By Ashley Lau
Jan 30 Invesco Ltd said on Thursday its
fourth-quarter profit jumped 81 percent, boosted by strong
markets and the sale of its Atlantic Trust Private Wealth
The Atlanta-based money manager, which oversees the
PowerShares line of exchange-traded funds, said net profit rose
to $287.4 million, or 64 cents per share, from $158.7 million,
or 35 cents per share, a year earlier.
Excluding the sale of its Atlantic Trust unit, which Invesco
sold to the Canadian Imperial Bank of Commerce for $210 million,
the company earned 58 cents per share. Analysts on average had
expected 57 cents, according to Thomson Reuters I/B/E/S.
Strong markets and demand for alternative and equity
products helped drive growth in assets under management at the
firm during the quarter.
"In risk-on environments, clients shift demand toward
equities," Chief Executive Officer Martin Flanagan said on a
call with analysts on Thursday. "This is exactly what we
Invesco shares were up 1.8 percent at $33.64 in midday
trading on the New York Stock Exchange. Invesco shares gained
39.5 percent in 2013, mirroring the rise in the broader stock
MARKET RALLY BOOSTS ASSETS
Invesco ended the year with $778.7 billion in total assets
under management, an increase of $33.2 billion during the three
months ended Dec 31, and up 16.7 percent from a year ago.
A market rally in 2013 in which the S&P 500 gained 29.6
percent over the year drove those gains at Invesco and boosted
funds flowing into the asset management industry.
Among other major asset managers, both BlackRock Inc
and T.Rowe Price Group Inc reported a 24 percent
increase in profit during the fourth quarter.
Net long-term flows at Invesco, not including flows into
institutional money market funds, were $1 billion. They were
largely lifted by investors pouring money into equity and
alternative products, which had net inflows of $1.5 billion and
$2.5 billion during the quarter, respectively.
"When you look at the big, core publicly traded asset
management firms, they're doing the best on flows" over the past
two years, said Luke Montgomery, a New York-based analyst at
Sanford C. Bernstein & Co. "This quarter may not be as
relatively robust, but it's still pretty good."
Flanagan said Invesco launched more funds during the fourth
quarter than it did in any full calendar year over the past five
"These product launches are designed to further solidify our
position as one of the largest managers of alternatives for U.S.
institutional investors," he said.
Invesco's PowerShares QQQ fund added $2.6 billion in
net new money. PowerShares is the fourth-largest U.S. provider
of ETFs by assets, following BlackRock Inc, Vanguard and
State Street Corp.
Analysts focus on flow data because asset managers' revenue
and profits are closely tied to market indexes not under their
TOP MANAGER DEPARTING
One of Invesco's top fund managers, Neil Woodford, is set to
depart in April after 25 years with the firm, which analysts and
market participants have said could lead to the defection of
clients loyal to Woodford.
"I think it's inevitable that there will be outflows,"
Montgomery said, noting that the bulk of the potential client
departures would likely come around the time of Woodford's
departure. "You're going to see the most amount of noise around
Still, "there's enough strength in the rest of (Invesco's)
platform to offset what's going on with (Woodford's) departure,"
Woodford, one of the investment industry's most closely
watched fund managers, has developed a strong client base over
the years, given his consistent performance and cult-like
Flanagan sought to allay concerns about client defections
during the investor and analyst call.
"We continue to see strong evidence that many clients are
choosing to remain invested in the funds," Flanagan said,
referring to Tuesday's announcement that Edinburgh Investment
Trust will retain Invesco as manager of the trust.
Invesco first announced Woodford's departure in October. He
is being replaced by Mark Barnett, who will take over management
of Woodford's funds as head of British equities.
"The market has been extremely receptive toward Mark,"