be but you on unclear about, it's there the sidelines flows talk enthusiasm record that

And say needless with particular. much all rates and very at you're money not the negative environment making in to rate

is predict step. talks see one round next activity is seeing why round will disruptive Yes, a that's important emerge. positive very, this we're everything of can't you're I sort how that to but starting actually some of trade be, very So

Operator

Fannon next with Jefferies. from comes Dan Your question

your ask You may question.

line open. Your is

Dan Fannon

savings. at follow-up of understand synergies flows So kind the were and And are the look just and talking a incremental to I I on you're you're sitting results and we after expenses. if about seeing. But core Invesco the here today,

talking about or cutting, to curtail investments. I think other cost we ways be would

doing than you do obviously about, and that end talk what day the of you've you at have could expected. the but and you've are business integration worse So you the achieved outlined the

are doing environment being for expenses about reinvested think you've to we I any being think now. business. incrementally the to when savings I about in talked you And that what So guess have additional we or adjust are an

you the us other or that's integration under can think expenses beyond are help market keeping you maybe backdrop, what can the that control? So as about favorable things just not do

Loren Starr

Yes, great Dan. question,

it’s on coming have deal we I focused been want to of mean our I steel say focus this out So synergies very not and stops. where but the

from there of about Oppenheimer larger how done of about can happens more entire firm completely greater there what work separate a the is efficient is two being effective, kind at. transaction more the ideas sort make So looking around day we and focus

others of may more some fair do multiple just of office, of an amount with our middle How manage and we things sort office supporting can could of something example that obviously, is associated that because way And we simplify have into get as systems, directly systems the a our to the be technology teams. capabilities. back other some of technical debt various but simplify support that and that we sort or of particularly investment not that's us, interesting

may There infrastructure. sort us of of that some streamline opportunities for be to

good a very is cloud. move clearly maintenance. that maintenance that of of expenses kind required about and on-premise due Having can could have talked how are Invesco, support So the example to that's pursuing an is quite been we but beyond actively of are more things we things area large. Other physical that be that for to a lot

lot move significant not a necessary that to can we of a just cost other is if of sort centers are anymore. and to data so more cloud, eliminate really the things there opportunity And

of those we are well, as further we absolutely things us, XXXX. ideas So, through talk we're will to not through these that Oppenheimer a through as just ones. XXXX on want of Probably more but its the XXXX opportunity working for get about some

Dan Fannon

what MassMutual a channel then XXXX of kind potential could has that there? or are you And happened through those terms planning of and what of from expand contribution advisors be what can upon relationship the in you and the

Marty Flanagan

Yes, Andrew chime make and can I'll a couple in. comments

be to it’s that and on at that account So the X,XXX capabilities of capabilities going first they alternatives general historically some onboard at areas couldn't mandate. will conversations looking as obviously that the available sales and in their have make could force. Also literally and take quarter call available on is the made we advisors around portfolio’s that looking that

So we're very have, a that again important but business we shareholding the together. be it's expecting strong and doing to relationship, it beyond also

Andrew Schlossberg

of and see highly is Advised thing of on only is insurance our also solutions side, one channel. add the and but opportunities that the we the inclusive passive active mutually I'd strategies. into model architecture portfolios Open Yes, with bigger

opportunities what larger so maybe And the - advice we a in it's see, the one of channel. that's

Dan Fannon

is is or And that in that beyond? XXXX

Andrew Schlossberg

and yes. XXXX beyond Through

Operator

Hawken Our with from next question comes UBS. Brennan

your You may ask question.

Your is open. line

Adam Beatty

on and competitive you. sense sounds might just of stake get Also and increase environment going little the the on the well. JV be are the you financial a is business terms any in bit might China thoughts on expecting. contribution your a the timing to just you magnitude things in Thank finally, the any in regulatory updates This when focus that the Adam and Beatty appreciate like wanted flows breakdown Brennan, I on in wanted more there to it for there?

Loren Starr

terms financial I Yes, that joint of well the What the same do and in excess in of positive expenses detail I seen the release, we so bit between that terms down of range you've this that if XX% revenues our XX% But our sort a full it again a was of the it to the bit the allow in to little little dipped very I'd the firm's kind footnotes think, margin quarter. is provide you quarter-to-quarter somewhere are point margins down you margins. they in mean in generally it press a incremental venture. is transparency and of has business

and higher there You to generally infrastructure a would necessarily expect for growth. something lot is that the required fees has of support

your is going one see that as help grow. continue it is to that the question. our other we of think I a to part forgot accrete I margin financial business So

Marty Flanagan

so will I the pick Yes shareholding. up,

us - point is terms. come of not shareholding - that have there the we But control the have others joint to meeting to very because it's less for of the So we we’ve management is minds the be venture. control management we think important and continue final relevant I increase a - point than will is had

firm as about of it. that that's in a and operate really what's we so, because China, unique combined And

flows the look that years you in is competitive it, industry next half come from can there nature estimates If China. of XX the at the the over

joint see growth. or and in business XXXX, to be whether retail billion it continue of securities Chinese management strong was we venture to institutions of been clients large the XXXX, in $XX very China the managing We since expertise Chinese

So it competitive, quite fundamental is opportunity, an me very fact successful to tailed. is to my time people as look the long at is become sense that and start-up the

a having and What capabilities So is the advantage us. we important depth look tenure and of for experiences. at very competitive

Loren Starr

Yes, I launches. of being there have more others, regulators because at and are probably be the now, they just right than market has just in performance and product wonderful who allowed products able to products, kind experts when has say equipped as of these rapidly area do in this seen launch position the is to to looking think do strong, I'd so of also which investment managing spectacularly them that the they're really is

Operator

question comes with Blostein from next Our Alex Goldman Sachs.

your Your open, you may question. line ask is

Alex Blostein

comments talk expect your then and fees on Marty maybe quarter the discussion When given second, the Wanted fund bit a billion. you first growth rates second in to to taking guess, fee pivot to AUM from on both AUM for I are little for on organic fee about just growth guys could the step sight XXXX could a helpful. about $XX I guess expect year, the talk do a would positive pipeline get of and that the flows growth you for line you around rates is organic be fee what on if the that organic back, just to you

Loren Starr

Yes.

it said the at we're think think typical I solutions I for fees of kind So solutions - digits. single

in So ETF I tends seen. it capabilities the are of mean fee, lower at it going generally is a to space we've a not to be is fee, be lot what higher which well. the as

So going FX overall to strategy. we're with the sit consistent somewhat

terms in feed progression. overall of So

mix, with things that said we fee with down clearly rates ETF into hard as overall ETFs to margin it become to he of because different on out you'll kind exchange figure and think around, of so hard I growth as but some part fee foreign more our market is was not but continue coming Marty is rates mentioned around sort just we're mix see forecasting not a at prominent of focus dilutive.

incremental high growth. that very is This margins for

that's some we've bit that some how we, we've about there have the with in little those terms what predicting talked feed growing the and get product this were wildcard higher quickly fees outflows of through stem, can absolutely of So we've our has the the around of the so seen been we due higher of sort in fee issue we no down ETFs a to and about, redemptions topic things talked bigger hopeful coming so can

the but wanted happen. to bigger that's and quickly to how part is that's the forecast hardest to say going

Alex Blostein

second had for was And particularly question just dynamic and Europe. then the non-US U.K. guys I growth you the around

lots So money of sidelines. the on clearly,

have we and that see well. some as that, mentioned you You of as

products. or of money flowing of of be the of you Can to you share it's active think more not investment the the products. into going some back back whether some of the prospect perspective passive products coming you about a think money As that or into

from helpful. on flavor some hearing what the UK channels in distribution you that be just actually So the would the content and

Marty Flanagan

Yes, I'll Loren your up. comment make can pick

saw year. what So you last

our sort right. flows know record were You of flows ETF

even is ETFs but actually January. Europe Look done early going - the picking we're And to days inflows that's up Brexit, the in our not largest that early on second we're trend. active the I it's So post seeing with focus again, continue. into almost we're mean, and

So to already. too been I change there a but don't want has much, extrapolate

Loren Starr

coming I there just we've Europe. do be mix, of a what that start I going probably probably is heavy going think expect is and is Really, seen say Yes, to I think to active back. to to mean, would into ETFs we we be change some but a the of component going helpful that flowing it's don't probably that

products We examples have some great products that really balance high corporate of bonds are that performance are a are the perspective. European doing performing European well. really income well from

actually on our active lineup pretty is European So strong.

on so sort risk off we're on more back to is cross And any of improvement flows the going be us. risk border getting to coming for those helpful of some

Marty Flanagan

strategies so that add low two been that equity a a off has high active I one both the didn't the alternative is expect. back quick initially strategies then things, mentioned, retail. we're throughout balances Institutionally, globally other demand pickup the demand also think mean is more equity thing come which is last but that base and I being the seeing passive relevant I'd EMEA, was we just in just few talk we world. emerging into cash into depressed I about years might And

to people as I look sidelines. for So off come probably flows return as the there well

Operator

Suisse. Credit with Siegenthaler Craig from comes question next Our

please standby. may You ask and your question

line Your open. is

Craig Siegenthaler

commentary out to just you thought called improving several wanted hear Q&A, Oppenheimer come fund, net were specifically why the quarters. given over next I the I performance international would positive flows be that you First, back the trailing be wanted in fund. just earlier flow to to

Loren Starr

Yes.

performance significantly that on improved one-year particular the And So has product.

screaming in so I see think tell it seen a little right can now, I can pick-up if a actually find I to it… you, we've real bit but is

Marty Flanagan

XXnd is It

Loren Starr

one-year. a on percentile XXnd

Marty Flanagan

One year.

Loren Starr

it's So it definitely improved where was. from

dramatically, will much So sort it but so around not it's it's of allow redemptions it to protect us maybe stem and going to that little. it turn

story a be So big to overall. help flow the to going that's

Marty Flanagan

space rate. improvement about continues headwinds we again team the conviction well-established come high into are a redemption the also some the with back with changing better It's equity international money performance to in comes and of feel with the

Loren Starr

a it's just I I Yes, basis it percentile. I think a anecdotally, three-month on short but it's mean know period,

well So near and term it's up really performing come so definitely it's well.

Craig Siegenthaler

and current then you you Jemstep, mostly PowerShares. Jemstep. inside this us an And I update do the what from business up know which also is follow would my of contribution Can provide AUM just be on on assume

Marty Flanagan

under Yes, there now, so the $XXX platform in administration. total assets billion is digital right

feel continues online. talked and some portfolio while the certain the on Pretty come advancements little to be quarter, really we come you This about clients model So to here strategy will into it Jemstep is here, some mid-year meaningful before are very, of business fourth to we'll you'll good probably suspect continent start to see we that but starting and that, see to happening up very online you launch, quickly due start next flows into but talk we about holistically in strong. clients the to then good see the things again about.

Loren Starr

Yes, Yes. more add I to I don't have much other think, than.

than think So of AUM it's just a the share you less is X% huge opportunity, and mentioned. Invesco I of

of point, but penetrate in this very before at the material to us actually not able AUAs real one. it's being that terms is is the So opportunity

hope So XXXX I tell going able that story to be we're we a fully for think more it's to

Marty Flanagan

And put to in a context.

in be the to the position is having you to if XX% at a and share about successful platform and basically were the context put so introduced is that of the active XX% to products model Invesco a X traditional X other mark distribution the platform. that XX% architecture you XX% higher open with that and than portfolios in So U.K. of content of times would

Operator

Lee comes final Robert KBW. Our from with question

your ask may You question

Robert Lee

Actually answered. my follow-ups you. Thank were asked and

Marty Flanagan

you good. will and shared everybody good thank Well, rest day Great be a the soon. you of with have and

Loren Starr

Thanks everybody.

Operator

this Thank thank your for you. time, participation. your conclude today’s conference. you lines. you We may disconnect This does At

Invesco (IVZ) 29 Jan 202019 Q4 Earnings call transcript