Invesco Q2 FY26 earnings call IVZ

Invesco is executing against strategic priorities, including product line management and innovation, with over 50 new products launched this year across regions, including 6 new active ETFs and a tokenized treasury strategy with Superstate. Partnerships with Barings and LGT Capital Partners are accelerating growth in private markets, while changes in India and Canada have enhanced focus and revenue opportunities. These efforts contribute to a more streamlined business, driving profitability and margin expansion.

The QQQ fund, following its successful conversion, generated an incremental $130 million in net revenues in H1 FY26, with AUM growing 20% and strong organic net flow growth in Q2. Its global presence is expanding with cross-listings in Hong Kong and Tokyo, raising over $10 billion in AUM, leveraging its strong brand and liquidity. Management emphasizes the fund's 25-year history, scale, and total cost of ownership benefits, including tight bid-ask spreads and deep liquidity.

The company has significantly improved its leverage ratio from 2.7x to 1.9x (inclusive of preferreds) over the last year and increased common share buybacks by 80% year-to-date. This was achieved while investing in the business and reducing debt, including preferreds, and increasing the quarterly common stock dividend to $0.215 per share. The firm targets a total payout ratio, including common dividends and share buybacks, to be near 60%.

Invesco is implementing a transformational hybrid investment platform, with implementation costs of $14 million in Q2 FY26 and expected to be $15 million per quarter in H2 FY26, aiming for completion by year-end. Incremental operating expenses related to AUM on the platform are building towards $10 million per quarter later this year. This platform is expected to yield benefits across the organization and for clients, with further expense reductions planned post-implementation in 2027.

The firm prioritizes achieving first quartile investment performance, with 44% of active funds in the top quartile over 3 years and nearly 70% of active AUM beating its benchmark over 3- and 5-year periods. Fundamental equities are showing improved performance, with over 40% of funds in the top quartile over 5 years. Management is focused on strengthening fundamental equity long-term investment quality through talent, risk management, and platform tool enhancements.

The U.S. wealth management SMA platform, including equity assets, now stands at nearly $40 billion in AUM, with an annualized organic growth of 23% this quarter, driven particularly by fixed income and muni space. In private markets, demand for real estate debt, specifically INCREF, remains strong, with the fund growing to over $6 billion in AUM. The firm has approximately $7 billion in real estate dry powder, indicating continued investment capacity.