Invesco Ltd

Welcome to Invesco's third quarter earnings conference call. All participants will be in a listen-only mode until the question and answer session. At that time, to ask a question, press star 1. This call will last one hour. To allow more participants to ask questions, one question and a follow-up can be submitted per participant. As a reminder, today's call is being recorded. Now I'd like to turn the call over to Ged Ketron, Invesco's head of investor relations. Thank you. You may begin.

Thanks, Operator, and to all of you joining us on Invesco's quarterly earnings call. In addition to our press release, we have provided a presentation that covers the topics we plan to address today. The press release and presentation are available on our website, Invesco.com. This information can be found by going to the investor relations section of the website. Our presentation today will include forward-looking statements and certain non-GAAP financial measures. Please review the disclosures on slide two of the presentation regarding these statements and measures, as well as the appendix for the appropriate reconciliations to GAAP. Finally, Invesco is not responsible for and does not edit nor guarantee the accuracy of our earnings teleconference transcripts provided by third parties. The only authorized webcasts are located on our website. Marty Flanagan, President and Chief Executive Officer, and Allison Dukes, Chief Financial Officer, will present our results this morning. After we complete the presentation, we'll open up the call for questions. Now I'll turn the call over to Marty.

Great. Thank you, Greg. And those so inclined to follow along, I'll start on slide three on the highlight page. So the challenging industry backdrop continued in the third quarter as most major equity and bond market indices move lower. Investors continue to behave cautiously, seeking risk off trades that impact industry flows as well as the level of and mix of asset center management. The dynamic environment we are in favors money managers that have a broad, diversified range of capabilities that meet client demands in this market. Invesco continues to prove to be one of the few global investment managers that can do that with net flows, momentum, and market leadership positions in areas of high client demand. Despite historic market declines, the firm generated net long-term inflows this quarter in active fixed income, greater China, and our institutional channel. All three of these areas also garnered net long-term inflows on a year-to-date basis, along with our global ETF business and the private market's capabilities. I'll begin with our active fixed income capabilities, which has been a steady source of growth this year and is a testament to the diversity of the investment platform. The asset class generated net inflows of $3.7 billion in the quarter, with strong demand from clients in Asia Pacific. We managed nearly $380 billion of active fixed income across a full spectrum of investment offerings, vehicles, serving retail clients as some of the world's largest institutions. Our greater China business delivered $2.1 billion of net long-term inflows this quarter. Invesco Great Wall, our China joint venture, has fueled our growth, and we continue to successfully launch new products, most notably in fixed income. We've grown consistently in the last several quarters despite the recent difficulties faced by the Chinese economy as a result of our strong local partner and our longstanding reputation as one of the top global investment managers in China. Our leading position in China is the result of many years of investment and hard work. As China and the global economy eventually recover, we expect our growth to accelerate in the fastest growing market in our industry. Our institutional channel generated net inflows for the 12th consecutive quarter with $3.9 billion led by clients in Asia Pacific. The business has proven resilient throughout COVID-19 pandemic and the market downturn we are experiencing in 2022. Growth in the institutional business is a result of investment in our distribution team, the range of capabilities we bring to market, and the build-out of our solutions capability over the last several years, which is increasingly becoming the differentiator for Invesco. Despite volatility and the risk-off sentiment impacting global markets, We continue to win new mandates, and our pipeline remains solid. We look forward to continuing our partnership with many of the world's leading organizations to meet the challenges of this uncertain time. While net inflows into ETFs were relatively flat in the third quarter, demand for ETFs slowed industry-wide. Despite the slowdown, we maintain the leading position in ETFs, and we expect to see growth rebound as market volatility eases. On a year-to-date basis, we have generated strong organic growth and gained market share. We have continued investing in our private markets capability, and we have experienced net outflows in the third quarter. Over the past year, we have generated organic growth against a very volatile market, demonstrating the strength of our alternative platforms. Key to our alternative strategy is our strategic relationship with Mass Mutual, which is meaningful and continues to strengthen. In addition to managing over $10 billion in broker-dealer variable annuity and self-advised assets prior to this decline, We have over $3 billion in other investment relationships with MassMutual. This includes nearly $2.5 billion in commitments to various Invesco alternative strategies. The commitment for MassMutual has been growing over time, and we work on various strategies, including $400 million committed to our INRI product. Having a partner like MassMutual as an investor adds significant reputational impact to our third-party investors. Considering the combined investment we have in seed and co-investment vehicles, which totals $900 million, along with $2.5 billion in commitment for MassMutual and various alternative strategies, is a compelling partnership that enables us to bring products to market more quickly and brings with it the strong reputational backing of a world-class financial institution. While growth continues in key capability areas I mentioned, the firm experienced net long-term outflows of $7.7 billion during the quarter, Equity strategies have been under pressure industry-wide. We're the largest contributor to net outflows, totaling $7.4 billion for the quarter. Client demand for emerging markets remained subdued, and our developing markets fund had $2.8 billion in net outflows in the third quarter. While near-term headwinds persist, we have confidence that the equity global capabilities will be a driver of growth in the future when global markets recover in client demand for this important asset class returns. As we discussed last quarter, significant progress has been made building a stronger balance sheet position to help us weather this market downturn. We ended the quarter with a zero balance on our over and total debt outstanding is at the lowest level in years. Our cash balance increased over a billion dollars and we maintained the flexibility we need to sustain investment in key growth areas. Last quarter, we mentioned that we met our target of $200 million in annual cost savings from our strategic evaluation. As market volatility continues, the need to maintain a disciplined approach to expense management is paramount. We are reexamining all aspects of our discretionary spending relative to the environment we are in, and we will be focusing on near-term hiring on critical growth initiatives. We continue to thoughtfully balance managing through near-term market headwinds while investing for long-term growth. As always, we remain focused on helping clients meet their investment objectives, investing in areas of strategic importance, scaling our operating platform, and efficiently allocating resources. By executing a long-term strategy, I'm confident Invesco will maintain its position as one of the leading firms in our industry while delivering compelling return to shareholders. With that, I'll turn it over to Allison.