Invesco Ltd., owner of the Invesco, Van Kampen and PowerShares funds, said first-quarter profit rose 15 percent as record client deposits lifted assets. The shares gained the most in 18 months.
Net income increased to $222.2 million, or 49 cents a share, from $193.9 million, or 43 cents, a year earlier, Atlanta-based Invesco said today. Excluding certain items, earnings of 52 cents a share beat the 47 cents-a-share average estimate of 20 analysts in a Bloomberg survey.
Invesco took in a net $19.2 billion in the past three months, the most ever for a single quarter, including $8.4 billion into its active funds. Chief Executive Officer Martin Flanagan, who has used acquisitions to broaden Invesco’s offerings beyond traditional stock and bond mutual funds, said retail investors started to move out of lower-yielding assets and into equity funds in the first quarter.
“You did see what I would classify as the early stages of a rotation into equities,” Flanagan said during a conference call with analysts. “But I would imagine retail investors would be cautious into the fall.”
Invesco rose 6.8 percent to $31.74 in New York, the most since October 2011. The stock has advanced 22 percent this year, compared with a 19 percent gain by Standard & Poor’s 20-company index for asset managers and custody banks.
Chief Financial Officer Loren Starr said the firm’s asset-allocation products took in about one-third of first-quarter deposits, while fixed-income products accounted for another third.
“We certainly don’t expect to see the same pace of inflows continuing in the second quarter,” he said in an interview.
Revenue increased 10 percent to $1.14 billion as the higher level of assets boosted investment-management fees by 10 percent. Expenses rose 8 percent to $868.4 million after employee compensation jumped 12 percent.
Invesco’s assets climbed 6 percent in the three months ended March 31 to $729.3 billion, according to preliminary figures reported by the company on April 9, matching the rally in global stocks as measured by the MSCI AC World Index.
“Net revenues were well above expectations, with performance fees being the primary difference,” Daniel T. Fannon, a San Francisco-based analyst at Jefferies & Co., said in a note today to clients.
Sixty-one percent of Invesco’s long-term mutual funds rank in the top half of their peer groups for returns over the last three years, according to research firm Morningstar Inc.
Invesco increased its quarterly dividend 30 percent to 22.5 cents a share. The firm raised the dividend by 41 percent in April 2012.
Starr said returning capital would continue as a “consistent theme” for Invesco’s management.
Legg Mason Inc., the Baltimore-based money manager that appointed a new chief executive office in February, said today that fiscal fourth-quarter profit fell 62 percent as client withdrawals from its stock and bond funds continued.
BlackRock Inc., the world’s largest asset manager, said April 16 its first-quarter net income rose 10 percent as the New York-based company attracted $40.5 billion in net deposits. T. Rowe Price Group Inc., based in Baltimore, on April 24 reported first-quarter revenue that increased 22 percent, helped by the best mutual-fund deposits in six years.
The firm said earlier this month it had agreed to sell its Atlantic Trust Private Wealth Management unit to Canadian Imperial Bank of Commerce, Canada’s fifth-largest bank, for $210 million. Atlantic Trust manages about $20 billion for clients in 12 U.S. cities. The companies said they expect to complete the deal in the second half of 2013.
The sale will reduce Invesco’s annual earnings by about 5 cents a share, Starr said in an April 11 conference call with analysts. The company intends to use the money raised to repurchase its own stock, offsetting the dilution of earnings by 3 cents a share, Starr said.