Invesco Profit Rises 34% as Deposits Help Increase AssetsChristopher Condon
Invesco Ltd., owner of the Invesco, Perpetual and PowerShares funds, said third-quarter profit rose 34 percent as clients deposited money and a stock-market rally lifted assets.
Net income increased to $228.1 million, or 51 cents a share, from $170.6 million, or 38 cents, a year earlier, Atlanta-based Invesco said today in a statement. Excluding certain items, earnings of 55 cents a share beat the average estimate of 52 cents in a Bloomberg survey of 20 analysts.
Chief Executive Officer Martin Flanagan, 53, has invested in distribution outside the U.S. and made acquisitions to diversify the mix of products and client base. That helped shield the firm as investors pulled $14 billion from the nation’s mutual funds in the third quarter, driven by a flight from bonds, according to estimates from the Investment Company Institute. Invesco attracted a net $9.1 billion in the quarter, and gathered another $3 billion in October, Chief Financial Officer Loren Starr said today in a telephone interview.
Client deposits were “better than expected in the quarter as active equity flows continue to gather momentum,” Daniel Fannon, an analyst at Jefferies & Co. in San Francisco, wrote today in a note to clients.
Invesco rose 3.2 percent to $33.97 at 10:15 a.m. in New York. The shares had risen 26 percent through yesterday, compared with a 36 percent gain by Standard & Poor’s 20-company index for asset managers and custody banks.
Excluding money-market funds, Invesco gathered $5.8 billion in new client money in the quarter, including $4.8 billion to actively managed products. Equity investments took in $4.6 billion, while alternatives led by bank loan and real estate products attracted $1.4 billion. Bond products lost $1.1 billion to withdrawals.
“It was a very strong quarter, and we think the trends are still in place for increasing margins,” Invesco’s Starr said today.
Revenue in the third quarter climbed 16 percent to $1.17 billion, driven by an equivalent rise in investment management fees. Expenses rose at a slower pace, increasing 10 percent to $886 million, as employee compensation rose 4.8 percent.
Invesco’s assets increased 5.7 percent in the quarter to $745.5 billion and 12 percent in the year ended Sept. 30. The MSCI ACWI Index of global stocks rose 7.4 percent in the quarter and 15 percent in the year through Sept. 30.
Invesco’s board of directors authorized management to repurchase $1.5 billion of additional shares with no expiration date. The company didn’t repurchase any shares in the third quarter.
Assets under management exclude money run 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 expected to complete the deal in the second half of 2013.
Invesco may see client defections next year with the departure of 25-year veteran fund manager Neil Woodford, Kim said. The company said Oct. 15 that Woodford, 53, who oversees the U.K.’s largest equity fund, will leave its Invesco Perpetual unit in London on April 29 to set up his own company.
Woodford oversees about 33 billion pounds ($53 billion), including the 14 billion pound Invesco Perpetual High Income Fund. The fund has returned 14 percent annually in the past three years, outperforming 76 percent of competitors.
BlackRock Inc., the world’s largest asset manager, said Oct. 16 its third-quarter net income rose 14 percent to $730 million. Investors deposited a net $25 billion, driven by flows to equity exchange-traded funds.
T. Rowe Price Group Inc. said Oct. 24 its third-quarter net income rose 9 percent to $267.7 million after clients withdrew a net $7.4 billion, marking the second straight quarter of redemptions for the Baltimore-based company.