Bloomberg News

Invesco Profit Falls 16% as Stock Markets Erode Assets

July 26, 2012

Invesco Ltd. (IVZ:US), owner of the Invesco, Van Kampen and PowerShares funds, said second-quarter profit declined 16 percent as falling stock markets eroded assets and the fees charged for overseeing them.

Net income decreased to $153.9 million, or 34 cents a share, from $183 million, or 39 cents, a year earlier, Atlanta- based Invesco said today. Investors withdrew $8.3 billion in the quarter, including $3.2 billion from actively-managed products and $1.7 billion from index-based strategies. The shares rose after Chief Executive Officer Martin L. Flanagan said clients reversed course in July.

“In the first few weeks of July we’ve seen a sharp turnaround in flows,” Flanagan said on a conference call with analysts.

Invesco joined BlackRock Inc. (BLK:US) and Janus Capital Group Inc. (JNS:US) in reporting lower profit as market declines eroded assets and clients pulled money in the three months ended June 30. Flanagan, who has expanded through acquisitions, broadened the product lineup and boosted sales outside the U.S., said he’s confident the company can weather a volatile market as its funds beat 77 percent of peers over the past five years.

New Investments

Investors made new investments in July focused on real estate, non-U.S. stocks, bank loans, asset-allocation products and stable value products, Flanagan said during the conference call.

Invesco rose 3.3 percent to $21.17 at 11:43 a.m. New York time, bringing gains this year to 5.4 percent, compared with a 4.6 percent increase in the Standard & Poor’s 20-company index of asset managers and custody banks.

U.S. stocks gained today, snapping a four-day drop in the Standard & Poor’s 500 Index, as European Central Bank President Mario Draghi pledged to defend the euro while American jobless claims fell and durable-goods orders rose.

“We are confident of future organic growth in spite of a challenging quarter and a volatile market environment,” Flanagan said in a statement announcing earnings.

Total assets as of June 30 declined 3.9 percent from the previous quarter and were down 1.1 percent from a year earlier. Equities, which account for 44 percent of Invesco’s assets, dropped 7 percent from March and 6 percent from a year earlier.

“Generally there was a risk-off attitude with investors in the second quarter,” Chief Financial Officer Loren M. Starr said in a telephone interview. Starr said the comnpany’s Balanced-Risk Allocation Fund, a multi-asset-class product, helped temper net redemptions by attracting $3 billion in deposits in the quarter.

Janus, BlackRock

Lower assets caused revenue to fall 5.7 percent to $1 billion. Expenses fell 3.7 percent to $806.1 million as compensation dropped 4.3 percent.

The MSCI ACWI Index (MXWD) of global stocks declined 6.4 percent in the second quarter, amid signs the global economy is slowing and Europe’s debt crisis is spreading.

Janus, owner of the Janus, Intech and Perkins funds, said today that second-quarter profit fell 44 percent to $23.4 million after clients withdrew money for the 12th straight quarter. BlackRock, the world’s largest asset manager, said July 18 that second-quarter profit fell 11 percent to $554 million as clients withdrew $29.4 billion.

T. Rowe Price Group Inc., the asset manager that has posted a profit every quarter since going public in 1986, yesterday reported a 0.9 percent increase in second-quarter profit, missing analysts’ estimates.

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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Companies Mentioned

  • IVZ
    (Invesco Ltd)
    • $40.85 USD
    • 0.24
    • 0.59%
  • BLK
    (BlackRock Inc)
    • $329.74 USD
    • 1.57
    • 0.48%
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