Invesco Ltd

Thank you for standing by, and welcome to Invesco's fourth quarter earnings conference call. All participants will be on a listen-only mode until the question-and-answer session. At that time, to ask a question, please 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 Greg Ketron, Invesco's head of investor relations. Thank you. You may begin.

All right, thanks, Operator, and to all of you joining us today. In addition to the press release, we have provided a presentation that covers the topics we plan to address on the call 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. Andrew Schlossberg, President and CEO, and Allison Dukes, Chief Financial Officer, will present our results this morning, and then we'll open up the call for questions.

I'll now turn the call over to Andrew. Thanks, Greg, and hello, everyone, and I'm pleased to be speaking with you today. In a reversal from the third quarter, overall market sentiment in the fourth quarter turned more constructive as investors began to gain confidence, putting money back to work in the last several weeks of the calendar year. Equities and fixed income were both beneficiaries of a growing belief that central banks would cut rates sooner in 2024. The S&P was the best performing major equity index, and while outside the U.S. there was solid market growth in Europe, while China continued to lag. Fixed income markets performed well, led by government bonds as expectations for tightening interest rates earlier in 2024 prevailed. The market volatility and shifting macro trends exhibited this past quarter strengthened our conviction in the areas we focused on throughout 2023, continuing to reposition Invesco to perform through various market cycles and in front of the rapid evolution underway in our industry. As discussed on previous calls, we continue to streamline and simplify the company for the benefits of our clients, colleagues, and shareholders. The focus of these efforts is to further emphasize long-term investment quality, strengthen our diverse product offering, and build on our value proposition that uniquely meets a broad range of client needs around the world. We are also tightening our financial discipline, which will further enable us to allocate resources to drive innovation and acceleration for the benefits of clients. We're going to continue to leverage our scale to more effectively invest in profitable growth and further strengthen a culture that attracts and retains the top talent in our industry. While our work in each of these areas continues, we are making good progress and I'm appreciative of the client focus and dedication of my Invesco colleagues around the world. Our results, which are highlighted on slide three of the presentation, summarize many of these external and internal factors at play. During the quarter, we continued to benefit from growing client demand and assets beginning to move off the sidelines. In the fourth quarter, we delivered $6.7 billion in net long-term inflows, which is a testament to our advantageous position with deep client relationships, strong geographic mix, and a broad suite of in-demand solutions. While organic flow growth and improving sediment drove asset levels higher, most of the gains occurred later in the quarter, limiting the revenue impact in the fourth quarter, but increasing AUM nearly 7% from September 30 levels. Several factors contributed to our strong organic flow growth in the fourth quarter. Most notably, demand for our ETFs and our SMAs continued to drive market share gains in these important product platforms. During the quarter, we achieved $14 billion in positive flows in our ETF factor and index capabilities globally and hit a record high of $634 billion in AUM. We also produced our 13th consecutive quarter of positive flow growth in SMAs as we continue to see strong demand for custom tax-optimized solutions in the U.S. wealth management channel in particular. The second set of quarterly organic growth drivers were the return to positive flows in two of our most critical growth areas, our China business, as well as the broader Asia Pacific region, and private markets alternatives. While overall sentiment in China remained relatively weak, our well-established position in the country drove positive organic growth in the fourth quarter. The majority of the flow growth came from the launch of seven new products, which were augmented by equity product sales in existing capabilities. Strong demand for these new products could signal a more constructive 2024 in China. Long term, we remain optimistic about this market and our unique leadership position within it. We continue to believe that the Chinese asset management industry will grow and mature in the coming years with the development of the local retirement and capital market systems in the world's second largest economy. In private markets, we generated net long-term inflows led by a stabilization and modest inflow into direct real estate and inflows to credit strategies, notably bank loans, which include CLOs. We have over $6 billion in dry powder to capitalize on opportunities emerging from the market dislocation of the last several quarters, but we will need greater market clarity before we begin to see significant growth. Shifting to fixed income, which is a key area of strength for Invesco, we continue to see steady ongoing growth, having recorded positive inflows in 19 of the past 20 quarters. Leading contributors in the fourth quarter included investment grade, custom SMAs, as well as municipal bond strategies. As investors gain greater clarity on inflation and central bank interest rate policy, we expect clients to move out of cash and extend the duration profiles of their fixed income allocations into a wider range of strategies. As previously highlighted, fixed income is one of our absolute strengths at Invesco, and we remain focused on ensuring we're well positioned to capture an outsized share of this ongoing reallocation. Finally, pressure on active equity flows continued in the fourth quarter for both the industry and for Invesco. We continue to emphasize investment quality, product differentiation, and client engagement to ensure we remain a leading provider in this space, with a focus on our in-demand capabilities where we can gain market share. Despite the continued headwinds, we have seen some moderation in certain areas of active equity flows, particularly in global, international, and emerging market segments. Our net outflows into these important strategies moderated during 2023 to $1 to $2 billion a quarter, significantly lower than what we experienced in 2022. These early signs of reversal have been led by our global equity and income strategy, which achieved top retail selling status in Japan and delivered an incremental $1.4 billion of net inflows in the fourth quarter. While we are cautiously optimistic about market conditions for 2024, we remain prepared to meet client and shareholder expectations across a range of scenarios. We have the breadth of capabilities, the discipline to drive performance, as well as the organizational structure and focus to ensure we are well positioned to meet evolving client demands. As market sentiment improves, this should translate to even greater scale, performance, and improved profitability. With that, I'm going to turn the call over to Allison for a closer look at our results, and I look forward to your questions.