Invesco at Barclays Conference: Strategic Shifts and Growth Prospects

On Tuesday, 09 September 2025, Invesco (NYSE:IVZ) presented at the Barclays 23rd Annual Global Financial Services Conference, showcasing robust growth and strategic shifts. The company reported strong net positive flows, driven by demand in ETFs and global equities, while also addressing challenges such as divesting non-core operations and navigating evolving industry trends.

Key Takeaways

• Invesco reported over $11 billion in net positive flows in August, marking a record month.
• The company is divesting its IntelliFlow business to focus on core operations.
• Strategic partnerships, like the one with Barings, aim to expand Invesco’s reach in alternative credit.
• Invesco is actively expanding its active ETF offerings and exploring blockchain tokenization.
• A focus on international markets, particularly in Asia, is driving significant asset growth.

Financial Results

• August Net Positive Flows: Invesco achieved over $11 billion in net positive flows, a significant milestone.
• IntelliFlow Sale: The divestment is expected to result in a $40 to $45 million loss but will streamline operations.
• Capital Return: The company is buying back $25 million of stock per quarter, with a 2.5% dividend increase announced in April.
• Operating Income and Margins: Operating income rose by 10% in the first half, with margins up 200 basis points from the previous year.

Operational Updates

• Active Equity Performance: Improvement in active equity strategies, with half of the assets now in the top quartile.
• SMA Growth: Separately managed accounts have grown to over $30 billion.
• International Business: Asian and European markets account for 40% of long-term assets.
• Alpha Platform Transition: Transitioning to a hybrid solution, with completion targeted by the end of 2026.
• Barings Partnership: Collaborating to create diversified credit strategies for affluent investors.

Future Outlook

• M&A Strategy: Maintaining a strong balance sheet to support future M&A opportunities.
• QQQ ETF Modernization: Filed a proxy to convert QQQ ETF to an open-end structure, potentially reducing fees.
• Private Assets in 401(k)s: Positioned for opportunities in incorporating private assets into retirement plans.
• AI Utilization: Anticipating AI benefits to enhance efficiency over the coming years.
• Blockchain Tokenization: Exploring opportunities in tokenizing funds and private assets.

Q&A Highlights

• Investor Appetite: Strong volumes since spring, with high demand in ETFs and global equities.
• Capital Priorities: Focused on balanced capital allocation, investing in business growth, and maintaining a strong balance sheet.
• China Markets: Benefiting from economic reforms and increased investor confidence.

Invesco’s strategic focus and operational updates indicate a commitment to growth and innovation. For more detailed insights, refer to the full transcript below.

Full transcript - Barclays 23rd Annual Global Financial Services Conference:

Ben Budish, Analyst, Barclays: All right. Good morning, everyone. Welcome to Day 2 of Barclays Global Financial Services Conference. I’m Ben Budish. I cover the U.S. brokers, asset managers, and exchanges. To kick it off today from Invesco, we’ve got Andrew Schlossberg, President and CEO, and Allison Dukes, CFO. Welcome. Thanks so much for being here.

Andrew Schlossberg, President and CEO, Invesco: Thanks for joining us, Ben.

Ben Budish, Analyst, Barclays: Maybe just to kick it off, can we start with your latest observations in the marketplace? How has investor appetite trended since the heavy volatility we saw earlier in the year? How have flows looked more recently? Your AUM release came out this morning.

Andrew Schlossberg, President and CEO, Invesco: Yeah, you haven’t had time.

Ben Budish, Analyst, Barclays: a brief amount of time, what’s sort of your latest observation?

Andrew Schlossberg, President and CEO, Invesco: Yeah. I mean, going back to the early part of the spring, things were obviously a little tepid and investors were, I think, reacting to a lot of the trade news and things out there. Really, since then, the volumes have been quite strong for Invesco. We did release our assets for August, and we had net positive flows of a little over $11 billion, which is one of the best months we’ve had on record in a long time. That followed other good months since April. For the third quarter to date, we’re flowing more than we did in the whole of the second quarter and approaching what we already did in the first quarter. I think volumes are picking back up.

For us, it’s been a lot of the places where demand has been high: ETFs, separately managed accounts (SMAs), investment-grade fixed income, global equities, especially out in Asia, but in particular, China as well has really come back online. We’re starting to see investors move their capital back into the markets.

Ben Budish, Analyst, Barclays: Great. Maybe looking at a couple of the things you’ve done over the past year or two, the MassMutual preferred redemption, the QQQ fee structure change, just curious from a high level before we kind of dig in a little bit more deeply, how else are you thinking about creating value at Invesco?

Andrew Schlossberg, President and CEO, Invesco: Yeah. A couple of the things you mentioned were really important for us in unlocking value, but I think they’re just indicative of the work that the team’s been doing for the last several years to really tighten the strategy, simplify the business, get focused on creating operating leverage and more flexible. The first one is always and will be delivering good, high-quality investment outcomes, especially in our active equity portfolios. We’ve seen performance improve over the last several quarters. We now have about half of our assets in those active strategies in the top quartile peers, which is up from 25% just a few years ago. We have started to see the flow volume out in Asia and Europe for equity strategies in the positive territory, and we’re working towards getting the same thing in the U.S.

We’re focused on secondarily scaling strategies where there’s high demand and where Invesco has a pretty significant strength. ETFs, separately managed accounts (SMAs), model portfolios, private wealth for private markets, so wealth management for private markets, are all sort of things that are really significantly important for us. The Barings partnership that we formed, the flow volume that we’re seeing in the ETF space, getting our SMAs to over $30 billion are all examples of how we’re doing that. The international markets for us, Invesco’s Asian business and European business are about 40% of our long-term assets, and they’re accounting for about 80% of our really sort of record long-term flows. Those markets are really critical for us. Places like China, India, Japan, the UK are all going through significant demographic changes or wealth changes, and we’re participating there, and we seek to really differentiate.

Our investment operating platform and investing in innovation, we announced that we were going to go to a hybrid solution for our alpha platform, which is going to allow us to finish that project more quickly and really start to unlock the value of it to create. We divested our IntelliFlow business, which we can talk about a little while later, all to focus our energy on next-stage technology. Lastly, just putting up financial returns and strong operating leverage. In the first half, operating income was up 10%, operating margins were up 200 basis points compared to the first half last year. A little long-winded, but just trying to quarter by quarter just put up big events and outcomes like you asked about.

Ben Budish, Analyst, Barclays: You mentioned the IntelliFlow sale. Just curious if you could unpack that one a little bit. What was the rationale there?

You want to go ahead?

Allison Dukes, CFO, Invesco: The rationale was really focused on a continuation of the same theme, which is how do we unlock value for our clients and our shareholders? That comes with needing to be really focused, focused in terms of where we direct our capital, our investments, our time, our energy, really thinking about our core business. IntelliFlow is not entirely core to what we do. They are a market-leading cloud-based practice management software provider to independent financial advisors in the UK, a business that was never entirely strategic to the broader Invesco portfolio of businesses. We announced at the end of last month an agreement with Carlyle to sell IntelliFlow to them for a purchase price of up to $200 million, of which $135 million would be received at closing, which we anticipate in the fourth quarter. The remaining $65 million is in potential future earnouts.

Great opportunity for us to monetize that business, unlock value. Because we have moved it to held for sale in the third quarter, we will be in the third quarter booking a loss on sale of something in the range of $40 to $45 million. That would flow through other gains and losses, below the operating income line items. Because that loss is not a taxable event on a subsidiary in the UK, we do anticipate an effective non-GAAP tax rate for the third quarter to be closer to 29% just due to this discrete item that would be flowing through other gains and losses. The operating results of IntelliFlow won’t actually come out of our results until the fourth quarter after closing. That business is a kind of break-even to operating loss of a couple of million dollars in any given quarter.

The removal of those results will be neutral to modestly accretive to the overall Invesco results. In keeping, again, with the strategy overall, focus, create operating leverage, really look for opportunities to improve our operating margin, really improve the direction of our investments really to our core business. I think it’s a great opportunity. We’re excited to get this one done in the fourth quarter.

Ben Budish, Analyst, Barclays: A lot of helpful details. Maybe just sticking on the topic of capital management. MassMutual, you repurchased $1 billion of the preferred. You’re going to be paying down your term loans over time. What are your capital priorities otherwise? How do you think about appetite and capacity for M&A? What else is sort of top of mind?

Allison Dukes, CFO, Invesco: Our capital priorities remain really balanced, starting first and foremost with investing in the business and really supporting our business, broadly speaking, in terms of product launches and just the ongoing CapEx that we have to modernize our technology and our platforms overall. We’re also highly focused on maintaining a really strong balance sheet. That’s been a real journey, as you know, that we’ve been on for the last few years, and we’re making substantial progress there. Last but not least, returning capital to shareholders. Yes, in May, we did repurchase $1 billion of our preferred that is held by MassMutual. We financed that with term loans of $1 billion. That’s a three-year tenor and a five-year tenor. We have actually already paid. We were able to pay $100 million down in this quarter. We anticipate continuing to pay those term loans down as quickly as we feasibly can.

We have a $500 million senior note that comes due in January, which we intend to redeem as well. We’re really making substantial progress in creating that flexibility in the balance sheet that we’re looking for. There’s a path for us to continue to look at doing more with MassMutual as it relates to the preferred. As we make progress on the leverage ratios, we’re focused there. I think it’s really an opportunity for us to come back at the right time to look at doing more to unlock that preferred, which is really just flexibility. That is the focus in creating more of an all-weather balance sheet than we’ve had in the past. As it relates to returning capital to shareholders, we’ve been buying back $25 million of stock a quarter. We intend to continue that. We announced a 2.5% increase in the dividend back in April.

We’re at about a 60% payout ratio this year. We like where we are there, especially as we think about the opportunities to continue to unlock this capital to reinvest in the business and create flexibility in the balance sheet. As it relates to M&A, I’ll come right back to it. It’s the balance sheet that’s going to give us that flexibility to do what we want to do there. We can talk a little more about this, but we’ve got a lot of opportunities as it relates to partnerships. We think that’s just as productive sometimes as an acquisition can be. Of course, we’ve already entered into an agreement with Barings, which is owned by MassMutual, for a partnership that we previously announced there.

Andrew Schlossberg, President and CEO, Invesco: We continue to have just a number of organic opportunities to reinvest in ourselves, as Allison was saying. There’s still a lot to unlock at Invesco.

Ben Budish, Analyst, Barclays: Right. We’ll certainly come back to the Barings partnership, but maybe some other recent news kind of alluded to earlier. You recently filed to make some fee structure changes to your flagship Invesco QQQ ETF. Can you talk a bit about the background, why now? A management fee for Invesco, lower fees for investors seems like a pretty easy win-win. What are the other maybe remaining hurdles that need to be overcome?

Allison Dukes, CFO, Invesco: Yes. We announced that in July. We did file the official proxy on August 18, I believe, which does contain all of the benefits and the risks and the considerations that I would point you to. It also contains all of the timelines and the path in that solicitation, which is underway right now. In terms of why now, there were a lot of reasons. I think this was a UIT structure that was probably one of the last few and is a very long-dated fund. This was an opportunity to modernize it consistent with the rest of our platform and convert it to an open-end ETF. A lot of the rationale, too, was tied up in the fact that the marketing budget had just become so large that it’s hard to efficiently spend a marketing budget on one single fund that’s approaching $300 million.

It created an opportunity to enter into conversations with all of our stakeholders to look at how we could convert it into an open-end ETF. Very pleased, we were able to reach the stage we’ve reached so far. It does have a two-basis point benefit to the end investor. That solicitation is underway right now. It is one of the most widely held ETFs in the world, so this is no small undertaking. I think as published in the proxy, there is a shareholder meeting that occurs at the end of October. That will be the first available date that we might have any opportunity to see how things are going. More to come there. Very excited. I think, again, in keeping with everything we’ve said, an opportunity to unlock value.

We do anticipate the revenue on that fund will be around a net four-basis point net revenue yield associated with the Invesco QQQ, which does continue to grow. The flows, we often understate those flows because we don’t create revenue on them today, but we look forward to a future opportunity to convert that to revenue.

Ben Budish, Analyst, Barclays: Maybe staying on the subject of ETFs, can you talk about the current lineup of active ETFs? I think as of last quarter, you had 31. What sort of strategies are seeing the greatest success? What does the pipeline look like for more products? High level, how do you think about active asset management here? Does it make sense to kind of clone prior mutual funds, generate new active strategies, come up with new things, funds that use derivatives to generate income? How do you think about the approach?

Andrew Schlossberg, President and CEO, Invesco: Yeah. I mean, we started in the active ETF space almost 10 years ago. Finally, the market really seems to be adopting the premise of bringing together active management and the benefits of an ETF structure. We think it’s going to continue to grow. We’ll continue to expand our lineup, which today is a lot of fixed income active ETFs, some commodities, options income, and over the course of the next year, more so into the equity space.

Invesco, given the size and breadth of our ETF business, which I think you’re probably all familiar with, and its heritage being really oriented around alternative weighted beta, a more sort of active approach to how to bring ETF to market, and the size and scale of our active business, as well as sort of the well-traveled path of reaching wealth advisors, I mean, we’re primed to be one of the real leaders in the active ETF space. With regard to how one will get there, whether it’s probably not conversions for us, it’s probably more, and I’d say less clones and more new adoptions of active into ETFs. Many of us have relief that we’re seeking to get on share class of mutual funds and ETF share class.

I think it’s really going to be for us just creating the optimal ETF lineup around active and not trying to spend too much time thinking about conversions and clones and share classes. It is going to be a journey for active ETFs. You’re seeing the pace of it move forward, but it’s still for us $15 billion, $20 billion of $900 billion of ETF-related assets. There’s a lot of room to grow.

Ben Budish, Analyst, Barclays: Yes. Speaking of active, ETFs being increasingly adopted, but active equity mutual funds have been across the industry trending the opposite direction for some time. You guys recently announced some management consolidation here among some other changes. What is Invesco doing to try to buck the trend? Maybe more broadly, Andrew, what are your thoughts on sort of the future of active versus passive?

Andrew Schlossberg, President and CEO, Invesco: Yeah. I mean, look, the active and passive are going to coexist. I think the definition of active is going to continue to evolve. I think its relation to the mutual fund needs to be disconnected. This notion of active equals mutual fund or mutual fund equals active, I think, is probably the wrong way to think about it going forward. Active will get brought forward in public markets, but also private markets. Those are all active strategies as well. It’ll start to, beyond just ETFs, find its way into separately managed accounts (SMAs), model portfolios, all kinds of custom solutions where you’re able to bring active management. We’re working and building all of those areas. I wouldn’t overemphasize the mutual fund. We’re very bullish on the future of active. The bar has gotten raised, as you all know.

No longer are the days where being average and active was OK. Hence my comments before about you really need to be in those top quartile, top decile. That’s what we’re striving to do with all of our investment strategies. We did announce earlier in the spring some consolidations toward that effort. We brought all of our global, international, emerging market equity teams across now into a single platform. We did the same with our private markets between real estate and alternative credit. We had done the same thing a few years ago with global fixed income. Having a scaled platform where you can share investment ideas across like investment strategies, where the top talent can really rise and we can promote that top talent, and where you can really get the scale out of the investment support and the operating platform to drive investment quality.

We think the future for active has very much a home in people’s portfolio, but you really have to be outstanding.

Ben Budish, Analyst, Barclays: That’s a good segue into the private side, which you mentioned. Maybe before we talk about Barings, I’m curious on the real estate side. In your wealth channel, you’ve been showing some solid inflows to Increv. I’m curious, what would you say is going well here? It seems like most non-traded REITs in particular are not having that sort of kind of success. What’s going well for Invesco? Maybe can you give us an update on where you are in terms of distribution, how many warehouse platforms, where else are you selling the product?

Andrew Schlossberg, President and CEO, Invesco: Yeah.

Allison Dukes, CFO, Invesco: We’re seeing strong demand for real estate credit. I think relative to non-traded REITs, this is a bit of an alternative solution, and we’ve seen really strong demand there. We launched Increv just about two years ago. It’s at $4 billion in AUM today, so really nice demand, good growth in a relatively short amount of time. I think it provides a pretty attractive asset class for investors. As some of the, I would say, rhetoric around real estate and real estate credit in particular continues to improve, I think it bodes well for the future of Increv. One of the things we’re seeing, too, is just strong cross-sell opportunity between our fixed income separately managed accounts (SMAs) and Increv. I think you’ve got a very similar target, high net worth, ultra high net worth, end clients there, so we’re seeing pretty good cross-sell opportunities between those.

It is today on over 20 platforms, most of the warehouses is what I would say, and I think continuing to grow. We just were awarded another very significant platform recently. We’re very optimistic about the future of Increv and the ability to continue to get that one placed on a number of platforms.

Andrew Schlossberg, President and CEO, Invesco: Yeah. I mean, our private markets complex is about $130 billion between real assets and alternative credit. Our wealth management team and profile in the U.S. market, we’re top 10. We’ve been investing behind bringing private markets to wealth over the last several years. We’ve added specialists onto the team, all sorts of thought leadership capabilities, and really investing behind the wealth platforms and making it easier for these end investors to get into these strategies and for advisors to really understand them. Everything Allison described has been sort of a multi-year journey starting to pay off now. You can kind of see the setup for the next set of strategies that we can bring behind Increv.

Ben Budish, Analyst, Barclays: We’ve mentioned the Barings partnership in passing a few times. Maybe let’s talk about that one a little bit. That was announced earlier this year. Talk about the arrangement. What does each party bring to the table? What are your sort of 12, 18-month expectations? How are you thinking about potential future product creation opportunities?

Andrew Schlossberg, President and CEO, Invesco: Yeah. Just to remind everybody, we announced this alongside the restructuring of the preferred and the intention to establish a few products of which MassMutual is going to put its capital, its general account capital behind these strategies. The idea was to take the strengths of Invesco’s alternative credit and real asset capabilities with the strengths of Barings on the credit side. In particular, Barings bringing to the table upper middle market direct lending, bringing some of their loan capabilities, bringing some of their specialty finance capabilities alongside what we do in the lower end of direct lending distress and our loan capabilities alongside real estate lending. Being able to bring a diversified credit strategy wrapped in a vehicle that will make sense for mass affluent, high net worth into the wealth space.

The arrangement is essentially Barings as a piece of the management of the funds, us a piece of the management of the funds, us distributing the funds to market MassMutual’s capital into the strategies. What was important for us is when we announced it in April that we get to market as quick as possible. There are a lot of partnerships being announced. I’d say watch what happens rather than the headline of them getting announced. We will get this to market relatively quickly. We’re just in the throes of that right now. That’ll be the first of two products along the same sort of theme. We’re really excited about it. We really think it’s kind of a perfect connection. I think we have a roadmap now for doing more things like this going forward.

Ben Budish, Analyst, Barclays: Right. Maybe one last question on the private markets topic. Private asset utilization in the 401(k) channel is one of the hot topics recently. How do you see Invesco positioned for that opportunity?

Andrew Schlossberg, President and CEO, Invesco: Yeah. I mean, it’s sort of like what I was saying before about ETFs. The scale and size of the private markets franchise that we have today, which has largely been placed with defined benefit plans, so institutions, sovereign wealth, endowment funds. We have a deep heritage in the defined contribution space. This executive order that came out, I think that’s excited everybody and should, starts to move down a path where plan sponsors can be in a better position to adopt these private assets into target date funds, probably most likely. There’s a lot between now and then. I think litigation risk will be top of mind for plan sponsors. We’ll see how the executive order turns into either legislation or actual progress. You’ve got to get the plan sponsors to adopt it. I guess a slightly long-winded way of saying I think Invesco is incredibly well positioned.

We already have private assets in defined contribution plans in both the U.S. and in the UK. I think the notion that this is all going to turn like a switch for the industry, I think, is overstated. It will be a little bit of a slow development. Invesco, I mean, we couldn’t be, I don’t think we couldn’t be better positioned with all the tools that we need to do it. It’ll be kind of like the wealth space. You’ll see preparation, preparation, and then things will start to move.

Ben Budish, Analyst, Barclays: Right. Maybe switching topics, your international business. In Q2 and earlier this morning, you called out positive flows outside the U.S. in Q2, EMEA, and APAC. Maybe just unpack that a little bit. What’s going well there? How do you see the broader trend playing out?

Andrew Schlossberg, President and CEO, Invesco: Yeah. I mean, I was mentioning it earlier. I think it’s not as well understood, I don’t think, about Invesco as it should be, that 40% of the long-term assets come from clients outside of North America. Just to repeat the fact, over this whole year, through the results in August, about 80% of the long-term net flows are coming from outside of North America. The strength of those businesses all through Asia and in Europe are incredibly meaningful. I think we owe the success to being in those markets for decades. We’ve been in China in our JV for over 20 years. We’ve been in Japan for 30 years. We’ve been in the UK for 50 years. We’re really committed on the ground with locals.

We run those businesses in a sort of domestic way around reaching clients and around putting together portfolios, but we use our global size and scale to bring investment capabilities produced all over the world. Those markets, some of them are wholly domestic, like China, and others are very international, like Japan. I think our commitment and our focus, you’re really starting to see that move. All three of our regions, including America, are all in positive flows. The diversity and the offset to volatility that’s in the markets, you can see the strength of Invesco’s global profile, I think, showing right now.

Ben Budish, Analyst, Barclays: What is the appetite like for domestic versus international assets? Earlier in the year, that was a big theme coming out of a lot of the new tariff news. There is going to be a shift in preference for local in Europe and Asia. Are we still seeing that? Has that played out?

Andrew Schlossberg, President and CEO, Invesco: It really hasn’t played out. I think the notion of U.S. exceptionalism dimming, we haven’t fully seen it, right? Where you have seen decisions where people are redeploying their portfolios, I wouldn’t say it’s for nationalistic purposes. People are diversifying, taking advantage of valuation disconnects and some fundamental change. It’s really not, we have not seen this sort of drive back to everybody kind of hunkering down in their domestic market. We have seen things broaden out. We are starting to see portfolios not just be focused on U.S. large-cap tech or short-duration fixed income. That’s been more of the trend we’ve seen, a little more broadening out, which is so needed for investor portfolios.

Ben Budish, Analyst, Barclays: Got it. Maybe moving to China and APAC, starting with China, can you give us an update there? It looked like the asset levels looked pretty solid in August. You mentioned before you’re seeing a kind of a pickup in demand. Maybe kind of an update on the latest there.

Andrew Schlossberg, President and CEO, Invesco: Yeah. Just a reminder for everybody, our Chinese business is domestic for domestic. It truly is very isolated on that market. How goes the Chinese economy, the Chinese development of its capital markets, its retirement system? Those are the factors that will drive the success of our business. As you said, we’re reaching new high watermarks for assets under management. Flows have been very strong this year in China and successively strong throughout the year. Those flows have been focused on, earlier in the year, fixed income. They’ve continued to be heavily fixed income skewed, but moving into some balanced assets as well.

It feels like the reforms that the Chinese government has put in place for its domestic economy, its emphasis on capital markets, and the confidence in capital markets, the diversification away from real assets and real estate, which was a challenge for them about 18 months ago, are having an effect. I think maybe some of the tensions between the U.S. and China, which are still high, are feeling a little more relaxed in certain places. It has been good progress in China. It’s a really differentiating piece of Invesco. I think, again, our being there for 20-plus years and the success we’ve had in building what’s regarded as one of the best asset managers there, we’re seeing a return to the positive.

Ben Budish, Analyst, Barclays: Right. Can you talk a bit about some of your other key Asian markets? You mentioned Japan. You’ve been there a very long time. Same kind of question: What are the key drivers in that country? What does the local appetite look like? What’s the latest?

Andrew Schlossberg, President and CEO, Invesco: Yeah. It’s been remarkable. It was forever, when is Japan going to start going? When are they going to actually have some inflation, which was always funny when I’d go there and they’d talk about how excited they were for inflation. It was the only place that that happened. We went from really about $30 billion in assets to $85 billion in assets over the last five years. It’s been a really good growth for us, and it’s come in the form of global equities. Investors in Japan, big owners of equity assets outside of Japan, and we have a very strong global equity strategy. Also, investment-grade fixed income with institutions. I think one of the catalysts for a lot of this development, in addition to us having the right products in the market at the right time, has been the government’s focus on asset management.

Their desire to have a much stronger capital market system, much stronger company management around equities, and their desire to really advance ownership. The government is just very focused on those reforms. That just means the flywheel of capital flow for a company like ours that’s been there for 30 years is really starting to be recognized.

Ben Budish, Analyst, Barclays: Maybe pivoting to fixed income. Fed cuts now seemingly increasingly likely and likely just around the corner. What’s your latest taking on how investor appetite for fixed income may evolve?

Andrew Schlossberg, President and CEO, Invesco: Hopefully, going out the duration curve a little bit, we’re starting to see that a bit more. We have a $650 billion fixed income platform that goes passive to active, public to private, all up that duration spectrum. We’re starting to see a little more flow come in beyond short term. I think that’s been the anticipation. We’re seeing it come in ETFs on the passive side, and we’re seeing it come in separately managed accounts (SMAs) on the active side. Over time, this notion of public and private coming together in fixed income, we’re well positioned for that trend if it develops. I think we’re cautiously optimistic. Maybe we’ve got a little more central bank clarity now, or rate clarity, I should say. I think it’ll bode well for us. We’ve been in positive flows every quarter. It’s not a flow thing for us.

I think it’s just a diversification of those flows into maybe some higher yielding, higher fee strategies.

Ben Budish, Analyst, Barclays: I was going to ask Allison if there’s any color you have on the P&L implications of movement from shorter duration to money market assets to longer duration fixed income. How should investors think about that impact?

Allison Dukes, CFO, Invesco: I mean, of course, there is modestly higher yield opportunity there. I wouldn’t overstate it, but there is a bit of a revenue opportunity there. I think a lower rate environment, actually, where it’s even more impactful is to our direct real estate business. That’s where I think transaction activity has been reasonably low and a little bit stuck with just the higher rate environment. I think where we are hopeful is that in a lower rate environment, you start to see some of that transaction activity picking up, which should bode well for future flows and future revenue generation there.

Ben Budish, Analyst, Barclays: Right. Maybe switching gears again, you mentioned I think earlier in our chat Invesco is currently transitioning its equities platform over to State Street Alpha. Can you give us an update on where you are in that integration? Maybe talk a little bit about the longer-term benefits you hope to derive.

Andrew Schlossberg, President and CEO, Invesco: Yeah, maybe I’ll start, and Allison can jump in too. We made that decision in the spring, and it’s going quite well. Our anticipation is our next wave of go live on assets on the platform will happen here in the third quarter. That’s been really great progress, and we’ll start working on the final phases of that with the intention of finishing this program by the end of 2026.

Allison Dukes, CFO, Invesco: You really summed it up. Why did we do it? It’s more than anything, it’s an intention just to make sure we’re simplifying our operating structure as much as possible and making sure we’ve got certainty of execution. The opportunity to get this finished up in 2026 was of utmost importance to us. This migration in the third quarter is a significant milestone and will unlock the opportunity for us just to continue to progress through this for a completion at the end of next year.

Andrew Schlossberg, President and CEO, Invesco: Yeah. Look, simplifying our operating platform, we talked earlier about bringing together the benefits of our investment teams. With this platform complete, we’ll be able to really exercise those benefits. It’s been an opportunity to bring together what was dozens and dozens of systems and processes and ways of doing things, all of this into a fewer set of those. The financial benefits and the operating benefits will be what they are. I think actually the time and the energy that we invest behind things that are redundant, we don’t need to do. We can spend our time on new innovations and technology that we really want to take forward.

Ben Budish, Analyst, Barclays: Curious, maybe just unpacking that a little bit. I was going to ask, Allison, we’ve talked a lot about simplifying the structure, raising the company’s margins. This is part of that. I was going to ask, what else can be done? Where else is there space to become more efficient? Andrew, you also mentioned new technologies. Curious how you’re thinking about utilization of AI, either internally to make things more efficient, to improve the investing process. A couple of questions in there.

Allison Dukes, CFO, Invesco: Sure. I mean, look, I think we have pretty successfully demonstrated a real focus around expense management over these last few years. Our expense base has been around $3 billion, and we have been consistently harvesting some of those expenses, reinvesting them in places where we can get stronger growth. Our focus is, I would say, kind of maniacally focused on how do we improve operating margin quarter after quarter, create that operating leverage. Our focus is on scale. How do we drive more revenue over a relatively fixed, and I won’t say fixed, consistent expense base? We are looking to variabilize whatever we can.

In that, I think, look, everything we’ve just talked about, whether it’s from the queues to monetizing our investment in IntelliFlow, which unlocks some expense there, the decision around both Alpha and Aladdin, those are all examples of places where we’re looking to reinvest the expense base. We have had implementation costs kind of almost getting baked into the run rate of the expense base that we anticipate coming out after 2026. Those, as we have said, have run kind of $10 to $15 million a quarter, some quarters $15 to $20 million. Those are real examples of, I think, future efficiency. Much like many, we’re looking at various technologies all over the place that we can use just to make our people more productive, make our people more efficient. I think you’ve seen our headcount has been flat to down.

I anticipate that to continue to be the case for some time because we’re now managing over $2 trillion in assets with fewer people than we had a year ago. That’s really because we’re taking advantage of the technology. We’re taking advantage of solutions that are out there. We’re looking for places everywhere to make our people more efficient. We always tell our folks, we’re not looking necessarily to get smaller. We’re looking for the top line in our AUM to get larger with the team we have today. We want to make our people more efficient so we can work together more collaboratively.

Andrew Schlossberg, President and CEO, Invesco: Yeah. Just to add on the AI or generative AI front, it’s still early days. We’re clearly heavily invested in the technology and probably more importantly, training all of our people to use it effectively, from engineers who are way more advanced to the front of the house where they’re really users. We’re applying it all through those parts. I think the obvious use cases are the ones that you would expect in operational processes, technology processes, commentaries, marketing, things like that. Increasingly, our investment teams are also using it to be more efficient in their research, to be able to bring together their ideas more rapidly. We are deploying it all throughout the company. I’d expect we’re going to continue to in terms of what will its benefits be. I think Allison started to summarize them.

We’ll start to see it, I think, play through over the next several years.

Ben Budish, Analyst, Barclays: Got it. Maybe one final question here, just talking about new technologies. I’m curious your thoughts on blockchain tokenization. You guys do a few things there. Yesterday, NASDAQ was here. They had a press release in the morning talking about an application they had filed to list tokenized versions of equities. How do you think about opportunities there, either in terms of product creation like ETFs, in terms of backend like fund management that uses stablecoins to settle transactions? There are a lot of different angles there. How are you thinking about opportunities?

Andrew Schlossberg, President and CEO, Invesco: Yeah, I mean, all the above. Today, we have several digital asset coins and other assets that you can invest in through ETFs. We’ve wrapped them in ETFs. I think that’s an early innovation. I don’t know if that’s always going to be the future. I think tokenization is probably the one that continues to be the most interesting for us. In particular, how can you, as the NASDAQ talked about yesterday, see the future of tokenizing funds? How could you see the future of tokenizing some private assets? I think for us in asset management, being able to invest in digital assets will be one avenue. I think using tokenization and that technology has probably a lot more internal applications.

Ben Budish, Analyst, Barclays: Got it. With that, we’re nearly out of time. We’ll leave it there.

Andrew Schlossberg, President and CEO, Invesco: Thank you.

Ben Budish, Analyst, Barclays: Andrew, Allison, thanks so much for being here. What a pleasure to have you.

Allison Dukes, CFO, Invesco: Thanks for having us.

Andrew Schlossberg, President and CEO, Invesco: Yeah, thanks, Ben.

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