Invesco Ltd · NYSE:IVZ

Invesco — Q3 2017 Earnings Presentation

54 slides from Invesco's earnings presentation, Oct 26, 2017

  1. Slide 1: Invesco third quarter 2017 results

    Invesco third quarter 2017 results Martin L. Flanagan Loren M. Starr President and Chief Executive Officer Chief Financial Officer Dan Draper Global Head of ETFs October 26, 2017

  2. Slide 2: Forward-looking statements

    Forward-looking statements This presentation, and 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 expendit

  3. Slide 3: Presentation of third quarter 2017 results

    Presentation of third quarter 2017 results This presentation includes the following non-GAAP financial measures: net revenue (and by calculation, net revenue yield on AUM), adjusted operating income, adjusted operating margin, adjusted net income attributable to Invesco Ltd., and adjusted diluted ea

  4. Slide 4: Discussion topics

    Discussion topics Third quarter overview Investment performance and flows Further building our global ETF business Financial results Questions Appendix 3

  5. Slide 5: Third quarter overview – highlights

    Third quarter overview – highlights Maintained strong investment performance and achieved solid long- term organic growth during the quarter  Maintained strong, long-term investment performance – 67% and 75% of actively managed assets in top half of peer group on a 3- and 5-year basis  Strong inve

  6. Slide 6: Third quarter overview – summary of operating results

    Third quarter overview – summary of operating results Assets under  September 30, 2017, AUM of $917.5 billion, versus $858.3 billion management at June 30, 2017  Average AUM was $890.8 billion, versus $849.2 billion for the second quarter of 2017 Flows  Long-term net inflows of $6.3 billion  Tot

  7. Slide 7: Discussion topics

    Discussion topics Third quarter overview Investment performance and flows Further building our global ETF business Financial results Questions Appendix 6

  8. Slide 8: Investment performance – overview

    Investment performance – overview Aggregate performance analysis – asset weighted Percent of actively managed assets in top half of peer group* 1-Year 3-Year 5-Year 64% 67% 75% 25% 36% 33% Assets top half of peer group Assets bottom half of peer group * Excludes passive products, closed-end funds, p

  9. Slide 9: Quarterly long-term flows

    Quarterly long-term flows Strong active and passive demand for the quarter Quarterly long-term flows ($ billions) Total(a) Active(a) Passive 51.7 13.2 49.1 49.4 39.9 46.2 12.3 11.8 43.0 42.8 45.8 42.3 33.2 32.9 33.5 35.6 37.3 36.2 11.8 33.7 10.6 9.8 9.9 8.6 4.5 12.2 3.9 8.3 6.3 2.3 2.4 3.9 4.5 3.5 3

  10. Slide 10: Quarterly long-term flows

    Quarterly long-term flows Strong retail and institutional demand during the quarter Quarterly long-term flows ($ billions) Retail(a)(b) Institutional(c) 40.3 39.6 38.0 11.4 11.4 35.6 10.4 11.0 10.6 33.1 34.8 34.4 32.6 9.7 9.5 7.9 5.0 3.9 3.4 3.2 8.8 1.4 1.2 3.1 1.8 1.4 0.0 0.0 -2.7 -0.5 -3.9 -2.0 -6

  11. Slide 11: Discussion topics

    Discussion topics Third quarter overview Investment performance and flows Further building our global ETF business Financial results Questions Appendix 10

  12. Slide 12: We've built Invesco with a single focus: to help clients achieve their investment objectives

    We’ve built Invesco with a single focus: to help clients achieve their investment objectives  Our investment in the business is designed to position us ahead of client demand trends; we deliver the business across channels, asset classes and geographies to help meet client needs.  Our comprehensiv

  13. Slide 13: Acquisition of Guggenheim's ETF business will strengthen our global ETF platform

    We believe the acquisition of Guggenheim’s ETF business will further strengthen our global ETF platform and position us for long-term growth The acquisition provides highly complementary capabilities that will help accelerate the growth of our ETF business by further:  Expanding the depth, breadth

  14. Slide 14: Guggenheim's ETF business is highly competitive, with well-performing capabilities

    Guggenheim’s ETF business is highly competitive, with well-performing capabilities positioned for growth ▪ ETF business with $37.3 billion in AUM ▪ Approximately 60% of AUM in Smart Beta product suites Overview ▪ 79 ETFs; top five funds account for 52% of ETF assets ▪ Diversified product offering in

  15. Slide 15: The addition will enhance Invesco's global ETF platform

    The addition will enhance Invesco’s global ETF platform with unique and market-leading capabilities Overview ETF Product Suite AUM ($B) S&P Equal Weight (15 ETFs) ▪ Large S&P Smart Beta suite, including Equal Weight Sectors ▪ S&P 500 Equal Weight ETF (RSP) is a premier offering in the market with a

  16. Slide 16: Leveraging synergies between Invesco's and Guggenheim's ETF capabilities

    We are well-positioned to leverage significant synergies between Invesco’s and Guggenheim’s ETF capabilities We will leverage a number of key factors to further accelerate growth  The depth, breadth and strength of our global distribution capabilities  Global ETF sales teams (including the recent

  17. Slide 17: ETFs launched with a first-mover advantage continue to drive growth

    ETFs launched with a first-mover advantage continue to drive the growth of Invesco’s ETF business In the majority of all ETF product segments, first movers maintain the greatest amount of assets Nine of Invesco’s top 10 ETFs are first-to-market/first-of-its-kind Ticker Fund AUM ($M) First to market/

  18. Slide 18: Barriers to entry in the ETF marketplace are low, but barriers to success are high

    Barriers to entry in the ETF marketplace are low, but barriers to success are high, reinforcing Invesco’s Smart Beta leadership  Later entrants represent a very Smart Beta market share small portion of the ETF market  ETF providers that entered the market prior to 2010 represent 98% of the US ETF

  19. Slide 19: Combined business strengthens Invesco's #2 Smart Beta position in the US

    The combined business further strengthens Invesco’s #2 Smart Beta leadership position in the US Increased Market Share Strengthening Invesco’s Position ETF Industry 25% No. of AUM Market Rank Firm Products ($B) Share 1 iShares 56 76 20.9% 19.9% 2 PowerShares1 + 131 72 19.9% 20% Guggenheim ETF 3 Vang

  20. Slide 20: Discussion topics

    Discussion topics Third quarter overview Investment performance and flows Further building our global ETF business Financial results Questions Appendix 19

  21. Slide 21: Total assets under management – 3Q17 vs. 2Q17

    Total assets under management – 3Q17 vs. 2Q17 ($ billions) 3Q-17 2Q-17 % Change Beginning Assets $858.3 $834.8 2.8% Long-Term Inflows* 49.4 42.3 16.8% Long-Term Outflows (43.1) (42.9) 0.5% Long-Term Net Flows 6.3 (0.6) N/A Net flows in Invesco PowerShares QQQ (0.2) 0.2 N/A Net flows in Inst. Money M

  22. Slide 22: US GAAP operating results – 3Q17 vs. 2Q17

    US GAAP operating results – 3Q17 vs. 2Q17 ($ millions) 3Q-17 2Q-17 % Change Operating Revenues Investment Management Fees 1,062.3 1,010.4 5.1% Service and Distribution Fees 217.6 211.3 3.0% Performance Fees 42.3 16.7 153.3% Other 15.5 16.0 (3.1)% Total Operating Revenues 1,337.7 1,254.4 6.6% Operati

  23. Slide 23: Non-GAAP operating results – 3Q17 vs. 2Q17

    Non-GAAP operating results – 3Q17 vs. 2Q17 ($ millions) 3Q-17 2Q-17 % Change Adjusted Revenues Investment Management Fees 1,081.9 1,027.9 5.3% Service and Distribution Fees 217.6 211.3 3.0% Performance Fees 43.3 18.0 140.6% Other 16.7 17.3 (3.5)% Third-Party Distribution, Service and Advisory Expens

  24. Slide 24: Third quarter overview – highlights

    Third quarter overview – highlights Maintained strong investment performance and achieved solid long- term organic growth during the quarter  Maintained strong, long-term investment performance – 67% and 75% of actively managed assets in top half of peer group on a 3- and 5-year basis  Strong inve

  25. Slide 25: Discussion topics

    Discussion topics Third quarter overview Investment performance and flows Further building our global ETF business Financial results Questions Appendix 24

  26. Slide 26: Discussion topics

    Discussion topics Third quarter overview Investment performance and flows Further building our global ETF business Financial results Questions Appendix 25

  27. Slide 27: We are diversified as a firm

    We are diversified as a firm Delivering a diverse set of solutions to meet client needs By client domicile By channel By asset class 3% 15% 12% 68% 45% 63% 13% 25% 32% 9% 9% 6% 1-Yr 1-Yr 1-Yr ($ billions) Change ($ billions) Change ($ billions) Change U.S. $578.0 7.6% Retail $621.5 16.8% Equity $416

  28. Slide 28: Investment performance by investment objective

    Investment performance By investment objective (actively managed assets)* Equities AUM above benchmark 1st quartile 2nd quartile U.S. Core U.S. Growth U.S. Value Sector 100% 100% 100% 100% 9% 87% 88% 83% 80% 29% 58% 13% 54% 20% 57% 78% 52% 54% 52% 47% 38% 34% 22% 7% 10% 0% 0% 14% 3% 17% 10% 6% 6% 9%

  29. Slide 29: Investment performance by investment objective (continued)

    Investment performance By investment objective (actively managed assets)* (CONTINUED) Equities Other AUM above benchmark 1st quartile 2nd quartile Global Global ex-U.S. and Em. Mkts. Alternatives Balanced 100% 100% 100% 100% 90% 4% 83% 20% 77% 75% 75% 52% 51% 65% 63% 59% 5% 1% 51% 47% 75% 63% 48% 38

  30. Slide 30: Investment performance (5-year) by investment objective

    Investment performance (5-year) By investment objective (actively managed assets)* Percentages in parentheses represent % AUM of each investment objective as a ratio of all objectives (Total ranked AUM of $497.6 billion) % of assets top % of assets bottom Equities half of peer group half of peer gro

  31. Slide 31: Investment performance (5-year) by investment objective (continued)

    Investment performance (5-year) By investment objective (actively managed assets)* (CONTINUED) Percentages in parentheses represent % AUM of each investment objective as a ratio of all objectives (Total ranked AUM of $497.6 billion) % of assets top % of assets bottom Equities Other half of peer grou

  32. Slide 32: US GAAP operating results – quarterly

    US GAAP operating results – quarterly ($ millions) 3Q-17 2Q-17 % Change* 1Q-17 4Q-16 3Q-16 2Q-16 1Q-16 4Q-15 Investment Management Fees 1062 1,010 5.1% 955 947 966 947 914 987 Service and Distribution Fees 218 211 3.0% 206 209 213 203 198 208 Performance Fees 42 17 153.3% 11 18 3 9 15 17 Other 16 16

  33. Slide 33: Non-GAAP operating results – quarterly

    Non-GAAP operating results– quarterly ($ millions) 3Q-17 2Q-17 % Change* 1Q-17 4Q-16 3Q-16 2Q-16 1Q-16 4Q-15 Investment Management Fees 1,082 1,028 5.3% 974 965 983 963 930 1,009 Service and Distribution Fees 218 211 3.0% 206 209 213 203 198 208 Performance Fees 43 18 140.6% 18 18 4 9 16 19 Other 17

  34. Slide 34: Total assets under management – quarterly

    Total assets under management – quarterly ($ billions) 3Q-17 2Q-17 % Change 1Q-17 4Q-16 3Q-16 2Q-16 1Q-16 4Q-15 Beginning Assets $858.3 $834.8 2.8% $812.9 $820.2 $779.6 $771.5 $775.6 $755.8 Long-Term Inflows* 49.4 42.3 16.8% 49.1 46.2 51.7 45.8 42.8 43.0 Long-Term Outflows (43.1) (42.9) 0.5% (47.3)

  35. Slide 35: Total assets under management – by asset class

    Total assets under management – by asset class Fixed Money ($ billions) Total Equity Balanced Alternatives Income Market March 31, 2017 $834.8 $381.8 $203.8 $48.9 $73.1 $127.2 Long-Term Inflows 42.3 19.0 10.9 3.6 1.0 7.8 Long-Term Outflows (42.9) (24.6) (8.8) (2.1) (0.9) (6.5) Long-Term Net flows (0

  36. Slide 36: Total assets under management – by asset class

    Total assets under management – by asset class Fixed Money ($ billions) Total Equity Balanced Alternatives Income Market September 30, 2016 $820.2 $365.3 $207.0 $48.9 $77.2 $121.8 Long-Term Inflows 46.2 20.1 11.6 2.0 0.8 11.7 Long-Term Outflows (48.9) (27.1) (10.9) (2.5) (0.9) (7.5) Long-Term Net fl

  37. Slide 37: Total assets under management – by channel

    Total assets under management – by channel ($ billions) Total Retail Institutional March 31, 2017 $834.8 $552.1 $282.7 Long-Term Inflows 42.3 34.4 7.9 Long-Term Outflows (42.9) (33.0) (9.9) Long-Term Net flows (0.6) 1.4 (2.0) Net flows in Invesco PowerShares QQQ 0.2 0.2 - Net flows in Inst. Money Ma

  38. Slide 38: Total assets under management – by channel

    Total assets under management – by channel ($ billions) Total Retail Institutional September 30, 2016 $820.2 $532.1 $288.1 Long-Term Inflows 46.2 35.6 10.6 Long-Term Outflows (48.9) (39.5) (9.4) Long-Term Net flows (2.7) (3.9) 1.2 Net flows in Invesco PowerShares QQQ 2.7 2.7 - Net flows in Inst. Mon

  39. Slide 39: Total assets under management – by client domicile

    Total assets under management – by client domicile Continental ($ billions) Total U.S. Canada U.K. Asia Europe March 31, 2017 $834.8 $550.0 $23.9 $101.0 $77.6 $82.3 Long-Term Inflows 42.3 22.5 1.1 4.0 9.8 4.9 Long-Term Outflows (42.9) (25.3) (1.0) (5.1) (5.8) (5.7) Long-Term Net flows (0.6) (2.8) 0.

  40. Slide 40: Total assets under management – by client domicile

    Total assets under management – by client domicile Continental ($ billions) Total U.S. Canada U.K. Asia Europe September 30, 2016 $820.2 $537.2 $23.9 $100.7 $75.5 $82.9 Long-Term Inflows 46.2 25.8 0.9 4.2 7.2 8.1 Long-Term Outflows (48.9) (31.5) (1.4) (3.8) (7.7) (4.5) Long-Term Net flows (2.7) (5.7

  41. Slide 41: Passive assets under management – by asset class

    Passive assets under management – by asset class Fixed Money ($ billions) Total Equity Balanced Alternative Income Market March 31, 2017 $154.3 $101.2 $45.1 - - $8.0 Long-Term Inflows 8.6 5.7 2.5 - - 0.4 Long-Term Outflows (9.0) (6.4) (1.1) - - (1.5) Long-Term Net flows (0.4) (0.7) 1.4 - - (1.1) Net

  42. Slide 42: Passive assets under management – by asset class

    Passive assets under management – by asset class Fixed Money ($ billions) Total Equity Balanced Income Market Alternative September 30, 2016 $143.3 $91.6 $42.4 - $0.1 $9.2 Long-Term Inflows 10.6 6.6 3.0 - - 1.0 Long-Term Outflows (11.4) (8.0) (2.4) - - (1.0) Long-Term Net flows (0.8) (1.4) 0.6 - - -

  43. Slide 43: Passive assets under management – by channel

    Passive assets under management – by channel ($ billions) Total Retail Institutional March 31, 2017 $154.3 $138.5 $15.8 Long-Term Inflows 8.6 8.5 0.1 Long-Term Outflows (9.0) (8.4) (0.6) Long-Term Net flows (0.4) 0.1 (0.5) Net flows in Invesco PowerShares QQQ 0.2 0.2 - Net flows in Inst. Money Marke

  44. Slide 44: Passive assets under management – by channel

    Passive assets under management – by channel ($ billions) Total Retail Institutional September 30, 2016 $143.3 $126.2 $17.1 Long-Term Inflows 10.6 10.6 - Long-Term Outflows (11.4) (10.1) (1.3) Long-Term Net flows (0.8) 0.5 (1.3) Net flows in Invesco PowerShares QQQ 2.7 2.7 - Net flows in Inst. Money

  45. Slide 45: Passive assets under management – by client domicile

    Passive assets under management – by client domicile Continental ($ billions) Total U.S. Canada U.K. Asia Europe March 31, 2017 $154.3 $150.2 $0.5 - $2.0 $1.6 Long-Term Inflows 8.6 8.2 0.1 - 0.3 - Long-Term Outflows (9.0) (8.2) - - (0.3) (0.5) Long-Term Net flows (0.4) - 0.1 - - (0.5) Net flows in I

  46. Slide 46: Passive assets under management – by client domicile

    Passive assets under management – by client domicile Continental ($ billions) Total U.S. Canada U.K. Asia Europe September 30, 2016 $143.3 $138.6 $0.5 - $1.9 $2.3 Long-Term Inflows 10.6 10.4 - - 0.2 - Long-Term Outflows (11.4) (11.2) - - (0.2) - Long-Term Net flows (0.8) (0.8) - - - - Net flows in I

  47. Slide 47: Reconciliation of US GAAP to non-GAAP – three months ended September 30, 2017

    Reconciliation of US GAAP results to non-GAAP results – three months ended September 30, 2017 Please refer to pages 8-10 in the 3Q 2017 earnings press release for a description of the adjustments ($ millions) US GAAP Proportional 3rd party Business Market appreciation / Consolidated Other Non-GAAP C

  48. Slide 48: Reconciliation of US GAAP to non-GAAP – three months ended June 30, 2017

    Reconciliation of US GAAP results to non-GAAP results – three months ended June 30, 2017 Please refer to pages 8-10 in the 2Q 2017 earnings press release for a description of the adjustments ($ millions) US GAAP Proportional 3rd party Business Market appreciation / Consolidated Other Non-GAAP Consol

  49. Slide 49: Reconciliation of US GAAP to non-GAAP – three months ended March 31, 2017

    Reconciliation of US GAAP results to non-GAAP results – three months ended March 31, 2017 Please refer to pages 7-9 in the 1Q 2017 earnings press release for a description of the adjustments ($ millions) US GAAP Proportional 3rd party Business Market appreciation / Consolidated Other Non-GAAP Consol

  50. Slide 50: Reconciliation of US GAAP to non-GAAP – three months ended December 31, 2016

    Reconciliation of US GAAP results to non-GAAP results – three months ended December 31, 2016 Please refer to pages 9-11 in the 4Q 2016 earnings press release for a description of the adjustments ($ millions) US GAAP Proportional 3rd party Business Market appreciation / Consolidated Other Non-GAAP Co

  51. Slide 51: Reconciliation of US GAAP to non-GAAP – three months ended September 30, 2016

    Reconciliation of US GAAP results to non-GAAP results – three months ended September 30, 2016 Please refer to pages 8-10 in the 3Q 2016 earnings press release for a description of the adjustments ($ millions) US GAAP Proportional 3rd party Business Market appreciation / Consolidated Other Non-GAAP C

  52. Slide 52: Reconciliation of US GAAP to non-GAAP – three months ended June 30, 2016

    Reconciliation of US GAAP results to non-GAAP results – three months ended June 30, 2016 Please refer to pages 8-10 in the 2Q 2016 earnings press release for a description of the adjustments ($ millions) US GAAP Proportional 3rd party Business Market appreciation / Consolidated Other Non-GAAP Consol

  53. Slide 53: Reconciliation of US GAAP to non-GAAP – three months ended March 31, 2016

    Reconciliation of US GAAP results to non-GAAP results – three months ended March 31, 2016 Please refer to pages 22-26 in the 1Q 2016 earnings press release for a description of the adjustments ($ millions) US GAAP Proportional 3rd party Business Market appreciation / Consolidated Other Non-GAAP Cons

  54. Slide 54: Reconciliation of US GAAP to non-GAAP – three months ended December 31, 2015

    Reconciliation of US GAAP results to non-GAAP results – three months ended December 31, 2015 Please refer to pages 22-26 in the 4Q 2015 earnings press release for a description of the adjustments ($ millions) US GAAP Proportional 3rd party Business Market appreciation / Consolidated Other Non-GAAP C

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