Invesco Ltd · NYSE:IVZ
Invesco — BofA Merrill Lynch conference 2012
40 slides from Invesco's conference presentation, Nov 14, 2012
Slide 1: Positioned for success in a changing world
Positioned for success in a changing world Martin L. Flanagan President and CEO Invesco Ltd. All information as of Sept. 30, 2012, unless otherwise noted. Please refer to the Appendix for important information.
Slide 2: What will global winners look like?
What will global winners look like? Exclusive focus on investment management Strong, long-term investment performance Broad range of investment capabilities A strong presence in established and emerging markets globally Strong investment culture Deep, stable teams Deep knowledge of cli
Slide 3: Our discussion today
Our discussion today The world is changing around us Key trends in the US Positioned for success in a changing world 3
Slide 4: Global population has grown to 7+ billion people worldwide
Global population has grown to 7+ billion people worldwide People, in millions (in order of GDP) 1,343 1,205 314 81 206 63 66 61 127 US China India Japan Germany Brazil UK France Italy Sources: Invesco; USA Today; US Census Bureau, Population Division, International Programs Center — data estimate a
Slide 5: Disposable income is expected to grow exponentially in developing countries
Disposable income is expected to grow exponentially in developing countries Household disposable income more than US$10,000 No. of Households (Millions) 300 China 250 200 150 US India 100 Brazil 50 Japan Russia 0 1991 1996 2001 2006 2011e 2016e 2020e China US India Brazil Japan Russia Sources: Bloom
Slide 6: China's 2020 GDP projection is equal to the combined GDPs of several countries
China’s 2020 GDP projection is equal to the combined GDPs of several countries Thailand Malaysia Sri Lanka Netherlands Israel South Africa Kazakhstan Argentina Korea Colombia Denmark Canada Kenya Saudi Russia Turkey Arabia Zambia Indonesia Belgium Poland Switzerland Australia Egypt Greece Iran Above
Slide 7: Established markets currently have the lion's share of $52 trillion global AUM
Established markets currently have the lion’s share of $52 trillion global AUM … Total AUM 2011 Estimates US$Billions 25,000 23,207 20,000 15,000 15,374 10,000 5,000 4,390 1,446 4,372 1,428 1,380 379 345 0 Asia United Western Latin Eastern Japan Africa Middle Canada Pacific States Europe America Eur
Slide 8: China and other emerging markets are experiencing the greatest growth
… however, China and other emerging markets are experiencing the greatest growth Total AUM Growth 2011–2014 Estimated CAGR % 14 12 12.3 11.9 11.8 10 8 6 7.3 7.2 6.3 5.8 4 4.3 2 2.9 0 Asia Pacific United Western Latin Eastern Japan Africa Middle Canada ex Japan States Europe America Europe East Sourc
Slide 9: DC's relative importance continues to grow
While the prevalence of DC assets differs by market, DC’s relative importance continues to grow 2011 North America Europe Asia 4 7 2 43 19 43 39 40 57 57 61 60 96 93 98 81 Overall Average US Canada UK Switzerland Netherlands Japan Australia Defined benefit Defined contribution 10 Year Change in DC a
Slide 10: Summary of significant global trends
Summary of significant global trends US remains the dominant market Critical to be a market leader in developed markets Strong presence in emerging markets a key driver of long-term success DC’s relative importance continues to grow globally, though significant opportunity remains in DB We
Slide 11: Our discussion today
Our discussion today The world is changing around us Key trends in the US Positioned for success in a changing world 11
Slide 12: Post-crisis uncertainty is driving market volatility and investor anxiety
Post-crisis uncertainty is driving market volatility and investor anxiety VIX - CBOE Market Volatility Index 70 60 50 40 30 20 10 0 Jun-03 May-06 Jun-10 Dec-99 Nov-02 Jan-04 Dec-06 Nov-09 Jan-11 Aug-04 Mar-05 Oct-05 Aug-11 Mar-12 Oct-12 Jul-00 Jul-07 Feb-01 Sep-01 Apr-02 Feb-08 Sep-08 Apr-09 Source:
Slide 13: Advisors are focused on managing risk post-crisis
Invesco research indicates advisors are focused on managing risk post-crisis Delivering Other absolute 12% return 11% Exceeding a benchmark 12% Managing risk 40% Wealth preservation 25% Source: Invesco RIA Survey conducted by Cogent Research, 2012. Results based on web survey of 189 registered inves
Slide 14: Flows into fixed income underscore the challenges of risk mitigation
Flows into fixed income underscore the challenges of risk mitigation US$Billions 400 300 200 100 0 -100 -200 2006 2007 2008 2009 2010 2011 YTD 9/12 Alternative Fixed Income US Equities International/Global Equities Source: Strategic Insight 7/31/12 (LT-OE Mutual Funds; Includes fund of funds). Value
Slide 15: Alternative mutual fund assets have experienced significant growth and diversification
Alternative mutual fund assets have experienced significant growth and diversification 2001: $27B 2012: $374B Real Estate Bank Loan Nontraditional Bond Commodities Broad Basket Global Real Estate Long/Short Equity Equity Precious Metals Market Neutral Multi-alternative Currency Managed Futures Bear
Slide 16: Major shift from balanced funds to target date and world allocation funds
Major shift from traditional balanced funds to target date and world allocation funds 2001: $208B 2012: $1,287B Balanced and Target Date World Allocation Retirement Income Target Risk Source: Simfund. Data as of July 31, 2012. Includes fund of funds. 16
Slide 17: ETFs remain an important vehicle
ETFs remain an important vehicle Projected Mutual Fund and ETF Assets (US$Billions) 16,000 14,000 1,700 12,000 1,500 1,400 10,000 1,300 1,005 1,061 8,000 786 6,000 12,200 536 11,100 9,200 10,100 4,000 8,109 8,031 7,005 5,236 2,000 0 2008 2009 2010 2011 2012E 2013E 2014E 2015E Mutual Funds ETFs Sourc
Slide 18: Baby boomers have started to turn 65
Baby boomers have started to turn 65 Estimated Number of Individuals in US Age 65+ (millions) 80 69.4 70 60 52.2 50 40.1 40 35.3 31.7 30 25.6 20.0 20 16.6 12.3 6.6 9.0 10 3.1 4.0 4.9 0 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 E 2030 E 10,000 baby boomers will file for Social
Slide 19: IRA assets growing at a faster rate
IRA assets growing at a faster rate Retirement Market Assets by Segment (%) 50 45 40 35 30 25 20 2000 2002 2004 2006 2008 2010 2012E 2014E 2016E DB DC IRA Sources: Department of Labor, ICI, U.S. Census Bureau, Federal Reserve, PBGC, EBRI, Cerulli Associates 19
Slide 20: Advisors prefer to build retirement income portfolios
Advisors prefer to build retirement income portfolios What Advisors “Always Use” for Retirement Income Retirement Annuitization Income 12% Funds 6% Bond mutual funds 41% Dividend-paying equity mutual funds 31% Source: Cerulli Associates. Advisor Portfolio Construction Dynamics. 2011. 20
Slide 21: Independent asset managers consistently deliver superior investment performance
Independent asset managers consistently deliver superior investment performance over conglomerates Mutual fund assets in 4/5-Star Morningstar rated funds 70% 30% Independent Conglomerate As of September 30, 2012 Source: Simfund. “Independent” and “conglomerate” classification based on current corpor
Slide 22: Independent asset managers are attracting significant flows versus conglomerates
Independent asset managers are attracting significant flows versus conglomerates Long-term net flows (US$Billions) Based on aggregates for each peer set 1,969 706 559 403 98 114 95 91 43 (33) YTD 1Yr 3Yr 5Yr 10Yr Independent Conglomerate Source: Simfund as of November 2012 22
Slide 23: Summary of significant US trends
Summary of significant US trends Post-crisis uncertainty driving market volatility and investor anxiety Population is aging Advisors and consultants are focused on managing risk In this environment, investors favor fixed income, alternative and target date/world allocation funds IRA and DC
Slide 24: Our discussion today
Our discussion today The world is changing around us Key trends in the US Positioned for success in a changing world 24
Slide 25: We are a leading independent global investment manager
We are a leading independent global investment manager Global presence Client focus Organizational strength More than 750 investment “Investors first” focus One of the world’s leading professionals globally independent global investment Commitment to helping management firms On the ground
Slide 26: Our investment-centric culture
Our investment-centric culture … Begins with disciplined, Traded on a global platform repeatable investment philosophies and processes Governed by performance Connected through our measurement and risk assessment “Investors’ Forum” “Investors’ Forum” Global Trading Platform Performance measurement a
Slide 27: Strong, long-term investment performance for clients
…enables us to deliver strong, long-term investment performance to our clients… Percent of actively managed assets in top half of peer group* 1-Year 3-Year 5-Year 63% 67% 78% 22% 37% 33% Assets top half of peer group Assets bottom half of peer group * Excludes passive products, closed-end funds, pri
Slide 28: Helps drive flows to our global business
…and helps drives flows to our global business Net long-term flows during the third quarter equaled $9.4 billion Quarterly long-term flows ($ billions) Retail(a) Institutional(b) Private Wealth Management(c) 0.9 1.0 1.0 0.9 1.0 0.8 0.8 0.8 0.5 0.6 0.4 0.1 0.1 0.2 0.2 0.2 -0.4 -0.4 -0.5 -0.7 -0.7 -0.
Slide 29: We have an effective foundation for a sound risk culture
We have an effective foundation for a sound risk culture Board of Directors and Independent Fund Boards Risk Oversight & Executive Management Team Governance Risk Areas of Focus Credit/Asset/ Investment Liability Financial Operational Business Global Performance Measurement and Risk Corporate Risk M
Slide 30: We are diversified as a firm
We are diversified as a firm and well-positioned to stay ahead of evolving market demand By client domicile By asset class By channel 7% 3% 12% 5% 15% 35% 44% 24% 4% 62% 69% 11% 9% ($ billions) ($ billions) ($ billions) US $474.5 Retail $423.4 Equity $300.6 Canada $25.0 Institutional $240.0 Balanced
Slide 31: Specialized investment teams with local knowledge across the globe
We have specialized investment teams with local knowledge of key markets across the globe A truly global firm with: $683 billion AUM More than 750 investment professionals On the ground presence in more than 20 countries, including: Australia Italy Austria Japan Belgium Korea Canada Luxembourg Ch
Slide 32: A wide range of investment capabilities through diverse vehicles
We deliver a wide range of investment capabilities through a diverse set of investment vehicles Investment Capabilities (AUM) Delivery Vehicles (US) Mutual Funds Asset Allocation SMAs/UMAs ($58B) VI Funds Alternative Unit Investment Trusts ($84B) ETFs Equity Sub-advised Fixed Income ($30
Slide 33: Delivering capabilities anywhere in the world to meet client needs
A key strength of the firm is delivering capabilities anywhere in the world to meet client needs Global gross sales as a % of total gross sales 40% 35% 30% 25% 20% 36% 37% 15% 33% 23% 10% 5% 0% 2009 2010 2011 2012 YTD 33
Slide 34: Extending our asset allocation strategies across the globe
Extending our asset allocation strategies to meet client needs across the globe… 2008 Originally introduced to US institutional market September 2010 Design elements exported to Canada on Intactive mutual funds June 2009 Added to US retail market September 2009 Added to offshore fund market 2012 Con
Slide 35: Strong demand with more than $20 billion in global asset allocation assets
…has resulted in continued strong demand, with more than $20 billion in assets currently Invesco Global Asset Allocation AUM ($ billions) 25.0 20.0 15.0 Asset allocation extension strategies (global aggregate) 10.0 Invesco Balanced-Risk Allocation 5.0 strategies (global aggregate) 0.0 4Q09 1Q10 2Q10
Slide 36: What will global winners look like? Invesco
What will global winners look like? Invesco Exclusive focus on investment management Strong, long-term investment performance Broad range of investment capabilities A strong presence in established and emerging markets globally Strong investment culture Deep, stable teams D
Slide 37: Positioned for success in a changing world
Positioned for success in a changing world Martin L. Flanagan President and CEO Invesco Ltd. All information as of Sept. 30, 2012, unless otherwise noted. Please refer to the Appendix for important information.
Slide 38: Appendix
Appendix
Slide 39: Additional disclosure for Invesco Balanced-Risk Allocation Fund
Additional disclosure for Invesco Balanced-Risk Allocation Fund Morningstar Ratings and Rankings and Lipper Rankings Class A Shares as of Sept. 30, 2012 Overall 1 Year 3 Years 5 Years 10 Years vs. Morningstar World Allocation Category* A Shares (Load) N/A N/A N/A A Shares (Load Waived)
Slide 40: Important information
Important information The opinions expressed are those of Mr. Flanagan, are based upon current market conditions and are subject to change without notice. This presentation is for informational purposes only. This is not to be construed as an off to buy or sell any financial instruments and should n