Invesco Ltd Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brennan Hawken - UBS - Analyst : Good morning. Thanks for taking my questions. Andrew, you spoke to the stimulus in China not really impacting the third quarter, but that you've seen some positive effects over the past few weeks. Could you maybe provide a bit more specificity to that? What have you seen? And how should we be thinking about the potential impact of the stimulus on IGW?

Question: Brennan Hawken - UBS - Analyst : Got it. Thanks for that. That's helpful. And then Allison, you have effectively delivered the balance sheet really well. And it's certainly encouraging to see the buyback restart. But I'm curious if you considered rather than buying back common approach MassMutual to see whether or not you could do a buyback program for the preferreds. When you talk to investors, the preferreds were one of the big issues and executing on that type of buyback could effectively continue the delevering efforts that you guys have done so well in the past few years.

Question: Dan Fannon - Jefferies & Company Inc. - Analyst : Thanks. Good morning. Allison, I wanted to follow up on the change in some of the accounting associated with the awards. You obviously took a charge this quarter, curious about the benefit, but as we think about things going forward, if there's anything to the adjusted results. And also, are you anticipating any change in the pace of retirements or is this to incent with some behavior internally as well?

Question: Dan Fannon - Jefferies & Company Inc. - Analyst : Okay. Understood. And then Andrew just following up on fixed income, obviously a good quarter for you in terms of flows. Can you talk about the dialogue and where you see opportunity, particularly both, I guess in the US and globally and maybe in the context also, you guys used to give us a backlog of unfunded wins. Just curious how that sits today and the makeup of that in terms of the contribution of asset classes?

Question: Bill Katz - TD Cowen - Analyst : Thank you very much for taking the questions this morning. So maybe a big picture question now that your balance sheet is more healed, there's been a significant amount of M&A around you, whether it be some nutritional managers trying to bulk up in the alts or your alt managers is trying to bulk up further into the alts space with a focus on driving opportunity to fix income replacement or retail democratization. I was wondering if you could talk a little bit about how you're positioned to participate in those trends, either de novo or perhaps inorganically. Thank you.

Question: Bill Katz - TD Cowen - Analyst : Okay. Thank you. Just as a follow up as you think about the go forward mix of the business. Sounds like at the edges, some of the higher fee products could have some incremental demand into a new quarter. But broadly speaking, it continues to be passing fixed income and SMA. So as you think about the interplay between the fee rate and operating leverage, I was wondering, can you continue to drive positive operating leverage if there's really no change to the underlying drivers to growth?

Question: Glenn Schorr - Evercore ISI - Analyst : Hi. Thank you. Something like $107 billion in gross sales. So there's obviously huge brand and powerful distribution and so follow on to maybe Bill's question, if you don't have everything now that clients want. You can build organically, it takes a long time, you could buy stuff you commented on that. Is there room in the repertoire? I'm curious how you think about the general concept of partnerships to lever your brand, leverage your distribution and strike while the iron's hot and client preferences are changing for some things that you might not have on the shelf?

Question: Glenn Schorr - Evercore ISI - Analyst : Maybe I'll stay on team and as a follow up on MassMutual. I feel like you come into plenty on the press issue, but there is a great opportunity to grow within their channel further penetrate their retail network and do more with them. Can you talk about some of the thing you're thinking about working on with them as a, obviously, big distribution partner, not just big owner. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2024 / 1:00PM, IVZ.N - Q3 2024 Invesco Ltd Earnings Call

Question: Craig Siegenthaler - Bank of America - Analyst : Hey, good morning, everyone. I had a question on Alpha. It looked like integration expenses rose $3 million sequentially in the quarter. So when should expenses peak? And when will you start to see a net quarter over quarter improvement in profits from Alpha? Especially because Alpha will save Invesco money over time?

Question: Craig Siegenthaler - Bank of America - Analyst : Thank you, Allison. And for my follow up on the ETF business, BulletShares flows were particularly strong in the quarter. So I was hoping you could talk about the key drivers and if you expect this to continue over the next few quarters, given that interest rates are somewhat declining now, which may benefit longer duration strategies? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2024 / 1:00PM, IVZ.N - Q3 2024 Invesco Ltd Earnings Call

Question: Alex Blostein - Goldman Sachs & Co. - Analyst : Hey, everybody. Good morning. Thanks for the question. I was hoping to double click into the private real estate flows you highlighted in the prepared remarks and a couple of times in Q&A. So it sounds like the contribution was relatively healthy from maybe one of the platforms that got added towards the end of the quarter. Was that the bulk of the growth? And is that come from almost kind of like a [1 time-ish] benefits since you just got added or the growth and the strength there has been a little bit more broad based. And I guess on the institutional side, could you update us on what the key and redemptions look like? It? Sounds like that's starting to ease a little bit for the industry. So I'm just curious if you've seen the same.

Question: Alex Blostein - Goldman Sachs & Co. - Analyst : Great, that's helpful. And Allison just a quick P&L question for you. The service and distribution fee looks like came down sequentially despite higher markets and higher AUM levels which tends to correlate. It's something that I think started to become a little more disconnected recently. And I guess at the same time, distribution expense increased sequentially. So the net effect of that on profitability continues to become a bigger drag. I know they're not perfect. There's a few things that go in there, but maybe just expand on kind of what drove the decline on the revenue side and kind of further creep up on the expense side.

Question: Ben Budish - Barclays - Analyst : Hi, good morning and thanks for taking the questions. Wanted to first ask about the competitive dynamics in the fixed income business. In the prepared marks, you called out a number of factors, new investment grade mandates, US wealth management flows. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2024 / 1:00PM, IVZ.N - Q3 2024 Invesco Ltd Earnings Call But just curious, I guess, I suppose you don't always know where the flows are coming from if they're from somewhere else. But is there an opportunity for share gains in that space? Was there anything you saw in the quarter? Do you see that as an opportunity for the fourth quarter? Or is this more money in motion rates coming down, more of a organic pick up?

Question: Ben Budish - Barclays - Analyst : Maybe one more follow up on the private well side, just you mentioned that you launched on a very large distributor. Just curious how would you describe your current distribution capabilities relative to kind of broader Invesco as it applies to just the private market's products. Thank you.

Question: Michael Cyprys - Morgan Stanley - Analyst : Thank you. Good morning. I was hoping you could talk a little bit more about the India JV that you set up. If you could maybe just elaborate a bit on the opportunity set that you see, how you see that marketplace opening up and talk about some of the steps that you're looking to take in your approach there and any sort of lessons learned looking back at the relationship that you've had over the years and how that may inform your approach here. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 22, 2024 / 1:00PM, IVZ.N - Q3 2024 Invesco Ltd Earnings Call

Question: Michael Cyprys - Morgan Stanley - Analyst : Great. Thanks. And then just a follow up question on the expense outlook. I was hoping you could maybe elaborate on how you see that taking shape here into the fourth quarter and next year? How you see expenses trending and if you could maybe help quantify how much the State Street Alpha fees on AUM? Might be how meaningful might that be next year. And as you think about scope for continued positive operating leverage as you look out from here, how much uplift in market data do you need to drive that positive operating leverage? Thank you.

Question: Brian Bedell - Deutsche Bank - Analyst : Thanks. Most of my questions have been answered. Maybe just a couple, maybe just one going back to the Great Wall JV. Andrew talked about this earlier in the presentation. But is there an opportunity for the fee rate to improve if we look at the contrasting elements of the fee cuts? And obviously the shift out of fixed income. But you're -- I think, correct me if I'm wrong, but you're thinking that we may see a positive mix shift into equities in the Great Wall coming in 4Q, maybe if you could just discuss that dynamic and whether we could see a rebound in that fee rate in as early as 4Q versus 3Q.

Question: Brian Bedell - Deutsche Bank - Analyst : Got it. Thanks. And then just on the on global liquidity, if you could just comment on that. I think we have the out outflows here in 3Q, maybe just if you can talk about any seasonality factors in 4Q and then do you expect liquidity flows to benefit from the rate cutting cycle or other dynamics that might pressure the flows?

Question: Patrick Davitt - Autonomous Research LLP - Analyst : Thanks a lot. I just have a quick follow up on that last question. Obviously, a narrative a lot of people have been trying to push for a while now is this idea that cash on the sidelines will fuel the bond allocations. But we're seeing both funds and bond funds broadly with big inflows the last few months. Do you have a sense of where in the allocation stack? I guess these strong bond flows are coming from you. Where it's rotating from within your client's allocations because it certainly doesn't appear to be money funds at this point. Thank you.