Release Date: April 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: What are the major components in the private markets business, and how do you view the growth outlook for this part of the business?
A: Allison Dukes, CFO of Invesco, outlined the major buckets in the private markets business, including direct real estate at around $69 billion, listed real estate at about $15 billion, private credit primarily in bank loans at approximately $39 billion, and distressed and direct lending funds just over $2 billion. Andrew Schlossberg, CEO, added that the demand for bank loans and floating rate strategies remains strong, and there is significant growth potential in bringing institutional-grade real estate strategies into the wealth space.
Q: Can you discuss the scalability of the ETF franchise and its impact on margins?
A: Andrew Schlossberg mentioned that the ETF business scales well and incremental margins should improve over time due to the ecosystem behind it, including technology and operations. Allison Dukes emphasized that the traditional ETF franchise is already margin accretive and offsets some outflows in fundamental equity.
Q: How does Invesco handle the shift in expenses into G&A, and is this indicative of potential future cuts in these expenses?
A: Allison Dukes clarified that the shift of some expenses into G&A was to better reflect the true nature of those expenses, such as travel and entertainment, which were previously categorized incorrectly. This shift is not necessarily indicative of future cuts but is part of ongoing efforts to streamline and accurately report expenses.
Q: What is the outlook for the fundamental equity segment given its position as a higher fee product?
A: Allison Dukes acknowledged that fundamental equity could continue to be a headwind due to industry-wide trends favoring passive strategies. However, Invesco is focused on improving investment quality and performance in this segment to mitigate outflows and manage exposure effectively.
Q: How is Invesco managing its balance sheet, particularly concerning debt levels and capital return strategies?
A: Allison Dukes highlighted that Invesco is on track to approach zero net debt in the second half of the year. The firm plans to resume regular stock buybacks as it reaches this target, reflecting strong balance sheet management and cash flow stability.
Q: What strategies are being implemented to drive growth in high-demand solutions like SMAs and active ETFs?
A: Andrew Schlossberg discussed the growth opportunities in SMAs and active ETFs, noting the success in fixed income SMAs and the potential for expanding into custom indexes and active strategies. He also mentioned the ongoing investment in active ETFs, leveraging Invesco's capabilities to meet evolving client demands.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
