Invesco (IVZ) 23 Jan 242023 Q4 Earnings call transcript

Thank you for standing by, and welcome to Invesco's Fourth Quarter Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded.

Now I'd like to turn the call over to Greg Ketron, Invesco's Head of Investor Relations. Thank you.

You may begin.

right. All operator. Thanks, you of today. It's joining all us

presentation addition presentation of website. that the on This call release information release, at found our plan the press a provided the Investor and press The going have can we today. available covers invesco.com. the address on website In to to are by the to be we topics section Relations

the non-GAAP the on the today presentation will of regarding Our Slide measures. disclosures review the appendix to statements and certain include statements Please financial and as X measures appropriate presentation these well GAAP. forward-looking as reconciliations for

are not Finally, Dukes, turn CEO; the on Andrew to open teleconference is call we'll Chief Officer, guarantee provided and our the does of responsible and this now Invesco will webcasts not transcripts up edit The Andrew. nor results located for President and parties. and by I'll present website. the earnings morning, questions. our third Financial our Schlossberg, accuracy then over authorized call only for Allison

banks Greg, in cut confidence, more income year. to central I'm in be Equities fourth weeks today. turned with you rates growing were a the market putting investors and sooner XXXX. both as from to would money of pleased back a work that belief fixed quarter, the and and reversal several hello, speaking In sentiment in last the quarter to gain third Thanks, began the constructive everyone, calendar beneficiaries overall of

to in by tightening as performed in Europe, for U.S., interest bonds index lag. while continued the growth was best-performing perform expectations the our rates underway there shifting solid and equity major to on we S&P China markets industry. focused government to market prevailed. earlier various well, in in front Fixed income the XXXX and was The rapid led while XXXX, areas macro past evolution market in volatility the conviction of reposition and market and trends Invesco continuing through cycles strengthened throughout this our quarter, exhibited outside The

we the clients, to these and needs build our The investment uniquely meets calls, client discussed further for focus continue value streamline diverse of offering the our previous our to is and strengthen product company broad long-term simplify on As emphasize efforts a on quality range colleagues around proposition and of the world. that shareholders. benefits of

benefits our discipline, us enable will We innovation to financial drive tightening to are the further allocate of also which and acceleration resources clients. for

retains a continue our invest more attracts that going and to talent in profitable our industry. culture leverage to scale the effectively further and in We're top strengthen to growth

our world. the good areas While I'm work and we making my continues, Invesco colleagues client in appreciative and each these of focus of the are of dedication progress, around

factors results, external of internal which are Slide X summarize many and Our play. of these presentation, highlighted the on at

a broad from to deep and During with our the the In delivered mix demand client sidelines. suite inflows growing is the to to long-term strong and $X.X benefit and continued fourth geographic in-demand advantageous we relationships, in quarter, net assets off billion testament client position beginning we a solutions. which of move quarter,

asset the in improving from revenue the AUM XX nearly fourth limiting quarter of While increasing levels later growth X% the the quarter, occurred sentiment and levels. drove organic gains impact flow higher, but in most September

to in gains for in SMAs our continue fourth ETFs drive contributed share market these the and Several growth our quarter. notably, factors our product platforms. important Most organic flow strong to demand

and index the capabilities record in globally During flows hit ETF $XXX achieved AUM. in positive our billion factor $XX quarter, billion high and of we a in

SMAs custom channel, particular. see we wealth as solutions consecutive strong management flow We in of also produced for to demand U.S. in our positive XXth optimized in quarter tax the continue growth

of were growth our the set as alternatives. region second quarterly areas, market China of well private as in our drivers Pacific broader X growth most and the to critical Asia flows organic The return business positive

weak, China our in by the in X which from quarter. the products remained country product flow the sentiment fourth capabilities. equity overall majority well-established growth While launch in growth drove position came The of of relatively existing in were new positive the augmented sales organic

Strong could it. these unique optimistic in and products term, this new market China. about position we constructive more signal demand within Long for a our XXXX remain leadership

development stabilization grow In of includes real bank to largest mature CLOs. we continue Chinese that inflow years with will We world's to coming retirement direct in and management inflows generated industry credit capital and second the economy. market the private and and into markets, strategies, inflows a estate systems modest the by notably the asset which believe led local long-term in net the loans,

dry for We strength the is on to billion key need begin from clarity capitalize area last in but $X to opportunities before a have over of which dislocation the growth. fixed Invesco. significant we several income, market Shifting of see market we powder greater emerging quarters, to will

We continue XX reported having positive bond past custom the quarter strategies. investment in Leading in XX included the ongoing of SMAs to steady inflows fourth grade, well as see contributors municipal growth, quarters. as

profiles clarity and As allocations into Bank range out of wider their of Central greater on move interest to rate of cash extend investors clients and expect the a fixed inflation policy, gain we strategies. duration income

and share well fixed one we're highlighted, ensuring in strengths of ongoing capture focused to this absolute of Invesco, positioned remain reallocation. on an is income we As our previously outsized

equity both flows Invesco. Finally, the fourth and the industry in active quarter for continued for on pressure

capabilities in on market and gain certain market investment seen of areas we a emphasize to moderation some flows ensure our client the space in have to product particularly engagement equity in-demand segments. and we active differentiation provider Despite continued leading headwinds, international can share. continue We we a with remain this where global, quality, focus in emerging

moderated in significantly XXXX. $X Our to we quarter than of net important [ of a ] these in billion signs reversal have during net an income and Equity XXXX These status our by what $X which experienced strategies Japan delivered selling to retail strategy, inflows quarter. outflows Global billion into achieved lower the billion in $X.X incremental early top led and fourth been

to for expectations across conditions we market meet of about remain shareholder prepared optimistic cautiously scenarios. XXXX, and are we a range client While

have breadth the well drive are well We capabilities, to evolving as of demands. we performance discipline structure as positioned ensure client organizational focus meet the the to and to

I market look As your translate closer sentiment greater With scale, performance forward improves, questions. our this should turn I'm profitability. to for results, to to improve Allison call and to going over even a that, and look at the

to the Andrew, peers on were fourth and funds XX% both X-year quarter morning, and Thank half beating improved on XX% international X-year on in reflective Slide basis, good a the basis, XX% third global going performance X-year the in was I'll respectively. considerably XX% improved Investment U.S., top of that begin a solid the quarter including of seeing you, and benchmark Overall fourth in in a across with equity. actively we're categories, performance managed and in performance everyone. from investment several X. of quarter

excellent deploy performance nearly these have time our to and money fact income fixed capabilities horizons. as given attract our important continue strategies. all into across strong flows investors An in ability in We to conviction

in equity end. the fixed and and the was quarter, higher at The $XXX AUM X. fourth markets progressed October as Slide the income ending quarter versus higher then markets with the of weak to last than third fourth billion trillion recovered year end quarter with quarter. quarter began $X.X nearly Turning the

we long-term $X.X a exchange challenging that an favorable assets inflows rate drove management X.X% been fourth with generated growth of inflows, quarter. once outperform asset coupled in and markets, Higher foreign has for was the net in net movements during again under organic expect growth. peers long-term in what organic the increase environment We billion which to

Equal one at our net once best leading nearly Index S&P bond long-term inflows quarters [ with passive $X.X long-term with remain strong The were net for inflows of flows ] also driver inflows. nearly was billion, XXX annualized XX%, ETF the this flow of the marking growth approach, our quarter for demand client Looking capabilities rate led of during investment the billion by we year billion $XX.X an as garner of organic billion ETF. inflows. $XX for This $XX of quarter. as again Weight

over growth ETFs second The lowest suite ago throughout market some sell-off encouraging the strategies. the $X.X the fourth in is quarter since full quarter. ETF million was was highest years in over outflows over Our of now XX began ability outside in launched second billion in market the the organic of passive We past in largest little the in quarters. early active growth a ETF growth at sustain of of inflows the level outflows XX the XXXX. QQQ. net our of with What's X that the and for the in cycle Offsetting was with stands billion through QX QM $XX the third AUM, $X demonstrate it QM QX our ETF making to

The net active outflows fixed income in income products inflows. lower $X.X SMA, level billion totaled of by fixed in driven growth was led our by which custom

Japanese experienced be garnering fund fund of active quarterly Japan strategies, $X.X our inflows billion Regarding strong a and the income fund for in Japan and in growth This both on Global to industry quarter of retail Henley equity a continues clients. another with Equity basis. net the we year-to-date from top-selling

of elevated investment which products after markets XXXX. net from the class level of outflows fund. equity of second the came global experienced The in billion redemptions declined developing half this of from Active significantly billion, $X.X $X.X outflows has

products flows channel. inflows retail estimate. Driving custom of channel channel of The well by long-term billion. as $X.X the in inflows, institutional had the retail net the ETF at Looking our previously, net growth billion $X.X while as generated fixed channel or income noted I the

Growth channel third by that targeted outflows driven returns quarter global resumed in long-term redemptions. in after the the were the institutional net

geography. Slide Moving inflows X to by

billion, growth inflows the $X.X venture. $X well quarter, growth fourth fixed organic Japan as Henley billion growth Japan's XX% of by delivered net income as representing Global income an our net rate inflows were resumption and growth Pacific in of long-term long-term by Asia products. a in the of and in organic driven driven of China Equity fund representing XX%, joint

years, markets constructive positioned that in growth. to for the are seeing Japanese capture most we're believe well on conditions assets We risk many and

venture $X.X generated strategies. China billion ETFs inflows Our and net fixed income by in long-term driven joint

bullet each billion. by Turning growth ETFs. inflows, mainly Fixed to occur flows net impacted planned December ETF $X.X which $X.X flows by our maturities by asset class. in that generated the billion Equities totaled driven strong and were share income long-term

This is seeing January. where in by we and already the share are strong annual quarter, typically an new products these launched bullet first in are occurrence, offset inflows outflows

global as net Excluding offset were net by net inflows these income These were commodity classify products, billion outflows and inflows including alternatives, long-term we $X allocation long-term inflows inflows $XXX maturities, into we million direct in fixed in In as that products alternative billion. and CLOs asset and such of and long-term ETFs. generated loans, estate. bank real $X.X other

have shifts as are long-term these private strong markets track asset our record a alternatives client platform We flows to to strategies. in demand with capture in positioned class and well this

Secular shifts recent Moving of acquisition to asset industry, in client Oppenheimer mix Slide market changed the demand more the X. significantly dynamics have Fund. with asset across since our coupled management

back AUM in billion XXXX have the the Going acquisition, our in index excluding quarter. our $X.X of XX% or from trillion of fourth billion of AUM, to to grown the $XXX and XX% XXXX average overall ETF $X.X or $XXX average QX AUM trillion after in

$XX fees from million benefit of in XX% this [ a AUM. revenue seen million earn to our or or We've the billion management a in QXQ, overall over X% also areas growth quarter. yields but In in average very or substantial from, marketing to of from to X% of These we ] total from average $XXX net size yield. provide $XX $XXX does net liquidity going fourth revenue no product to AUM time, tripled AUM billion average compared carry lower has product going global strong XX%

fundamental we've products, frame, During for higher and multi-asset time the which carry demand equities net same seen revenue. weaker

in developing equities This was driven off in early the well global of been as pressure in markets as capabilities. that coupled our that experienced has by GTR the the XXXX, sentiment risk and part we sparked closure with

X% of quarter, had to XXXX of $XXX frame. in that to billion of portfolio average average X% fourth equity this the fundamental also Multi-asset portfolio our or AUM. our average the Our million or AUM. XX% from By was AUM time declined XX% $XXX over declined

the XX% with third XXXX, QQQ compared XX% fourth to to to similar the we from XX% quarter from equities at from and AUM, Looking dynamics average fundamental continue from and of of in average declined experience as the while to ETF X% AUM going the quarter. XX% XX% to to of XX% X% going multi-asset quarter

has dynamics on The by created last X-plus our weighed of revenue results headwinds these result the years. over

fundamental enough excellent loss global liquidity multi-asset fee from not experienced like to the organic lower and and ETFs higher was we've fee While growth offset and revenue capabilities equity outflows.

but the declined overall mix revenue our decrease degradation during yields has that Our our shift been yield net frame, asset in in has strategy. time meaningfully in this not the driven by investment

strategy on provided been Net have stable the slide. the relatively by investment yields revenue ranges within

The has that emphasize been multiyear our want that preferences secular point client I in is shift results. in other to increasingly captured this

better diversified our concentration is been reduced. higher than years and fee today portfolio X fundamental multi-asset ago, and has risk equities Our and products

cycles, portend These which shifting through market growth for manage have now and navigate better positions and improvement. future gains. dynamics, marginal Further, they though revenue demand. we profitability to diversified Independent firm the various client a well market mix, business challenging to occur events should as of more

$X.XX million lower the due of fourth and of $XX discussed. million in quarter third the a shift the in largely than performance in revenue than mix to decline quarter was was Net just from The last billion asset was X. Slide that our fees the lower quarter to $XX of XXXX. and million $XX year fourth XXXX Turning decline

the performance million in assets to offset related and driven from management, by asset Total of organizational estate lower generated lower XXXX fourth fees average prior fees under shift related decline other $XXX The related of implementation adjusted relatively mix Included in quarter. $XX expenses. change by activities. due were $XX private The and quarter platform fourth unchanged the real year. performance primarily to from higher expenses in fees expenses million quarter operating incremental market quarter mainly the partially the was was decline fourth are in and from quarter Alpha last million.

items, More been compensation than were expenses. fourth includes employee on quarter. $XX detail quarter lower million million ongoing at in that quarter were continue XXXX. quarter changes million specifically, by million $X third more has these million operating $XX fourth expenses Compensation the for expense revenue shortly. Total fourth of Adjusting we expenses million that Marketing the manage the than the in $XX was of than to lower discretionary adjusted expenses the $XX lower the organizational fourth provide challenging XXXX the change lower impacted which related as looking savings organizational spend $XX tightly I'll environment. of were to given quarter

than last G&A G&A than and expenses quarter. higher and quarter was year typically $XX see were office Property technology we flat last million in to higher as $X million last quarter. higher the fourth

$XX spending Alpha higher million had related also $X the to million the incurred third implementation, in our in the quarter. costs implementation than fourth platform due incremental in We to quarter

million fluctuation forward, some quarter-to-quarter. implementation to quarter expect Going in per be onetime approximately $XX XXXX with we cost

will forward. costs We on to the update related continue implementation move our and we as progress

of Now XXXX. in in expense in nearly savings changes. moving to XX% the quarter to savings we or have $XX We the realized achieved Slide organizational million $XX expect in related to realize X. $XX On annualized expense basis, we the an million fourth million

first realize to the any these expect costs further expecting remaining million $X We're efforts. with quarter. the associated We restructuring not significant in

time efforts The seen margin growth full recovery. be and will simplification benefits as generate we from our over revenue

current XX% we've XXXX. range, the variable company and compensation higher a AUM the be the revenue of our towards been slightly the net industry in As year trending ratio line periods for decline. of levels, XX% managed to discussed, the full upper outcome expect to we practices. compensation above to to at and this competitive end has ratio revenue with Historically, in performance range end of would range or At we

benefit approximately payroll tax compensation reset to million the see expenses in related quarter. $XX in Seasonally, other first higher and we

we during ratio of XXXX. a exceed the expect half first will would As result, the XX%

organizational Adjusted to the margin $XXX the which operating Moving Adjusted Slide fourth for XX. quarter. included income quarter, to fourth the was million in operating was related costs XX.X% changes.

higher. XXX costs have the basis Excluding been organizational points would operating margin changes, fourth related to quarter

was fourth share per Earnings quarter. in $X.XX the

matters, last costs to fourth decrease was The would due per quarter. Effective $X.XX from the related a earnings discrete tax share the X.X% decreased benefit a quarter to certain sponsorship impact to change have tax resolution changes, of higher. Hong tax related been Kong the certain of income pension treatment sale organizational in favorable fourth rights, the tax quarter jurisdictions. of favorable in XX.X% across mix to of tax a primarily Excluding on related rate to and gain

can quarter income We estimate due between the The for discrete on non-GAAP first rate be and actual nonrecurring of XX% tax Slide items effective on effective our pretax tax items. XX. rate the to to impact and I'll of XX% conclude vary XXXX.

is us balance As for stated priority building strength. sheet

cash balance year on the ended with facility. credit nothing This our billion, quarter, we and our $X.X was drawn

We and near now it have lowered zero. our net debt stands significantly,

We have draw have We in senior position a in a million to maturity. notes maturing approximately million at facility fully $XXX XX, will excess on million to approximately redeem notes. and are on redeem the we January we'll our and cash $XXX credit the note estimate $XXX

quarter cash we facility is on second do move net the and end, a have credit through will expect quarter goal the first third and seasonally at quarter our which pay of down balance X high as reach The debt. so usage quarters a to we

We do the I'll to line to We're operator capability the strategic of while open progress To to and flow move continuing right level we resiliency and so. that, buyback we're towards up And performance, we program growth for the goal. driving regular build have also simplify as organization a pleased is begin net to evident conclude, we're to stronger balance the more again organic a and making ask and and profitable growth this of to Q&A. difficult financial performance high key a stock a quarter, the our market sheet the this hope firm's for positioning committed with with in invest areas.

[Operator first Instructions] question Glenn The from comes Evercore. with Schorr

very you towards sure I'm something the said intriguing beginning.

to of fixed on duration longer move You said lot income into of that. have us at cash expect think a some waiting you clients been out And I point.

last actually of outflows that markets waiting alternative? do on out some cash, more sit cash weighting? and just income but sidelines quarters. the just saw market how in sitting money the a couple I used flows, in determine another it we the curious is hope And meaning fixed outflows market lot to actually treasuries You cash to general? going is money the versus it's I'm it where money move that is makes sense. Or

Yes, it does.

and both. start, of pick me up. Let a Allison little can It's

So some our of Invesco corporate largely business treasurers T-bills directly. the and of money market flows out they're is buying

So Invesco. at a that as look I indicator from wouldn't great

to talking at and Early where have a out clients clearly telling we're little we're the maybe ETFs, of As which be and are you looking lack full been there about into going. conviction. flows bit of conviction signs might

starting otherwise, on in municipal sidelines. income say But then strategies. And moving and on days a some side, Europe picking is early the move into assets investment-grade off to pretty I'd fixed up bonds, active bit. the particular, it's little

just money our point market our liquidity on products. products, in particular, And to maybe a finer put

Our client base there is about XX% institutional.

course, markets limited we increase they're in to T-bill advantage going build. those is XX% about and institutional rates when -- taking side, point, which and out So retail, money in go. of of moving on It in the the is really it to corporate fluctuations Andrew's in where where of is some see the only T just of balances, treasurers they're

yielding stay client to of a of and smaller The side retail going kind there. there. our cash products they're So base component is

Makes sense.

about just and us slide, come in revenue product but degradation yield shift. you talked pricing, that down showed mix not So you of the

of way assets coming assets see assets. markets average pickup up revenue could the the How back With ending much way yield other that in quarter? above the much, first we average so

gone obviously, sure not that up I'm math through markets but yet, are you've bunch. a

will fourth quarter does average are, revenue mix yield quarter. as for sure. frankly, delay, for well of yield higher in portend they first was the point exit there. the mean give it rate for the be it the quarter coming I exit AUM I No, you net than X the higher mean, pickup coming that's revenue, Yes. much the could And the net for into -- didn't the into the us quarter, the in a coming basis market modestly do see, just and but call modestly it does it, revenue into

modestly very So higher.

we that there well I the within those those categories. mix it's the as mix showed page, on think within that asset categories as between really

the revenue So of revenue of elements revenue capabilities. one earlier. which really speaks even yield well, the some like net as point that performance there, our to QM a was net largely saw demand Equal quarter yield declined in quarter Weight passive products the lower for where passive product basis the the our was in And QX and the fee our about I in client you XXX inside of of quarter, noted our in within our S&P

to on the continue run demand client the to impact the market has where do demand. though, things predict that client see first We a hard helpful. huge being has strong It's be and our quarter, revenue. equal been in All will

of you're we other and it I'm think the out client the any as puts market earlier, broadening well. in thing we're sure of our relatively of position in I'd as diversification kind a mentioned and where assets. environment overall market, greater under the positioned. add, portfolio And well us Allison the seeing

Appreciate right. it. All

question comes Jefferies. Daniel next with from Our Fannon

X some prospectively, about up alts bucket markets. a follow in for the been and talk and business, there's the wanted were the in considering I thinking potential I private the outflows bit how dynamics more yes, think underlying seeing to trends. broader you on in you, alternatives more that growth about Slide but has quarter

of think an inflows. to a little about you've I update. more some talked But curious get seeing bit

with think And so really let noted net so on I we flows million. the update an $XXX real acquisitions. estate that's of about modest inflows maybe again, me on divestitures side, direct So just start the

the see to so the real And to some we estate continue some is see just of which in market. given challenges improvement, nice modest

Again, talk is we billion credit $XX business there private about about the billion. inflows. only $X.X side, our of On

driven bank a flows there. primarily That nice CLOs. pickup relatively So and was in loans by

credit well. That's on largely ETFs, in the some call. side, and And distressed listed side. driven by the as by on that allocation commodity all real modest and on public asset outflows estate offset And I alternative global that inflows are was private there capabilities noted that's the

bit in a in our some a got strategies, of on mix with by you've alternative again, side offset public the the gains So alternative outflows private good being strategies.

And we our look view as forward, best one as to and we continue alternatives markets opportunities. of private

on credit this real As some side, And first see on in assets mentioned, billion Allison private said, the environment. about of $XX Allison flows in billion in another seeing the as moderation positive side, and $XX some we're assets. to and estate gains,

credit view, I and a from if take into the diversifying on base last over the impactfully opportunity issuance of retail other focused lending largely long-term probably very but REIT we've direct several see real strategies, our non-traded wealth estate a us. institutional to great long-term more continue years think into we the as credit base sort into what both strategies for we distressed and institutional, management and been a is of

comments. I goal flat Street to to switching just Is if to, reduce some growth get project? expenses is of just then forward. And your Understood. could you the State ultimately maybe Allison, understand going talk the flatter expenses. or But

terms the growth year items general of the post year. the and And of to underneath kind mentioned rate for expense think want understand in about $XX for that, of this you inflation quarter then a components I other how we million the or factors? other So G&A should just

with if quarters, think start Alpha. around the they the for implementation me you Let back few growing. have last And been costs

we was to And in the $XX So guide throughout quarter, $XX per $X quarter will roughly in there -- third most in second million quarter recent our quarter. this was fluctuations. the it million $X a quarter, be then million XXXX, million

not is precise. It

are into implementation. deep We

is are is And quarter-to-quarter, then variability and so but with expenses is and reasonable think the out expectation peak, be that XXXX $XX And to a going is know some we The other the some are and what there we expectation be side. I million beyond. will today. building there that to uncertainty coming

ready then to are down. is guidance not it out. that flattening and isn't there yet. a on But we're start a to back to just peak, It So that exact give expenses come some building

continue cost some side. of some expense ability lead fade there -- on which systems, implementation will the are to rationalize our to rationalization streamline As the and some and to other

as deliver much what operating much is of about systems we accelerate our is that of reminder, today moving a that whole a the to operations -- a effort really and the have heavily of and about and some the as single eliminating as really streamline processes client perspective. And model duplication from some we customized towards can experience

I think you expense me other mentioned some those. some line on items, let maybe touch of the of

We million but in FICA in always the compensation would high G&A our that seasonality the the taxes, see quarter there's realize I million $XX as fourth expense for that a first quarter. in noted, and $XX also compensation expense From Note expect and a first we expect to in we like to to typically in fully higher quarter, savings. the about the expense was seasonally expect perspective, be bit lower the quarter. first

$X that expect realized the be another million there's will in first So we quarter.

of up going But that compensation cetera. and hopefully, G&A down markets alpha of realization course, gives of but the savings. that assuming color is, et cetera, flat All back expense of et the XX/XX, modestly, expense that's of by that seasonality coming you at primary our relates offset some seasonality to driver

Ken question with JPMorgan. next from comes Our Worthington

on Slide on I margins up wanted to XX. follow

lower what were Can lower of us on margin margins? level XQ as the items, page. unusual impacting the the is growth is extent pressure fee, some in 'XX being margins you give businesses kind color to impacted lowest Excluding how To mix growth by business you in businesses and highest it businesses? highest I higher some higher call lowest of slower can margin margin. this And are your know At used point, were the to margin of negative be what the and fee out businesses. non-U.S. margin, margin

Sure.

Let at a stab take me that.

quarter quarter. are would yes, you correct. severance be our adding expenses back The So lowest fourth

business that? so And it's is impacting what mix. Certainly,

just X on note, item. had to from Before standpoint, chart, Keep an we I the as will years the prior go all to last business underlying mind, this mix, in for a line quarters also base expense I TIR

TIR. of And was base within a that our there expense significant amount

So been has all fully alpha the of the X our expense implementation base quarters loaded last for costs. inclusive

on of on business The degradation and the is and of into of it even capabilities, shift the our business big lower a to although is well. is highlighted whole global story. Business as Page story part it extent to of driver fee including revenue our as in margins, that from equities absolutely continue well. in is the mix, index not story some So as pressure we you mix see mix part as liquidity the X, some fundamental the ETFs

noted, you and And the within be and some recent category. those that, asset quarters QX capabilities, couple opposed of with most to even within products as S&P mix QM that like some business other for I pressure as demand of loans capabilities see in would Weight the ETFs, fee commodity passive just XXX that bank within Equal the higher

categories categories. business is among it the and within the mix So

In are of margins, consistent. relatively margins terms region by sort of

are back look often at it's margins the which think worth I can average. than pointed joint our as there and higher noting you the see really in venture firm you we've add to China, there,

in cuts, quarter of been We're we than positive in stronger there. our attractive, the very of modestly have the impact are the would But implementation average of that realization modestly cuts lower of there and overall margins firm fee noted it previously. optimistic the about with and an first lower quarter which million per And very positioning -- rate than quarter our China, mandated fourth which are the full very the revenue. has fee there $XX those was still They now regulatory still our growth there. -- in have

the comes Cowen. with think I Bill next from question Katz TD

mix some stand Maybe to up little Mass with wondering alternative segment democratization growth potentially you where a accelerate bit. a the the on if was into expand out opportunity perhaps even products? just Mutual and on building bit or sort retail with to of relationship little your could either I you

our general across owning in a with and shareholder, comment everyone's memory broker-dealer, sub-advised Mutual has for us Bill, $XX invested thanks billion capabilities. to question. Maybe account just annuity, being to Mass refresh the preferred addition about

most billion wealth ones invested we've into important many last $X of particular, strategies, bringing has the the co-investment management One and the that of of years. over seating been several private in have of our been to the parts the they market

so partner a very, And important very regard. it's in that

multiple those that's sorts around of a And of own sheet what we on strategies. balance our Xx carry

So growth the lot we're of a to something although come opportunities are already. there focused that to relationship continue has on, develop

their then continuing second things with effectively. there, insurance I strategies, but taking opportunities think SMAs grow our we're further we're select on it well And to where area like just and fixed is models, platform to for look ETFs sense makes and and equity alternative placed relationship and our the income ways products.

on many important an levels. it's partnership So

Maybe just a follow-up on capital.

Or the do you're like in of line of to sounds get you on other able it So are credit? need you'd that on to back side expecting concert spot a just Allison, be terms in before the you carrying better of restart in stock buyback? with buy to much buyback. reengaging

be about should is broadly, more what thinking earnings are earnings kind that your rates payout more diversified now the then power we And and higher? of

All And closely goal we've and Board side ours a balance the I'd working we'd other say on debt to stated of has in been very achieving a yes, like our sheet. something And answer committed good of net with down stronger on to getting our short is, that concert we're -- questions. been X.

the conversations to having as forward share evaluating that, we reengage the so and approach regular more And to we Board look buybacks. opportunity and with

stay to it XX% has kind our been range past. XX% would modestly I as in payout that in the of think ratio

operate I the think modestly want of months. think we back both buying year us about each given over couple cash the common as as to away before just that's as well we be stock. of increasing range us needs few quarters there, where that dividend are for to in reasonable from we next a seasonality But a the are

growth a in we're and heading. in where the pleased debt about within long really with the are cash time the and We we're the for just time, the making progress balance sheet, sight is first

been So years. back position lot opportunistic it time we've a we long we're the for few than to more in where of in can a able does feel into getting kind be like last be first the a time,

with Brown Mike from KBW. comes question Next

to large equation perhaps and out M&A, necessarily as along Great. back not Maybe asset you side last goals come bolt-on further your look capabilities the to on but more just on the a strategic XXXX? perhaps on sheet, kind mix on the the and quick M&A adding maybe expect to, say, into as capital think you that as you allocation follow-up get question of do balance on altering start you about

Allison the Andrew. the It's around priorities as much the is of side, the uses focus the stay moment, and very cash, At sheet organic balance on the described true.

right described opportunity and we continue have add we opportunity inorganically. in to we time place grow market well we space in likely for see the both organically for the to past, already on situation, and be where us that would to the as things private in extensions that today As could do believe the

in for real be private on focused credit organically. now, do And the to that areas. work the But in very would and asset we the space have

Okay. good change And markets the to gears just maybe then Great. if I hear. developing fund. That's to

had is in kind assuming interest causes tepid. is given guess strategies this performance continue to remains interest outflowing, but like of my just performance still to to EM fund, what is there. improved can I You client That seems question and investor back product just really improve. flagged has that come that sentiment

about on eventually lower kind a be to that narrowing translate redemptions? to and Or story? of more going this redemption more a the of can Is story of growth kind

as of unknown, markets to well. performance first you I probably Look, Space is well It's think know, continue known well emerging wealth thing the channels. the outlined there. I known bit strengthen in both. a you mean the a question management And [indiscernible] the Yes. manager investment in we're the placed

can that's early have is So our to things investment improved, started quality. see picture a control the What sort of sign. we bit and the redemption we

we you're as see well we're you sales equities think been been marketplace moment, until gross it doing investors. the uptick it's in we've international have those predict, a global but material what not some as going for an see And it's -- to I from category and where that to pressure. haven't categories under really more seen broadly in and in more difficult demand waiting back is equities, come important

but Our on performance has declining, materially, redemption same the comment improved rates gross sales side.

UBS. Thank you Hawken Brennan next question with our comes from

when pressure [indiscernible] which Allison, the that's some grow I we to some about Or should appreciate of adjusted off on flat? through are is by think of that how here thinking full base And year having XXXX, to charges. about XXXX? But color right the positive expense. is be that for that to the we're -- able you XQ going keep

Brennan, good question. Yes.

modestly, XX% markets just year that severance and to you aren't of expenses of base anticipating at where in relatively caveat 'XX. usual perhaps base we the we in the very, When 'XX, expect point, and at where flat things our the adjusted the in at retirement are, very If we to ended incurred which the being 'XX expense to would I relative expense to look the expectations for more I we 'XX AUM, say all equal, look be this higher.

call in 'XX me, of all and to year flat just X is quarters, excuse going of importantly, I'm plus 'XX that, it inclusive in full no a TIR. But

a no year So like. year, inflationary and the X-quarter compared of pressures, year some merit as increases a TIR to X-quarter is the last inclusive it of

relatively year. work costs in guide account, So to out output All year. on this got we the taken going put we a as those on did We've things quarter our lot million of per there. expecting it $XX implementation into a we're base lot flat relates expense last

it. appreciate I Okay.

we've the quarter And in this year. the average exiting what AUM and note of with of fourth and some with market, of into where seen appreciation that, I'll coming are some we the in terms

are see margin to start that We we modest improvement in operating optimistic here. from

question from Deutsche Brian next with comes our Bedell Bank. And

that. the the to talk than Can as I think products, XXx QQQM that I how Switch think a billion monetize whole about you I be earning -- QQQs think, guess you able more is, you the think to $XX conversation that asset QQQ there's AUM and base? obviously, in franchise. but monetizing franchise. you obviously, might you do about

QQQM of the on also First XX is all, asset bps the revenue yield? that management

ratio the opportunities think then fee-bearing you sort cannibalize Or extent the developing to a favor effectively do of is -- level? -- Invesco and QQQ potentially that QQQ franchise to in of try more are just the there how about at

creates and as working And in asset for a questions. tremendous precisely, terms really is be creates opportunity that. on QQQ underestimated. talking brand that, spend The that can't that the team. marketing budget lot us That the and the topic we comes a time Great a about from that of us awareness thinking for about of the

do our of sort campaigns, brand the by ad All work QQQ. is of really we the fueled

and creates. is a us. the is And so asset it's it to It nature unique value it tremendous certainly in that's

that expect to one, there, assuming the continued given in growth from it's the in interest is very capability. to and or you billion very as successful and we value approaching we underlying only a optimize demand cannibalization we old, continue. underlying created grown note, be So have is quickly thoughtful The that is in the do been QQQM, a about and X has strategy $XX how that capability exposure it there has years and about the that

yield costs the In actual would the of terms all fee there. about revenue net of published net it rate, from the be half of

-- mix of in yield one So of it were the of driving to be it some on capabilities, of part again, pressure overall. what we business that is net is would lower-yielding revenue pointing the the terms

a coin capture positioned So well certainly to client that X-sided is demand. it's but one

what up Q on relationship. the Allison we've celebrating, And I The been very relationship that growing soon. year how back was much the think coming goes with describing, XXth its NASDAQ

In can an QQQM is more alternative ] Q really the -- [ for to it be the where creating the being traditional buy-and-hold it's situation also investors. and traders being a addition QQQ we're for --

and And happening in general ETF industry have the I in preferred is it's think for what's people short-term a interest. long-term it's vehicle of that interest now indicative

I so just And strategy part that. think is of indicative of our

You or to that from of more active. should expect see whether passive us, it's

And color. a great just That's maybe Great. follow-on. then

well, as in those product to the if sort management it, areas X in business that are course, top saves. in you just growth? you Allison, think of or Catalyst reinvesting you investment investing of about Maybe some perspective cost the are of terms can mentioned an talk investing from you of X I

you about You just QQQ leave that play investment the And can talked I think however, area also private you on be a X role. markets, out. that's area, franchise, an M&A where can can mentioned maybe that an

other of about any if most could from in of maybe So in you're dollars that? growth excited can investment terms that talk say, result you -- that areas a there about if putting that couple you're and

areas key those being most Sure. and grow probably invest. to I'd continuing really the and capability areas you the focused on to we've where our back point

factor So indexer look to at certainly, ETFs, how SMAs capture those client and really capabilities, within our the there. capabilities we to do demand we out continue build that's

of the build that's history just the client and in multiyear distribution Private there and the we've significantly channel our and continuing and product our building for not and education closely side. investing retail institutional on there and And increasingly markets the channel. those side. we the and expect seeding tremendous out but the with product to for those invest being the launching capability education it's that out, clients success where transformation capabilities be that got institutional legacy working really both in really on demand, strength so retail to our that's amount shift involved The before, about talked capabilities in a capabilities position shift those and that's as we've as involved in think a I

in -- invest China business, discussed before, cash highly positive we've largely to there. to but self-funded flow able we That capabilities. as a very invest are profitable, is continuing is in point a to continue also I'd speaking, our to it those attractive is and and capabilities it

streamlining of really in client is into lot order experience. deliver better experience overall our it our and capabilities and experience there. invest but to question a systems, capabilities, client-facing benefit product the Your our just primarily platform, was and clients, our continue to client goes A we our around also investment would a the the lot themes of technology the what the in note the I behind products, of client but

that, for Allison the closing the routinely thing to other we've what and we The point you'll seen mean, on several demand in product line few would probably parts pruning of And and and strategies over room only be closed to market. been a our capabilities see forward beyond that gets investment it's haven't delivered that the more to I'll hundred last extensions I on it less covered years. how shelf

to ETFs going and SMA And vehicles lead to and so is fixed the income like things to something seek we're trend or in. continue towards bringing passive capabilities beyond capabilities

The next question Bank comes of from Craig Siegenthaler America. with

XX% XX% year. this My X payout is target of to debt the after you your later on first question goal reach net

So target why the not of sounds a a higher intermediate-term payout strategy. because big isn't part it M&A like

execute. about said, we sheet, to position, capabilities but position perspective would to think say, to sure from about position capabilities in and as able right we think better a cash continue opportunities bolt-on in a bolt-on an balance the given And a have certain we're we with from to Andrew Reasonable some be making to question. opportunities find want is I build to our of be returning do continue to M&A as the should we we perspective. those

returning to cash So several ability going it's be of in to of the shareholders. to sure on priorities, execute making those we a balance capital have it's not all and to

has in much you Allison. able Mass can quantify third-party that And capital us MassMutual? capital billion as products $X for of Mutual, billion to from $X AUM sense, remind and to been which the with is that successful invested been you Makes one my has then that seed $X in around attract the alt how billion been? date, follow-up, how way seed initial have Like to just

from wealth the relatively although would say a strategy the seating been Probably where large, that then I in but can -- volume was REIT X or over decent non strategies I of early one amount have, percent we've have were or platforms don't Let traded and MassMutual Allison REIT the exact it's me start time is pick generating partner. U.S. still of up. still the they the most important in big

to one about. the we maybe other I'll then debt numbers wealth market. on Allison That estate you important just more to the of But our real the brought the it was was asked And sort specifics turn management for second that strategy strategically strategy.

Yes. account they've I across where general capabilities. want would got largely well exposure would say and sure they their as to make various

those really on to they invested. that So of see municipals we've capabilities really credit strategy CLOs it's been are of breadth REIT, both in them of where and mean, our would which the things you and capabilities from types private kind everything invested of some I like public

there the management which in aside at putting and really new clearly And think we at we're platforms in that's I signaling show packages capital, that I these but these new critical together up And that showing with are not investment with. wealth from is in. capabilities, of terms things the important, up particular, think credibility platforms

Sachs. Blostein The next question comes from Alex with Goldman

State on Alex. over X I to and do is of margins easy on Street it's into Luke expenses some coming the period revenues of appreciate high-level This But that color not XXXX, longer goal Alpha so the appreciate forecast out and costs post XXXX, for the down? as I any far. especially some have you in going

is and us absolutely mid-XXs loud our post. I to going and take gold of -- getting everybody is I But kind this clear. time some to get would into goalposts there. it's the say, term, high-level and is back longer here to going hope high-level

where and ] back XXs way basis, and mid-XXs the [ goal next getting with low the in no into are of margins of We back years. absolutely starting handful XX% a our the are to north them quarterly there, on today and satisfied from climb over

one, into work that focus to have our notable despite the but our things got lot expense XXXX of way that, expense quarter-to-quarter, implementation -- discipline. the most to know, coming sizable a a on of being is in base. Our of that through that expense market. and and it bit thank hard you our flat. headwinds revenue to absolutely expectation of it is and a We've with as grace impact lot predict us the around try we our little We've especially And at is hold done relatively to on really for of you giving base make

continue out really about can that very evaluate and where further take on control to help them in expenses to places expenses growth. can eliminate and those being areas it's everything it's where fuel disciplined will we not or reinvest So in facilitate we necessary opportunities and

Awesome.

follow-up. my for Just

wealth that launches you of You Do institutional guys highlighted to the strategies are the talk plans to have you're from some or looking in point? to wealth to the on at shift build working free are this and guys continue space about either you upcoming any that to on. product

direct demand I were interest a -- estate generally strategy, getting debt I'll to of and is you speak that, Look, the Yes. specific because real difficult. them just should for about expect can lending, we how distressed and and think seeing The more more lot And channels. then factor we going be of that strategies, in private about or the forward. wealth should the credit and market, we that position those whether they're talking into

be isn't U.S. just and clear, this Asia And the just Europe in in as to well. Pacific It's

for more have time we one question. Operator,

Cyprys with Okay. And Morgan from Michael our question last Stanley. comes

take maybe guys look And on steps Just on in greater to steps next base expenses. over elaborate expense variable additional the a years? of taking was evolve? hoping follow-up to you the couple operational I the of of efficiency could is business, you might some how you the the nature question drive are

should XX%. sort around was think do to say, expenses expenses And if know expenses? things, up, how flat about the if flattish in I sensitivity markets we markets that adjusted on for think 'XX? of assuming of we impact about markets up How are the you are guided but

about reasonable expense being I revenue. about think would is in say, and relationship what Mike. about base potential variable a still X/X you Thanks, relationship our the as think the to expectation growth

start some as of seen made that, revenue It our it of some pressure. real expense the is that's difficult would base element I because fixed. with we've has So there certainly,

think out climb relationship perspective, a starting But reasonable I expectation. a think from still we I revenue the anticipate to X/X is as

what's so of of streamlining, what we do it granular margins done just evaluate to which will mean, to is will can how continue everywhere. evaluate in expense we to what perhaps to our done the been going level costs said, some what that of done the continuation our we I a and terms lot I way where much base where really we -- unlock We're on it's and future. and a of at at doesn't some in and look, need of think looking we've are about continue a In past be

operating on have how to to do work like of with and I it We years rationalization will to close a That we it's on thinking be our of our call And about some year relates think many as to the would that it you to a and that want on really there. to [indiscernible] about some space. we usual a now. and ago facilities multiyear Andrew, -- been focused continue almost going how expect more dent we I'd of streamline continue. out started thoughts than elements make us that broader would like really business, lot that's really that. I kind effort office things if that, But do say of mean that, takes maybe and in, holistically you

we as go we of were impactful in things forward believe Yes. Look, efforts And question. XXXX, some for bear Mike, the that did that we the the here. fruit most thanks simplification will

the investment bringing simplified the was investment platform match then operational platform allowing and distribution more marketing enterprise elements think to product areas of I against and much areas, our the together off and areas, goal. and a

needed side, the how at strategies enhancement businesses I it and at the we think and bring -- some platform us the scale scale not to side way started and needed, quality opportunity also investments et things investment areas the in or think cetera. an that from we quality and those money run but disciplines, the gives where where those from margins to about to enhancements together make is

helps organization those in ways. simplified the So us

So maybe just closing. to wrap up in here

improve me clients the hopefully, outcomes. And the a them and globe clients market this from with hearing and portfolio I around across dynamics As well our range scale, this really tell, believe when past performance help well as to even the as we we positioned directly meeting had should to are sentiment year the navigate translate many subsequent of feel can that profitability. we of impact that expect. of enter of improves, and to assured greater we XXXX, changes the and we as market evolving you their pleasure positioned

our our And smooth their clients finally, I'd to future my and they're meet to like focused efforts XXXX, around and needs, transition our anticipate, the thank understand team, evolving shareholders their for leadership world, of and ability Invesco. colleagues of Board Directors I'm work for year. executive the on support truly the the to done And given during we're client the strengthen that a we've excited our for in

in look additional of forward for all continue So your Thank to I want and and reach today. to Relations appreciate team thank questions, soon. Please everyone again we for speaking Investor joining to our the you. interest Invesco call any to out

that and you, Thank conference. today's concludes

all may time. this at You disconnect