Invesco Profit Rises 32% as Assets Weather June RedemptionsChristopher Condon
Invesco Ltd., owner of the Invesco and PowerShares funds, said second-quarter profit rose 32 percent as equity market gains boosted assets and the fees charged for overseeing them.
Net income increased to $202.6 million, or 45 cents a share, from $153.9 million, or 34 cents, a year earlier, Atlanta-based Invesco said today in a statement. Excluding certain items, adjusted earnings of 50 cents a share missed the average estimate of 51 cents in a Bloomberg survey of 21 analysts.
Investors fled long-term U.S. mutual funds after Federal Reserve Chairman Ben S. Bernanke said June 19 that the central bank may begin tapering its bond buying program this year and end it in mid-2014. Client redemptions in June largely offset deposits through most of the second quarter at Invesco, Chief Financial Officer Loren M. Starr said today in a telephone interview. Investors deposited a net $1.4 billion with the firm in the three months ended June 30, compared with $18.7 billion in the prior quarter.
“June saw the taper tantrum and we did see that being a particularly bad month,” Starr said. “But in July there was a renewed interest coming back into investment products, and into equities in particular.”
Invesco shares fell 0.2 percent to close at $32.19 in New York. The shares rose 24 percent this year through yesterday, compared with a 29 percent gain by Standard & Poor’s 20-company index for asset managers and custody banks.
Invesco’s Chief Executive Officer Martin L. Flanagan said today during a conference call with analysts that “every region” of the company is experiencing net investor deposits this month.
“In my years at the company, I don’t remember that happening to that degree before,” Flanagan said today.
Invesco’s assets climbed 12 percent in the 12 months ended June 30 to $705.6 billion, according to preliminary figures reported by the company on July 10. The Standard & Poor’s 500 Index advanced 18 percent in the same period, and the MSCI All Country World Index rose 14 percent. Invesco’s investor deposits in the quarter included $1.3 billion in new cash into index-based products.
“Invesco’s flow prospects remain healthy reflecting favorable asset positioning, strong investment performance track records and a broadening distribution footprint,” Michael Kim, an analyst with Sandler O’Neill & Partners LP in New York, wrote in a research note before the results were released.
Assets under management excludes money managed by Atlantic Trust Private Wealth Management, the unit Invesco agreed in April to sell to Canadian Imperial Bank of Commerce, Canada’s fifth-largest bank, for $210 million. Atlantic Trust managed $21.7 billion as of June 30. The companies said at the time they expect to complete the deal in the second half of 2013.
Higher assets helped boost revenue 16 percent to $1.14 billion, driven by an 18 percent rise in investment-management fees. Expenses increased 10 percent to $861.6 million as employee compensation jumped 12 percent.
The company repurchased $75.5 million of common shares in the second quarter at an average price of $34.24.
BlackRock Inc., the world’s largest asset manager, said July 18 its second-quarter net income rose 32 percent to $729 million as investors deposited a net $11.9 billion in the New York-based company’s funds, driven by multiasset products and index funds. T. Rowe Price Group Inc. missed analysts’ estimates July 24 after institutional clients led a record $8 billion in withdrawals in the quarter. The Baltimore-based money manager said net income increased 20 percent to $245.8 million.