We are purely focused on investment management …...We are purely focused on investment management...
Transcript of We are purely focused on investment management …...We are purely focused on investment management...
We are purely focused on investment management for the benefit of clients
Investor Day March 31, 2016
Forward-looking statements
This presentation, and comments made in the associated Web cast today, may include “forward-looking statements.” Forward-looking statements include information concerning future results of our operations, expenses, earnings, liquidity, cash flow and capital expenditures, industry or market conditions, AUM, acquisitions and divestitures, debt and our ability to obtain additional financing or make payments, regulatory developments, demand for and pricing of our products and other aspects of our business or general economic conditions. In addition, words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “projects,” “forecasts,” and future or conditional verbs such as “will,” “may,” “could,” “should,” and “would” as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements.
Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. There can be no assurance that actual results will not differ materially from our expectations. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our most recent Form 10-K and subsequent Forms 10-Q, filed with the Securities and Exchange Commission.
You may obtain these reports from the SEC’s website at www.sec.gov. We expressly disclaim any obligation to update the information in any public disclosure if any forward-looking statement later turns out to be inaccurate.
All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This presentation is provided for informational purposes only and is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in an investment making decision. As with all investments there are associated inherent risks. Please obtain and review all financial material carefully before investing. This does not constitute a recommendation of the suitability of any investment strategy for a particular investor. The opinions expressed are based on current market conditions and are subject to change without notice. Past performance is not a guarantee of future results. Invesco’s Institutional Separate Accounts and Separately Managed Accounts are offered by affiliated investment advisers, which provide investment advisory services and do not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco’s retail products and collective trust funds. 1
Discussion topics
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Uniquely positioned to meet client needs Marty Flanagan
Factor investing Bernhard Langer Dan Draper
Fixed income Greg McGreevey
Alternatives and multi-asset Colin Meadows
Real estate Scott Dennis
Global Targeted Returns David Millar
Financial overview Loren Starr
Well positioned as a global leader Marty Flanagan
Questions
We’ve built Invesco with a single focus: to help clients achieve their investment objectives
Every client has a unique set of investment objectives, which can be achieved in a variety of ways.
Invesco’s comprehensive range of high-conviction investment capabilities has been constructed over many years to help clients achieve their investment objectives.
Our fundamental and factor-based methodologies aim to deliver positive client outcomes that go beyond the limitations of traditional passive investing and benchmark-centric active management.
This high-conviction approach provides better tools to build portfolios in a more precise and impactful way.
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We are uniquely positioned to meet client needs
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Success driver Invesco position
Deep understanding of client needs
Deep knowledge of clients and their evolving needs
Comprehensive, all-weather, high-conviction fundamental and factor investing product line
Demonstrated ability to combine a broad range of capabilities to construct portfolios aligned with client investment objectives by channel and by region
Pure focus on investment management
No competing lines of business to support
Strong investment reputation
Independence
Infrastructure and client support platforms that enable our investors to spend more time focused on investing
Experienced, stable and accountable investment leadership
Specialized, stable investment teams with discrete investment perspectives and experience across diverse market cycles
Disciplined, repeatable investment philosophy and processes
Strong risk management and oversight
Compensation aligned with performance and client interests
Organizational strength
Broad and deep global presence in key markets
Solid margins, financial strength and resources to ensure long-term investment in the business
6,000+ highly engaged and motivated employees focused on client needs
Proven management team with a solid track record
Our continued investment in the business is fully aligned with client demand trends
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Client demand themes Invesco’s positioning
Search for yield
In 2007, began expansion of global fixed income platform, which today supports the full range of single-sector and multi-sector capabilities
Continue to expand the full range of income-related capabilities, including equities, fixed income and alternatives
“Barbelling” and the shift to passive, beta and ETF products
Continued to expand our comprehensive range of all-weather, high-conviction capabilities
Began factor investing in 1983
Added Invesco PowerShares in 2006 – smart beta line remains broadest, most diverse in the industry
Continue to accelerate our ETF business globally
Multi-asset strategies and absolute return
Introduced risk parity strategy in 2008
Built new Invesco Perpetual multi-asset team beginning in 2012; expanding to new markets
Invesco Quantitative Strategies added global market neutral capability in 2008
Our continued investment in the business is fully aligned with client demand trends
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Client demand themes Invesco’s positioning
Growing demand for alternatives
Entered direct real estate business in 1991; completed the globalization of our real estate capabilities by adding the Asia team in 2010
Expanded into private equity through WL Ross & Co. in 2006
Continued to broaden our range of alternative strategies with the launch of more than 40 liquid alternatives offerings globally beginning in 2011; today the range represents one of the most comprehensive lineups in the industry
Increasing demand for solutions and new advice models
Invesco Solutions builds and manages goal-oriented, multi-asset strategies aligned to client outcomes
Early entrant into the digital advice space through the addition of Jemstep in 2016
66%
3%
13%
10%
8%
48%
6%
9%
24%
13%
A key strength of the firm is our diversification across geographies, channels and asset classes
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As of December 31, 2015
By client domicile By channel By asset class
$510.7 $21.7
$104.2 $75.4 $63.6
$775.6 Total
U.S. Canada U.K. Europe Asia
(4.0)% (15.9)% (0.9)%
6.0% 9.1%
(2.1)%
1-Yr Change ($ billions)
$514.8 $260.8
$775.6 Total
Retail Institutional
(3.3)% 0.3%
(2.1)%
1-Yr Change ($ billions)
$370.9 $48.1 $64.6
$187.9 $104.1
Total
Equity Balanced Money Market Fixed Income Alternatives
(3.5)% (4.9)%
(15.6)% 3.5% 4.8%
(2.1)%
1-Yr Change ($ billions)
$775.6
66%
34%
Our goal is to deliver strong, long-term investment performance for clients through our capabilities
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* Excludes passive products, closed-end funds, private equity limited partnerships, non-discretionary funds, unit investment trusts, fund of funds with component funds managed by Invesco, stable value building block funds and CDOs. Certain funds and products were excluded from the analysis because of limited benchmark or peer group data. Had these been available, results may have been different. These results are preliminary and subject to revision.
Data as of 12/31/15. Includes AUM of $463.6 billion (60% of total IVZ) for one year, $449.5 billion (58% of total IVZ) for three year, and $444.6 billion (57% of total IVZ) for 5 year. Peer group rankings are sourced from a widely-used third party ranking agency in each fund’s market (Lipper, Morningstar, IMA, Russell, Mercer, eVestment Alliance, SITCA, Value Research) and asset-weighted in USD. Rankings are as of prior quarter-end for most institutional products and prior month-end for Australian retail funds due to their late release by third parties. Rankings for the most representative fund in each GIPS composite are applied to all products within each GIPS composite. Performance assumes the reinvestment of dividends. Past performance is not indicative of future results and may not reflect an investor’s experience.
1-Year 3-Year 5-Year
2015
60%
40%
1-Year 3-Year 5-Year
2005
62%
38% 47% 53%
79%
21%
85%
15%
63%
37%
Assets in top half of peer group Assets in bottom half of peer group
Our comprehensive range of investment capabilities are offered in key markets across the globe
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Americas Asia Pacific EMEA Americas Asia Pacific EMEA Equity Allocation Global/ Multi-Region Traditional
Global √ √ √ Global Balanced √ √ √ Global ex Domestic √ √ √ Domestic Balanced √ √ √ Emerging Markets √ √ √ Non-Traditional
Regional/ Single Country Risk Parity √ √ √ Asian/ Asia ex Japan √ √ √ Target Maturity √ Australian √ √ Target Risk √ √ √ Greater China √ √ √ Custom Solutions √ √ √ Japanese √ √ √ European/ UK √ √ √ Alternatives US √ √ √ Directional Strategies Canadian √ Long/Short Equity √ √
Sector-Based √ √ √ Private Equity √ √ √ Bank Loans √ √ √
Fixed Income Inflation-Protection Multi-Sector Commodities √ √ √
Global Agg/ Core Plus √ √ √ Public Real Estate Securities √ √ √ Multi-Sector Credit √ √ √ Private Real Estate √ √ √ Strategic Income √ √ Macro Strategies
Single Sector Global Macro √ √ √ Investment Grade √ √ √ Relative Value/ Absolute Return High Yield √ √ √ Market Neutral Equity √ √ Structured Securities √ √ Unconstrained Bond √ √ Convertibles √ √ √ Financial Structures Municipal Bonds √ Credit Arbitrage √ √ √
Specialty Opportunistic √ √ √ EM Debt √ √ √ Stable Value √ Global Liquidity √ √ √
… And delivered through diverse vehicles to enable key outcomes for clients
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As of Dec. 31, 2015.
Our fundamental and factor investment capabilities …
… to enable key outcomes that help our clients around the world achieve their investment objectives
Income Capital preservation Growth
…are delivered through diverse investment vehicles… Institutional separate accounts
Collective trusts
Mutual funds (open/closed-end, on/offshore)
Exchange-traded funds (ETFs)
Unit investment trusts (UITs)
Private placements
Sub-advised portfolios
Separately managed accounts/ Unified managed accounts
Variable insurance funds Customized solutions
Equity
$371B AUM
Fixed Income and Money Market
$253B AUM
Asset Allocation
$48B AUM
Alternative
$104B AUM
Our investment capabilities are delivered to meet client needs across the globe
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Chinese equities Managed from Hong
Kong and Shenzhen
Introduced to the marketplace in 1992
Invesco Great Wall JV formed in 2003; Approved as QFII manager in 2004
March 2006 Added to US retail fund market
October 2001 Added to UK onshore fund market
July 1992 Added to offshore fund market
June 2009 Added to Japan onshore fund market
1992 Originally introduced to Asia Pacific market
June 2005 Added QFII A-share offshore fund
Our investment capabilities are delivered to meet client needs across the globe
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Global Targeted Returns Managed from Henley,
part of the Invesco Perpetual investment team
Introduced to the UK marketplace in Sept 2013
Expanded to Continental Europe and US in 2014
Sourced sales from Asia Pacific started in 2015
AUM reached $11 billion in 2015, up $8 billion over the prior year
Canada: Feeder fund Jan 2015 Retail fund May 2016
UK: ICVC Fund Sept 2013 Pension Fund Apr 2014 Feeder Fund Nov 2014 AUM $8.5bn 2015 Net Sales $6.0bn
Japan: (SICAV Select Fund) 2015 Net sales: $95m
Continental Europe: SICAV Fund Jan 2014 SICAV Select Fund Oct 2015 AUM $3.9bn 2015 Net Sales $2.1bn
US: 40 Act Fund Jan 2014 AUM $183m 2015 Net Sales $126m 2 Institutional Trust products (Q1 2016)
Australia: Unit Trust 2015 AUM $250m
Middle East: (SICAV Fund) 2016 Sales: $670m
Our investment capabilities are delivered to meet client needs across the globe
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Real Estate Securities/ REITs Managed from Dallas
by Invesco Real Estate; sold globally
Team has been managing REITs for over 20 years
Offers US, global, global ex-US, and regional variations 1988
Originally introduced to US institutional and retail markets
November 2008 Launched the first actively managed RE ETF in the US
November 2007 Added to Canadian mutual fund market September 2005
Added to offshore fund market
September 2004 Subadvise open-end fund in Japan onshore market
October 2009 Added to Australian onshore fund market
Today, we will focus on five key areas of opportunity for Invesco in 2016 and beyond
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Invesco is ahead of demand trends and well-positioned to meet client needs
“Barbelling” and the shift to passive, beta and ETF products
Factor investing
Search for yield Fixed income
Growing demand for alternatives Alternatives and multi-asset strategies
Real estate
Global Targeted Returns
Discussion topics
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Uniquely positioned to meet client needs Marty Flanagan
Factor investing Bernhard Langer Dan Draper
Fixed income Greg McGreevey
Alternatives and multi-asset Colin Meadows
Real estate Scott Dennis
Global Targeted Returns David Millar
Financial overview Loren Starr
Well positioned as a global leader Marty Flanagan
Questions
Reframing the active/passive debate
Which is better – active or passive?
Invesco believes this is the wrong question to ask
At Invesco, we believe in striving for a superior client experience through high-conviction investing – going beyond the limitations of traditional passive investing and benchmark-centric active management
High conviction means our fundamental-based active managers trust their research, have confidence in their discipline and build portfolios that are a reflection of their beliefs – not benchmarks
It also means that our factor-based active and smart beta strategies go beyond the traditional, market-cap-weighted passive benchmark approach
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A more important question: “Are you willing to settle for average?”
Factor investing – moving beyond active v. passive
Moving the industry from “mass production” to “mass customization”
Invesco believes this is occurring largely due to
Investors’ behavioral biases
Harvesting of Factor Risk Premium
Stronger expression of investment views
More efficient risk-adjusted performance
Evolution away from cap-weighted benchmarks
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Factor investing supports a better diversified portfolio
Diversification does not guarantee a profit or eliminate the risk of loss.
An introduction to factor investing
What is a Factor? A factor is a quantifiable characteristic of an asset
– Can be directly observable characteristics such as size, momentum or value – Can refer to statistical relationships such as the part of price moves that can be
explained by a variable such as inflation, consumption, etc. They explain the return and risk characteristic of portfolios They are often associated with a risk premium that investors receive for either bearing
an undesirable return profile (i.e. low returns in bad times) or for behavioral reasons that prevent arbitrage of such factors
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What is Factor Investing? Factor investing is to look at the investable world through a particular lens Tradable securities (e.g., stocks) are used as the instruments to achieve the factor
exposures A factor portfolio may target exposure to a single factor or a combination of factors Similar to other investments, factors possess observable risk and return profiles Achieving Improved Diversification and Factor Allocation involves the choice of
allocation across factors in a way that trades off these risk and return profiles to achieve particular investment goals
An introduction to factor investing
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Source: Cass Business School “Smart Beta – Academic research” November 2015
Separation of beta and alpha 1964 – Building on Markowitz’s mean variance analysis Sharpe develops the Capital Asset Pricing Model (CAPM)
Low vol 1972 – Haugen and Heins showed that low volatility stocks realized extra risk-adjusted returns
Size 1981 – Banz finds that small cap stocks outperformed large cap stocks Value Basu finds low PE stocks generate higher returns relative to high PE stocks
Practitioners begin to launch investment products based on the academic evidence of “anomalies” Research Affiliates and
Dimensional FA pioneer equity strategies focused on size and value factors
Size and value 1993 – Fama and French develop 3-factor model by adding size and value to CAPM Momentum 1993 – Jagadeesh and Titman found buying past winners and selling past losers was highly profitable 1997 – Carhart develops 4-factor model
The origins of Factor Investing
1960s 1970s 1980s 1990s 2000–2005
An introduction to factor investing
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Source: MSCI Research December 2013, Invesco. Past performance is not a guarantee of future results.
Well-known systematic factors from the academic literature
An introduction to factor investing
Factor strategies should …
… have a robust investment case
Evidence – empirical evidence must support the Factor
Belief – understand the economic and/or behavioral rational
Sustainability – consider the factor is likely to be competed away in the future
… be implemented using well-designed products
Systematic – a repeatable process that does not require significant discretionary management
Broad – large opportunity set to minimize risk coming from individual securities
Simple – transparent and only as complicated as needed to achieve investment goals
Cost effective – fees and costs should be considered in all stage of the process
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Source: Invesco
An introduction to factor investing (CONTINUED)
22 Source: Boston Consultancy Group - Global Asset Management 2015: Sparking Growth with Go-to-Market Excellence
Norway’s Ministry of Finance commissions an academic review to examine Norges Bank Investment Management’s use of active managers. Paper “Evaluation of Active Management of the
Norwegian Pension Fund – Global” (2009) found that the majority of outperformance in active management is driven primarily by exposure to systemic factors
Recommends risk factor investing using passive-like strategies
What has triggered the demand? Global financial crisis triggered demand for “smarter” equity strategies
Extreme market uncertainty
Record-high volatility
Sharp portfolio drawdowns
Solutions, Alternatives, Passive and Specialties will win a disproportionate share of Future Net Flows
Boston Consultancy Group (BCG) continue to believe that the structural shift from active core products to solutions, alternatives, passive products, and specialties will continue. In particular, solutions and passives are likely to get a disproportionate share of the net flows, relative to their current size. They therefore will remain the fastest-growing categories.
$34.4bn in AUM
Global presence with teams across four continents
Factor-based active since 1983
43 investment professionals
Globally delivered through mutual funds, collective trusts and separate accounts*
$96.2bn in AUM
4th largest ETF provider*
Factor-based smart beta pioneer since 2003
11 investment professionals
130+ETFs
$19bn in AUM
2nd largest unit trust provider
Factor-based smart beta packaged in unit trusts since 1975
19 investment professionals
74 unit trusts
What do we stand for in factor investing?
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* Source: US advisor-sold fund family is determined by the majority of a firm’s long-term assets classified in the sales force and ETF distribution channels by ICI. Offered through affiliates of Invesco Ltd. All data as of 4Q 2015.
Invesco is an innovative leader in factor investing with $138B in AUM and 40 years’ experience
Factor Based Investment Strategies
Differentiating Attributes Diverse, time-tested investment strategies
All vehicles available to meet investor needs
Product specialists and field wholesaler depth
Education and thought leadership support
Invesco Quantitative Strategies Invesco PowerShares Invesco Unit Trust
We believe we can add value for our clients through the systematic application of fundamental and behavioral insights.
Invesco Quantitative Strategies A proven philosophy of relevant factors and many applications …
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Salient Points
The best ideas from a team that values independent thinking
An engineered discipline that balances the rigor of quantitative modeling with the insight of fundamental and behavioral analysis
A commitment to renewal and purposeful evolution so that our process continues to capture the right opportunities
Invesco Quantitative Strategy
Pioneers in Factor Investing Managing more than USD 32 billion over four decades
Experienced team of over 40 investment professionals
An actively managed, multi-factor approach that evolves over time
Achieving a balanced factor portfolio may require a more customized approach for clients with plan constraints
The team has a history of tailoring solutions to client needs
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1983 U.S. Quantitative Core Equity
1992 U.S. Small Cap Core; U.S. Mkt Neutral
1995 Equitized U.S. Market Neutral
1996 U.S. Enhanced Index
1999 European Quantitative Core
2000 Eurobloc Quantitative Core
2001 Global Quantitative Core
1991 Financial Futures
2002 Absolute Return (multi-strategy hedge fund approach)
2005 European/ Global Low Volatility
2006 European Market Neutral
2007 Directional Long-Short (130/30)
2008 Global Market Neutral
2009 U.S. Low Volatility
2010 Emerging Markets
2012 European Growth
2013 Dividend Strategies; Liquid Alternatives
2014 Global Small Caps
2003 Global Balanced Solutions
2015 Eurobloc Low Volatility
80
90
100
110
120
130
140
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Money weighted cumulative excess return across product range
Invesco Quantitative Strategy
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Past performance is not a guide to future returns. Source: IQS as of December 31, 2015. The excess returns are gross of fees in the strategy currency. The chart represents the money-weighted average excess returns of our representative strategies such as, Global ex UK Enhanced, US Enhanced Index, US Enhanced Index Value, Eurobloc Enhanced, Global Quantitative Core, US Quantitative Core, US Quantitative Small Value, 2% Risk US Enhanced Index 1000, European Quant Core, Eurobloc Quant Core, Emerging Markets Quant Core, Global Low Volatility, European Low Volatility, US Market Neutral, GARF and Capital Shield, over time. Supplementary to the GIPS-compliant presentation available upon request. For periods before 1992 money weights are not available. The chart shows 35% outperformance since 1992, which translates into an annualized outperformance of 1.3%.
Performance – our results from factor based investing
ETFs have expanded access and application of factor investing
Invesco PowerShares (IPS) brings factor investing to a wide audience via the ETF wrapper that can be accessed by individuals, advisors and institutions from leading index providers
IPS offers passive factor-based strategies providing access to well-established investment factors including low volatility, value, dividend, growth, momentum and quality
The Smart Beta segment is growing faster than the overall industry with a 3-yr growth rate of 23% versus 13%. Some of the largest and fastest growing segments within smart beta are factor-based strategies including low volatility, momentum, quality and dividends. Low Vol, momentum and quality based ETFs have grown over 50% per year over the past 3 years*
Through systematic, transparent and simple methodologies investors can access key investment factors in a tradable, tax efficient and low cost vehicle
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* Source: Invesco PowerShares Research and Bloomberg, as of February 29, 2016. Invesco PowerShares does not provide tax advice. Please consult with your tax advisor for information regarding your own tax situation. While it is not Invesco PowerShares intention, there is no guarantee that the funds will not distribute capital gains to it’s shareholders. Smart Beta is an alternative and selection index based methodology that may outperform a benchmark or reduce portfolio risk, or both.
Invesco PowerShares – factor investing
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Source: Invesco PowerShares as of December 31, 2015. The smart beta category includes ETFs that have an alternative and selection index based methodology that seeks to outperform a benchmark or reduce portfolio risk, or both. Industry remainder represents all ETF products that meet this criteria, excluding PowerShares smart beta products. Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk. Beta is a measure of risk representing how a security is expected to respond to general market movements.
14%
86%
Smart Beta Assets
20%
80%
Number of ETFs
34%
66%
$37 billion in
smart beta franchise assets
92 smart beta
ETFs
63 smart beta ETFs with at
least a 5-year track record
Number with 5-Year Record
PowerShares
Industry Remainder
# > 5 Years PowerShares: 63
Provider with 2nd Largest Offerings: 33
Seek a high-conviction smart beta management firm A track record of meeting client needs through innovative product offerings
Invesco PowerShares has the largest and broadest set of Smart Beta ETFs with the longest track record
Invesco PowerShares – factor investing (CONTINUED)
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* Represents the number of funds in the PowerShares ETF Family that utilize the corresponding methodology introduced
Smart Beta pioneers since 2003 PowerShares industry leadership in first-to-market ETF innovation:
Year Index Methodology Introduced PowerShares ETF Example (Ticker)
Total Funds in PowerShares
Family*
2003 Quantitative Constructed Dynamic Large Cap Value (PWV) 15
2005 International Dividend International Dividend AchieversTM (PID) 1
Fundamentals Weighted Equity FTSE RAFI US 1000 (PRF) 15
2006 Share Buybacks Buyback AchieversTM (PKW) 2
2007
Emerging Sovereign Debt Emerging Markets Sovereign Debt (PCY) 2
Momentum DWA Momentum (PDP) 15
Options S&P 500® BuyWrite Portfolio (PBP) 1
2010
High Quality Weighted S&P 500® High Quality (SPHQ) 2
Fundamentals Weighted/Fixed-Income Fundamental High YieldTM Corporate Bond (PHB) 3
Yield Weighted REIT KBW Premium Yield Equity REIT Portfolio (KBWY) 1
2011 Volatility-Weighted S&P 500® Low Volatility (SPLV) 10
Beta-Weighted S&P 500® High Beta (SPHB) 3
2014 Multi-Strategy Alternative Multi-Strategy Alternative Portfolio (LALT 1
Laddered Corporate Bond LadderRite 0–5 Year Corporate Bond (LDRI) 1
Invesco PowerShares – factor investing
Competitive advantages
Experienced ETF team with nearly half its employees averaging over 8 years with the firm
ETF brand strength and marketplace recognition
Experienced smart beta ETF team and scalable platform
Leading ETF product and capital markets specialists to support clients and distribution teams
Innovative product development team raising 2nd most AUM ($13.5B) from new products launched in the last 5 years among the top 10 ETF providers*
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* Source: Invesco PowerShares product and research team, February 2016.
Invesco combines scaled, global capabilities to deliver factor investing strategies for clients
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Source: Invesco PowerShares as of December 31, 2015. The smart beta category includes ETFs that have an alternative and selection index based methodology that seeks to outperform a benchmark or reduce portfolio risk, or both. Industry remainder represents all ETF products that meet this criteria, excluding PowerShares smart beta products. Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk. Beta is a measure of risk representing how a security is expected to respond to general market movements. * Invesco analysis, includes 16 composites from 1992 to 2015.
A strong foundation in factor research
A systematic investment approach to meet client needs
Ability to deliver a full range of investment products globally
Invesco has been leading the way in rigorous, bottom-up factor research for 40 years
We have developed a broad platform of active and rules-based investment strategies backed by a strong track record of performance* We have the capability to build custom investment solutions where needed
Long-term experience in mutual funds, unit trusts, and separate accounts A pioneering leader in Exchange Traded Funds with an emphasis on Smart Beta Product development capabilities spanning all major regulatory regimes
Discussion topics
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Uniquely positioned to meet client needs Marty Flanagan
Factor investing Bernhard Langer Dan Draper
Fixed income Greg McGreevey
Alternatives and multi-asset Colin Meadows
Real estate Scott Dennis
Global Targeted Returns David Millar
Financial overview Loren Starr
Well positioned as a global leader Marty Flanagan
Questions
Invesco Fixed Income is entirely focused on delivering investment excellence to our clients
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A global team of experienced professionals whose knowledge of local markets strengthens the investment process
Global platform
A structured and disciplined process that integrates macro and credit research to uncover value
Research based investment process
An investment approach that is focused on increasing the predictability and consistency of investment returns
Performance-driven
Inclusiveness that compounds expertise by working together effectively to drive results
Collaborative team approach
Our global perspective and local market knowledge help us uncover investment opportunities
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Source: Invesco, as of December 31, 2015. Subject to change without notice. Invesco Fixed Income does not include all the fixed income entities within Invesco Ltd., and is not limited to those fixed income assets within the GIPS®-compliant firm Invesco Worldwide; therefore, the assets under management reported here for Invesco Fixed Income may not match the fixed income assets reported in the Invesco earnings statement. Offices in Mumbai and Shenzhen represent joint ventures.
Scope of fixed income platform: US $222.3* billion AUM
Depth of resources: 161 investment professionals 223 professionals Global footprint: 11 locations in key markets
Rates 19 Currency 14 Credit 72 PM 77
London
Hong Kong Tokyo
We have a well-resourced investment team with a strong global perspective
San Diego
New York
Atlanta
London
Hong Kong
Chicago Louisville
Shenzhen Mumbai Palm Harbor
Toronto
*AUM is unadjusted and does not include $11.5bn in assets for co-managed and manual adjustments.
IFI’s experienced teams provide broad market coverage and specialized expertise
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Fixed Income Teams Team Members
Average yrs. with Invesco
Average yrs. Industry Experience*
Portfolio Management & Trading 74 12 20
Global Research 87 8 15
Total Investment Professionals 161 10 17
Business Professionals 62 12 19
Total Fixed Income Employees 223 11 18
As of December 31, 2015. Subject to change without notice. * Investment specific experience for investment professionals.
We have made significant progress enhancing our capabilities for the benefit of our clients
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2011 Today Separate locations Independent teams
Global presence/regional hubs Connected teams
Independent processes Limited asset allocation
Consistent research processes Integrated strategy
Multiple systems Underdeveloped risk mgmt
Integrated systems Multi-faceted risk mgmt
Single sector oriented Limited multi-sector capabilities
Range of multi & single sector products
New capabilities
Process
Products
People
Platform
We offer a comprehensive range of single and multi-sector solutions to meet client objectives
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For illustrative purposes only and does not ensure future results of any product or strategy , nor does it constitute a recommendation of the suitability of any investment strategy for a particular investor.
–
+
+ Return
Cash
Investment Grade
Bank Loans
High Yield
Convertibles
Emerging markets
Municipals Mortgages
Single Sector Disciplines
Beta
Alpha
Core Suite
Strategic Real Return
Absolute Return
Unconstrained Bond
Strategic Income
Multi-Sector Credit
–
Multi-Sector Disciplines
Risk
Stable Value
We will continue to develop products to meet market demands in both single sector and multi-sector disciplines
Global Bond Suite
Understanding client demands are creating opportunities
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Shift to new advice models & solutions
Growing demand for alternatives & multi-asset products
Shift to global & emerging markets
Search for yield
Alternatives Multi- Asset
Our global opportunity set allows us to bring a broad range of solutions to our clients
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Capabilities:
Deep experience in income oriented strategies
Fundamental analysis to anchor yield focused solutions
Sophisticated risk management tools
Representative Examples:
Strategic Income
High Yield Corporates
Investor trends & client needs
How we address client needs
Search for yield
Shift to global & emerging markets
Growing demand for alternatives & multi-asset products
Shift to new advice models & solutions
Our global opportunity set allows us to bring a broad range of solutions to our clients
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Capabilities:
Interconnected team that leverages local knowledge globally
Experienced global macro economic & credit coverage
Representative Examples:
Global Aggregate
Asian Bond Strategies
Investor trends & client needs
How we address client needs
Search for yield
Shift to global & emerging markets
Growing demand for alternatives & multi-asset products
Shift to new advice models & solutions
Our global opportunity set allows us to bring a broad range of solutions to our clients
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Investor trends & client needs
How we address client needs
Search for yield
Shift to global & emerging markets
Growing demand for alternatives & multi-asset products
Shift to new advice models & solutions
Capabilities:
Comprehensive expertise & connected team
Sophisticated portfolio management platform and risk tools
Representative Examples:
Bank Loans & CLO’s
Absolute Return & Uncorrelated Strategies
Our global opportunity set allows us to bring a broad range of solutions to our clients
42
Capabilities:
Flexible platform and processes to tailor strategies
Broad range of delivery vehicles and packaging capabilities
Representative Examples:
PPIP & Mortgage Recovery Fund I*
IFI/IQS Balanced Funds
Investor trends & client needs
How we address client needs
Search for yield
Shift to global & emerging markets
Growing demand for alternatives & multi-asset products
Shift to new advice models & solutions
* Closed to new investors.
We have capabilities to address client demands globally
43
Source: eVestment. Based on estimated net flows for 2015 * Includes Asia, Japan & Australia
Key industry trends
EMEA Asia*
North America Core/Core Plus
Private Debt US Mortgages US Municipals
EM Debt Asia Fixed Income
US Bank Loans US High Yield
Global Credit Global High Yield
Cash
Unconstrained Bonds
Global Aggregate
Global Credit EU High Yield EU Corporates US Corporates
We are seeing flows from several different asset classes across the globe
44
Source: eVestment. Based on estimated net flows for 2015 * Includes Asia, Japan & Australia
Recent IFI flows
EMEA Asia*
North America Core/Core Plus
Municipals High Yield
Stable Value Cash
EM Debt US Investment
Grade
US Corporates EU Corporates
Cash
US Corporates Global Credit
US/Global Bank Loans
Global Aggregate
CLOs
Invesco Fixed Income is entirely focused on delivering investment excellence to our clients
45
A global team of experienced professionals whose knowledge of local markets strengthens the investment process
Global platform
A structured and disciplined process that integrates macro and credit research to uncover value
Research based investment process
An investment approach that is focused on increasing the predictability and consistency of investment returns
Performance-driven
Inclusiveness that compounds expertise by working together effectively to drive results
Collaborative team approach
Discussion topics
46
Uniquely positioned to meet client needs Marty Flanagan
Factor investing Bernhard Langer Dan Draper
Fixed income Greg McGreevey
Alternatives and multi-asset Colin Meadows
Real estate Scott Dennis
Global Targeted Returns David Millar
Financial overview Loren Starr
Well positioned as a global leader Marty Flanagan
Questions
Invesco has a deep, long-standing set of alternatives and multi-asset capabilities
47
1 Source: Invesco Ltd. as of December 31, 2015. Includes real estate, alternative credit, liquid inflation hedges, hedged and macro strategies, private equity, and risk parity.
2 Source: Invesco Ltd. and Pensions & Investments 2015 Money Managers Rankings; includes US tax-exempt institutional assets for the following categories: real estate equity domestic, real estate equity international, timber, hedge funds, infrastructure, venture capital buyout funds, other private equity domestic, other private equity international, privately placed debt, distressed debt, mezzanine debt, energy, commodities, and MLPs.
$132 billion in alternative assets under management1
More than 350 investment professionals managing alternative strategies around the world
5th largest manager of alternatives for institutions2
Strength and scale in both liquid and long-term alternative strategies
Scope of key capabilities includes: – Bank Loans – Commodities – Infrastructure – Long/Short Equity – Macro – MLPs – Market Neutral – Private Equity – Real Estate – Risk-Balanced
More than 30 years’ experience managing alternative investments
Recognized pioneers and industry leaders across multiple alternative strategies
Institutionalized, repeatable investment processes
Sustainable teams with deep talent bench
One of the world’s leading independent global investment management firms
Global trading and investment execution platform
Robust, independent risk management
Focused operations, compliance, and investment technology tools
Support from regionally-based client engagement teams around the world
Scale and impact Breadth of capability Depth of experience Strong foundation
Our $132 billion alternatives and multi-asset platform is well diversified to meet a variety of investor needs
48
Source: Invesco Ltd. as of December 31, 2015. Note: Includes AUM from various portfolios that are publicly reported as “Balanced” or “Fixed Income”.
Alternatives capabilities
Liquid real assets Commodities Infrastructure Master Limited Partnerships
(MLPs) Real Estate Securities
Private real estate Direct Real Estate
Alternative fixed income
Bank Loans Unconstrained Fixed Income
Alternative equity and macro strategies
Arbitrage Strategies Currency Diversified Alternatives Macro Hedged Equity Long/Short Equity Market Neutral Risk-Balanced
Private equity Direct Private Equity Private Equity Funds of Funds
Invesco Alternatives AUM - $132Bn
Liquid Real Assets $32.0B
Private Real Estate $37.0B
Alternative Fixed Income
$27.8B
Alternative Equity
and Macro Strategies
$29.0B
Private Equity $6.4B
We bring our clients over 30 years of experience managing alternative investments
49
1980s and 1990s 2000s and 2010s Invesco Private Capital 1981: Began investing in Private Equity Partnerships Invesco Real Estate 1983: Began investing in Private Real Estate 1988: Began investing in Real Estate Securities Invesco Quantitative Strategies 1983: Began Equity investing Invesco Fixed Income 1989: Began investing in Bank Loans Invesco Quantitative Strategies 1992: Launched Market Neutral strategy WL Ross & Co. 1997: WLR began investing in Direct Private Equity
Invesco Global Asset Allocation 2000: Began Multi-Asset investing 2008: Launched Balanced-Risk Allocation and Balanced-Risk
Commodity strategies Invesco Multi Asset 2006: Team members launched similar Global Macro strategy 2013: Team joined Invesco Invesco Quantitative Strategies 2007: Began Long/Short Equity investing 2008: Launched Global Market Neutral strategy 2013: Launched Long/Short Equity strategy Invesco Real Estate 2014: Launched MLP and Global Infrastructure strategies Invesco PowerShares 2015: Started managing 11 exchange-traded Commodity pools
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
1983 Real Estate
1997 Direct Private
Equity
2013 Multi Alternatives Long/Short Equity
1981 Private Equity
Partnership Investing
1992 Market
Neutral
1989 Bank Loans
2008 Risk-Balanced Commodities Global Market Neutral
2014 MLPs Infrastructure Unconstrained
Fixed Income
2001 Macro
Where appropriate, these teams collaborate to bring unique offerings to market
50
Invesco Mortgage Recovery Fund
WL Ross & Co. (WLR)
Invesco Real
Estate (IRE)
Invesco Fixed
Income (IFI)
Invesco Mortgage Recovery Fund I (IMRF I) was a partnership among WLR, IRE, and IFI to pursue distressed public and private commercial property
IMRF I was one of 9 sponsors selected to partner with the US Treasury on the Public-Private Investment Program (PPIP) in 2009
Fund I raised $1.5bn and, to date, has returned more than 100% of capital at attractive returns
That track record, the demonstrated capabilities of the combined investment committee, and the sourcing advantages of the model allowed us to launch further similar strategies.
Global Balanced Solutions
Invesco Fixed Income (IFI)
Invesco Quantitative
Strategies (IQS)
Building on over a decade of cooperation in the institutional market, IFI and IQS continue to collaborate on innovative balanced asset solutions for retail and institutional investors
These combine the best of IQS’ factor-based equities capabilities and tactical asset allocation models with IFI’s global fixed income capabilities
Strong track records in the underlying asset classes are supplemented with downside risk management features to create customized client solutions
More than $2.3bn jointly managed by IFI and IQS in balanced solutions
New product initiatives are under way to bring these capabilities to retail markets in Europe and Asia
Our capabilities are delivered to investors through diverse investment vehicles
51
Liquid Vehicle Offerings Long-term Vehicle Offerings Liquid Real Assets
Commodities Yes Yes Listed Infrastructure Yes Yes Listed MLPs Yes Yes Real Estate Securities Yes Yes
Private Real Assets Direct Real Estate Yes
Alternative Fixed Income Bank Loans Yes Yes Mezzanine Debt Yes Unconstrained Bond Yes Yes
Alternative Equity and Macro Strategies
Currency Yes Yes Diversified Alternatives Yes Yes Global Macro Yes Yes Hedged Equity Yes Yes Long/Short Equity Yes Yes Market Neutral Yes Yes Risk-Balanced Yes Yes
Private Equity Buyout/Distressed Yes Funds-of-Funds Yes
Note: Not all vehicles are available to all investors or in all jurisdictions.
We developed a framework for investing in alternative strategies – defining the asset classes
52
Client objective:
Inflation hedge
Principal preservation
Portfolio diversification
Equity diversification
Fixed income diversification
Alternative type:
Alternative Assets Relative Value Strategies
Global Investing and Trading Strategies
Alternative Equity Strategies
Alternative Fixed Income Strategies
Asset classes:
Real Estate (REITS) Commodities Infrastructure MLPs
Market Neutral Arbitrage
Strategies
Macro Risk-Balanced Multi-Alternative Currency
Equity Long/Short Unconstrained
Equity Private Equity Option overlay
strategies
Bank Loans Unconstrained
Fixed Income Long/Short Credit
Allocate to: Assets that historically performed well during periods of inflation
Strategies that historically generated positive returns regardless of market environment
Strategies that invest beyond equities and fixed income across the global markets (currencies, commodities, etc.)
Strategies that invest in equities on a long and short and/or unconstrained basis
Strategies that invest in fixed income and/or credit
Seeks to achieve:
Hedge against inflation and generate current income
Preserve capital and produce positive returns
Generate attractive non-correlated returns
Participate in equity market upside with reduced downside risk
Boost yield, protect against rising rates and/or generate returns unique to traditional fixed income investments
Framework applies to liquid alternatives and non-accredited, retail investors. Past performance is not a guarantee of future results.
Our scale, experience and expertise across our alternatives platform allow us to uniquely deliver for our clients
On-the-ground presence in major world markets provides local market intelligence
Enhanced access to deal flow and alternative investment opportunities due to Invesco scale, reputation and access to market participants
Expertise in a broad range of securities and financial instruments (e.g., equities, credit, currencies, commodities, derivatives)
Fully integrated global trading platform with a dedicated alternatives desk
Multi-layered enterprise risk governance framework that spans both business/operational and investment risk across the alternatives platform
53
Discussion topics
54
Uniquely positioned to meet client needs Marty Flanagan
Factor investing Bernhard Langer Dan Draper
Fixed income Greg McGreevey
Alternatives and multi-asset Colin Meadows
Real estate Scott Dennis
Global Targeted Returns David Millar
Financial overview Loren Starr
Well positioned as a global leader Marty Flanagan
Questions
Table of contents
55
1 The case for real estate
2 Invesco Real Estate (IRE)
3 IRE’s investment strategies
The case for real estate
Competitive total returns
Diversification
Income yield
Exposure to global markets
56
42.95
32.27
24.76
0
5
10
15
20
25
30
35
40
45
50
Global Bond Global Equity Global Real Estate
Estimated size of major asset classes globally (USD trillions)
Estimated size of major asset classes Real estate is a significant part of the investment universe globally
57
Notes: 1. Size of the global bond market is estimated based on the total market capitalization of the Barclays Global Aggregate Index as at Dec. 31, 2015. 2. Size of the global equity market is estimated based on the total market capitalization of the MSCI World Index USD as at Dec. 31, 2015. 3. Size of the global real estate market size is estimated based on each region’s investable stock as defined by latest DTZ Money into Property
as of December 31, 2015. Sources: Invesco Real Estate using data from Bloomberg and DTZ.
8.7
26.7
19.3
26.6
7.9
1.0
4.5 5.3
8.9
25.5
17.5
27.5
7.8
1.1 6.
8
4.8
8.8
26.4
18.6
22.2
8.5
1.9 6.
7
6.9 8.
5
23.1
17.7
25.0
9.9
1.1
7.3
7.4
0
5
10
15
20
25
30
Real Estate US Stocks ForeignEquities
Fixed Income VC/PrivateEquity
Cash Hedge Funds Other
2013 2014 2015 2016
Percent of total assets (%)
Historical target allocations
58
Source: Kingsley Associates, Institutional Real Estate, Inc. 2016 Annual Investor Study
Non-US Respondents 8.5% 12.8% 22.0% 37.7% 7.8% 2.9% 0.8% 7.4%
Correlations of real estate and other asset classes Direct real estate is a potential diversifier to other asset classes Risk and return profile of selected asset classes (quarterly and local currency)
US UK Australia
Market Sector Index NCREIF IPD IPD MSCI World Index 0.14 0.39 0.11
MSCI USA Index 0.13 0.41 0.05
MSCI Europe Index 0.14 0.35 0.13
MSCI Far East Index 0.05 0.31 0.07
MSCI Australia Index
0.06 0.31 0.09
FTSE EPRA/NAREIT Developed Index 0.13 0.49 0.13
FTSE NAREIT All Equity REITs Index 0.16 0.52 0.05
FTSE EPRA/NAREIT Developed Europe Index 0.26 0.56 0.23
FTSE EPRA/NAREIT Developed Asia 0.08 0.39 0.09
FTSE EPRA/NAREIT Australia Index
0.29 0.63 0.15
Barclays Global Aggregate Bond Index -0.15 -0.12 -0.16
BofA Merrill Lynch Corporate/Government Bond -0.16 -0.16 -0.22
Note: Correlations calculated using the longest available common time period from 1Q 1990 through 4Q 2015, except for IPD-UK from Q1 2001 to Q4 2015, and Barclays Global Aggregate Total Return from Q2 1990 to Q4 2015. Sources: NCREIF (National Council of Real Estate Investment Fiduciaries), IPD (Investment Property Databank), Barclays, Lipper Inc, Bloomberg and FTSE EPRA/NAREIT Index as of Q4 2015 and in local currencies.
59
UK Australia
US Canada
US
UK
Australia
Canada
Canada
Australia US UK
UK
US
Australia
Canada
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
0.0 5.0 10.0 15.0 20.0 25.0 30.0
ave
rage
ann
ual t
otal
ret
urn
(% p
er a
nnum
)
Risk (average annual standard deviation)
Risk and return profile of selected asset classes (annual and local currency)
Risk/return profile of selected asset classes The characteristics of listed and unlisted real estate are different
60
Sources: Invesco Real Estate using data from NCREIF, IPD, NAREIT, Barclays, and Macrobond. Past performance is not indicative of future results. An investment cannot be made in an index.
Countries Government bonds Barclays Aggregate
Equities S&P/ASX 200, FTSE100, S&P 500
Private real estate NCREIF, IPD
Public real estate FTSE/EPRA NAREIT
Australia 1988 – 2015 1980 – 2015 1985 – 2015 1990 – 2015 Canada 2002 – 2015 1978 – 2015 2000 – 2015 1997 – 2015 United Kingdom 1987 – 2015 1986 – 2015 1981 – 2015 1990 – 2015 United States 1978 – 2015 1978 – 2015 1978 – 2015 1990 – 2015
Bonds
Private Real Estate Equities
Public Real Estate
8.3
8.0 8.
8
3.5
10.3
1.1
7.1
8.3 8.5 9.
1
2.7
10.7
1.0
7.1 7.
7
7.4
7.2
4.0
9.4
1.4
6.3
8.7
6.8 7.
6
3.6
10.4
1.1
6.3
0
2
4
6
8
10
12
Real Estate US Stocks ForeignEquities
Fixed Income VC/PrivateEquity
Cash Hedge Funds
2013 2014 2015 2016
Expected nominal total rate of return (%)
Return expectations
61
Source: Kingsley Associates, Institutional Real Estate, Inc. 2016 Annual Investor Study
Non-US Respondents 9.7% 6.6% 7.1% 3.3% 12.3% 1.7% 8.8%
5,935 24%
7,476 30%
11,349 46%
United States
Asia Pacific
Europe
Total investable universe1 (US$ billions) = $24,759 billion
Global real estate investable universe
62
1 Total Investable Universe market size is estimated based on each region’s investable stock as defined by latest DTZ Money into Property as of year-end 2015.
Real estate investment styles Each has a different risk and return profile
63
For illustrative purposes only. Source: Invesco Real Estate.
Core/Stabilized
US Income
Value-Added/Enhanced
High Return/Opportunistic
Risk
Return
Global Securities
Real Estate Debt
Strategies targeted by private real estate investors in the next 12 months as of Q3 2015(%)
Strategies targeted by private real estate investors There continues to be sustained interest across the risk spectrum
64
Source: Invesco Real Estate using data from Preqin as of October 2015
60%
25%
56%
46%
13%
6% 0%
10%
20%
30%
40%
50%
60%
70%
Core Core-Plus Value-Added Opportunistic Debt Distressed
Prop
ortion
of
Fund
Sea
rche
s
Increasing Risk
The 2016 outlook for global real estate rents More varied economic prospects are leading to divergence in fundamentals
65
Note: Market positions are not relative and comparable. Duration of market cycles also varies. This does not constitute investment advice. There is no guarantee that the results will be realized. Source: Invesco Real Estate as of September 2015
Melbourne, Sydney
Office sector Industrial sector Residential sector Retail sector Rents falling
Rental decline slowing
Rental growth slowing
Rents rising
Singapore
Singapore
Washington DC
Houston
Hong Kong, Stockholm
Beijing, Los Angeles, Seattle, Seoul, Shanghai San Francisco
London, Madrid, New York, Washington DC
Houston
Singapore Houston
Washington DC
Los Angeles, Tokyo
Beijing, New York, San Francisco, Shanghai Hong Kong, Seattle
Paris (IdF)
Houston
New York
Sydney, Washington DC
Stockholm, Frankfurt, Melbourne, Munich
Los Angeles
Oakland
Hong, Kong, Riverside
Beijing, Seattle, Shanghai, Singapore London, Tokyo
Paris (CBD)
Melbourne
Madrid, Sydney
Los Angeles
Frankfurt, New York, Tokyo, Seoul
Denver
London City, Beijing, Shanghai
Hong Kong, Stockholm
Invesco Real Estate As of Dec. 31, 2015
66
Source: Invesco Real Estate (IRE) Total employees and assets under management as of December 31, 2015
Americas Direct Real Estate Investments — $25.9 BN Under Management — Since 1983
Global Securities Management — $25.8 BN Under Management — Since 1988
EMEA Direct Real Estate Investments — $7.4 BN Under Management — Since 1996
Asian Direct Real Estate Investments — $5.3 BN Under Management — Since 2006
195 N. America 132 Europe 107 Asia
San Francisco
Newport Beach Dallas
New York
Atlanta
London
Madrid Prague Munich
Hong Kong
Paris Tokyo Shanghai
Luxembourg
Seoul
Singapore
Sydney
Beijing
$64.4 Billion Under Management 434 Employees Worldwide; 21 Offices; 16 Countries
Warsaw
Milan
Hyderabad
Invesco Real Estate vision
67
Global real estate investment management business
One corporate culture
Global perspective
Local expertise/execution
Best practices
Performance driven
68
Source: Institutional Real Estate, Inc. Information for this special report was compiled through industry surveys of participating firms and, in some cases, from public information sources.
Invesco Real Estate ranked in the top 10% of Investment Managers by AUM included in the latest IREI Investment Guide Report
69
Source: Institutional Real Estate, Inc. Information for this special report was compiled through industry surveys of participating firms and, in some cases, from public information sources.
Invesco Real Estate ranked in the top 10% of REIT Managers included in the latest IREI Investment Guide Report
Invesco Real Estate investment strategies
70
North American Direct Real Estate
Strategies Separate Accounts
Commingled & Institutional
Funds Mutual Funds Public Markets Core Income Value Added/Opportunistic Structured Investments
European Direct Real Estate Strategies Core Value Added
Asian Direct Real Estate Strategies Core Value Added/Opportunistic J-REIT
Global Securities Strategies US Real Estate* Global Real Estate** Global Real Estate Income Global (Ex-US) Real Estate Global Infrastructure MLPs
* US: Institutional separate accounts and the Institutional Collective Trust closed to new investors ** Global: Institutional separate accounts closed to new investors As of December 31, 2015. Not all funds/strategies mentioned are registered in all jurisdictions, or available to all investors. Some funds are currently under development.
Three things that distinguish Invesco…
71
1 Senior management is comprised of 5 founding members of the Invesco Real Estate business platform Photographs shown above represent recently acquired core real estate assets. For illustrative purpose only.
1 Stability of People Senior management team
has been together an average of 28 years1
2 Stability of Firm Investment Management
only focus
3 Stability of Investment Process Developed and fine tuned
since 1983
Discussion topics
72
Uniquely positioned to meet client needs Marty Flanagan
Factor investing Bernhard Langer Dan Draper
Fixed income Greg McGreevey
Alternatives and multi-asset Colin Meadows
Real estate Scott Dennis
Global Targeted Returns David Millar
Financial overview Loren Starr
Well positioned as a global leader Marty Flanagan
Questions
Invesco Global Targeted Returns Strategy Agenda
73
1 The Invesco Multi Asset team – who we are and why we are here
2 What we do and how we do it – our philosophy and process
3 Why it matters – the opportunity and our performance
4 Conclusion
Who we are and why we are here Invesco Perpetual, a highly regarded investment team – cross asset-class expertise, with a long-term, high-conviction culture
74
Source: Invesco as at 31 December 2015. 1 The Global Equities team is composed of 6 dedicated investment professionals and 14 Portfolio Managers/Analysts drawn from the Invesco Perpetual UK,
European, Emerging, US, Asian and Japan equities teams. 2 Henley investment centre AUM. 3 Global Targeted Returns UK Composite.
Nick Mustoe Chief Investment Officer
66 investment personnel with an average of 16 years’ experience
US$127.5bn1 invested across over 40 countries
UK
Eq
uit
ies
Euro
pea
n
Equ
itie
s
Glo
bal
Eq
uit
ies
Emer
gin
g
Equ
itie
s
US
Eq
uit
ies
Asi
an
Equ
itie
s
Jap
an
Equ
itie
s
Fixe
d
Inte
rest
Mu
lti A
sset
Investment professionals 8 8 202 5 2 5 3 19 10
Average years at Invesco Perpetual 9 10 10 8 4 13 15 9 3
Average years industry experience 17 16 17 15 18 19 21 15 16
Global Targeted Returns Strategy Managed by the Invesco Perpetual Multi Asset team Launched on 9 September 2013 Performance: +16.93% from inception to 29 February 20163 Volatility: 4.00% from inception to 29 February 2016 Assets under management: US$11,093,506 across 3 domiciles at 29 February 2016
43%
9% 10%
16%
24%
4%
17%
18%
21%
24%
49% 65%
0
10
20
30
40
50
60
70
80
90
100
1 year 3 years 5 years4th Quartile 3rd Quartile 2nd Quartile 1st Quartile
Invesco Perpetual ICVCs1 and Invesco SICAVs2 managed by the Henley investment team Asset weighted performance to 29 February 2016
Who we are and why we are here Clear focus on high quality conviction investing – a proven track record
75
Past performance is not a guide to future returns. Source: Invesco, Lipper and © Morningstar 2015 as at 29 February 2016. 1 This makes use of the Investment Association (IA) peer ranking for each ICVCs primary share class. 2 This makes use of the Morningstar peer ranking of the primary share class of Luxembourg and Ireland domiciled funds. Excludes fund-of-funds
and passively managed products. May not sum due to rounding.
Who we are and why we are here An experienced Multi Asset team – core investment team with broad multi discipline support
76
Source: Invesco Perpetual as at 31 December 2015. Years of experience subject to rounding.
A team of macro specialists solely focused on the Invesco Global Targeted Returns strategy
Years of experience
>7
year
s w
orki
ng
toge
ther
David Millar, FIA: Head of Multi Asset 27
Dave Jubb, FIA: Fund Manager 33
Richard Batty, PhD: Fund Manager 21
Gwilym Satchell, PRM: Risk Manager 7
Georgina Taylor: Product Director 15
Clive Emery: Product Director 18
Danielle Singer, CFA: US-based Product Director 14
Saul Shaul: Fund Analyst 9
Steve Hawes: Research Analyst 5
Mike Marshall, CFA: Risk Analyst 9
Invesco: broad multi discipline support
Investment expertise Invesco Ltd.’s Chief Economist
– Monthly economic update 66 Henley-based investment
professionals – Monthly global equity
meetings More than 750 Invesco
investment professionals worldwide – Global investor forum
Invesco infrastructure Governance Dealing Operations Marketing support
Who we are and why we are here Invesco – a global platform committed to investment excellence
77
Source: Invesco as at 31 December 2015. Not all of the capabilities listed are available in all countries, nor are they available on all platforms. Please consult your Invesco representative for more information on any of the capabilities mentioned.
Invesco believes the best investment insights come from specialised investment teams with discrete investment perspectives, operating under a disciplined philosophy & process framework with strong risk oversight.
Corporate access Global product distribution
Independent risk management
Global operating platform
Invesco Asia-Pacific Invesco Canada Invesco Fixed Income
Invesco Fundamental Equity
Invesco Global Core Equity Invesco Perpetual Invesco
PowerShares Invesco Private
Capital
Invesco Real Estate Invesco Unit Investment Trusts WL Ross & Co.
Invesco Global Asset Allocation
Invesco Quantitative Strategies
78
1 27 ideas as at 29 February 2016. 2 MSCI World. * Gross of fees. There is no guarantee this performance target or volatility target will be achieved.
Target return: 3-month LIBOR plus 5% on a rolling, three-year annualised basis*
Target volatility: Less than half global equity2 volatility over a rolling, three-year period*
Portfolio: Typically 20-30 individual investment ideas across asset classes1
with a time horizon of two to three years
Investment philosophy: Unconstrained research combined with a robust risk based management process
For illustrative purposes only.
Portfolio risk
Total independent risk
Div
ersi
ficat
ion
bene
fit
Investing in ideas
What we do and how we do it Our philosophy and process
What we do and how we do it Investing in ideas – a repeatable three-step process
79
For illustrative purposes only.
Approving ideas
Thematic T
Economic E
Analytic A
Managers M
Implementing ideas
Order Comply Execute Review
Combining ideas
Risk Scenarios Structure Liquidity
1 Research
3 Implementation
2 Fund management
Port
folio
rev
iew
and
ove
rsig
ht
What we do and how we do it Approving ideas – targeted ideas across asset classes
80
Source: Invesco as at 29 February 2016. For illustrative purposes only.
Idea 1: The strength of the corporate sector European equities
Idea 2: Interest rates lower for longer
US consumer staples vs discretionary
Idea 3: Diverging economic outlook Chilean peso vs Australian dollar
Idea 4: Market Liquidity UK & US 30-year swap spreads
Currencies
Equities
Government Bonds
1 Research
Alpha Strategies
Equities Corporate Bonds
Commodities Currencies Government Bonds
Inflation Products
Real Estate Volatility Instruments
Alpha Strategies
What we do and how we do it Approving ideas – our central economic thesis
81
Source: Invesco as of 31 December 2015. For illustrative purposes only.
1 Research
Low, but positive, global economic growth
Uncertain market impacts from changing liquidity
Low inflation continues globally
Select opportunities in risk assets
Higher levels of market volatility to persist
What we do and how we do it Combining ideas – achieving diversification
82
Source: Invesco Perpetual as at 29 February 2016. 1There is no guarantee this target will be achieved. For illustrative purposes only. 2Portfolio risk – the expected volatility of the fund as measured by the standard deviation of the current portfolio of ideas over the last three and a half years. 3Independent risk – the expected volatility of an individual idea as measured by its standard deviation over the last three and a half years. 4Global equity risk is the expected volatility of the MSCI World index as measured by its standard deviation over the last three and a half years, 12.23% 29 February 2016.
2 Fund management
0
2
4
6
8
10
12
14
16
Independent risk Portfolio risk
Volatility - UK Equity vs Rates
Volatility - Japanese Yen vs US Dollar
Volatility - Australian Dollar vs US Dollar
Volatility - Asian Equities vs US Equities
Interest Rates - UK
Interest Rates - Sweden vs Europe
Interest Rates - Swap Spreads
Interest Rates - Selective EM Debt
Interest Rates - European Curve Steepener
Interest Rates - Australia vs Europe
Equity - US Staples vs Discretionary
Equity - US Large Cap vs Small Cap
Equity - Japan
Equity - Germany
Currency - US Dollar vs Euro
Currency - US Dollar vs Canadian Dollar
Currency - Norwegian Krone vs UK Pound
Currency - Japanese Yen vs Korean Won
Currency - Indian Rupee vs Chinese Renminbi
Currency - Chilean Peso vs Australian Dollar
Credit - European Curve Flattener
Commodity - Commodity Carry
Credit - Selective Credit
Equity - UK
Equity - Selective Asia Exposure
Equity - Global
Equity - European Divergence
Total portfolio risk 4.02%2
Total independent risk 15.12%3
50% of global equity risk4
Diversification benefit
A portfolio designed to target equity-like returns for less than half the risk of global equities over a rolling, three-year period1
What we do and how we do it Combining ideas – stress testing and scenario analysis
83
For illustrative purposes only. $ = US.
1. Regulatory stress testing of historic events by Invesco’s independent risk function
2. Analysis by the Multi Asset team of possible scenarios going forward
Scenario Characteristics
UK Macro Meltdown GBP trade-weighted index -15%, UK 10yr yield -75bps, UK 2 year yield +50bps
Emerging Markets Dead Stop EM currency index falls 13%, South African 10yr bond yields rise to 15%
US Policy Positive S&P 500 to 2300, US dollar index up (+25%)
Oil Spill Brent to $100, Oil stocks outperform (+20%), LatAm FX strengthens (+20%)
Recession 2016 S&P 500 falls (-50%), US 2yr yield +200bps, US 10yr yield -100bps, Investment grade bond spreads widen (+150bps)
Euro Exit Spanish 10 yr yields +500bps, European bank volatility doubles, EUR weakens (-15%)
Cash is King S&P 500 falls to 1000, yield on US 10yr Treasuries to 5%
Japan’s Third Arrow JPY weakens (-20%), Nikkei rises (+30%)
2 Fund management
What we do and how we do it Implementing ideas – the operational and trading platform
84
Source: Invesco as at 31 December 2015. For illustrative purposes only.
Review and Oversight
A global manager with global derivatives dealing capability
Global Performance Measurement and Risk and Compliance
Integrated global operating platform
3 Implementation
TRADE EXECUTION
85
Global Targeted Returns UK Composite Gross performance (%) Returns 3 months 6 months 1 year Since inception1 Calendar Year
(Cum) (Ann) 2014 2015
Portfolio gross 1.56 2.32 1.14 16.93 6.68 9.54 2.82
3-month sterling LIBOR 0.15 0.29 0.58 1.36 0.56 0.55 0.58
Out/under performance +1.41 +2.03 +0.56 +15.57 +6.12 +8.99 +2.24
Realised volatility2 4.10 4.00 3.42 3.81
Realised volatility of global equities2 15.10 12.48 10.73 13.23
Realised volatility as a percentage of equity volatility 27.13% 32.00% 31.86% 28.78%
Past performance is not a guide to future returns.
Source: Invesco Perpetual as at 29 February 2016. 1 Inception date 30 September 2013. 2 Standard deviation of weekly returns. An Invesco Perpetual Global Targeted Return Representative Account is shown using weekly data versus
the composite data which is provided monthly. Global equities represented by MSCI World Index. Performance figures are shown in sterling on a mid-to-mid basis, inclusive of reinvested income and gross of the Ongoing Charge and portfolio transaction costs. The figures do not reflect the entry charge paid by individual investors. Benchmark and other index information source: Datastream, total return, in sterling. Periods of less than one year are cumulative. This slide is supplemental information to the GIPS-compliant information included in slides 123-125. Performance figures are shown in GBP and are gross of fees.
Why this matters The opportunity and our performance
95
100
105
110
115
120
125
130
135
9/9/2013 12/9/2013 3/9/2014 6/9/2014 9/9/2014 12/9/2014 3/9/2015 6/9/2015 9/9/2015 12/9/2015
Invesco Perpetual Global Targeted Returns Strategy MSCI World Libor 3M + 500bps
Why this matters Global Targeted Returns Strategy* – gross performance versus global equities and target since inception1
86
Past performance is not a guide to future returns. *This is a representative account of the Global Targeted Returns Strategy Source: Invesco Perpetual and Bloomberg as at 31 January 2016. 1 Inception date 9 September 2013. Global equities represented by MSCI World Index (total return, in sterling). Fund performance figures are shown in sterling on a mid-to-mid basis, inclusive of reinvested income and gross of the Ongoing Charge and portfolio transaction costs. The figures do not reflect the entry charge paid by individual investors. An Invesco Perpetual Global Targeted Return Representative Account is shown using weekly data versus the composite data which is provided monthly.
Why this matters Financial performance
87
Source: Strategy AUM - Invesco Perpetual as at 29 February2016.
0
2000
4000
6000
8000
10000
12000
14000
2013 2014 2015
US Canada UK Cross-Border Asia-Pacific
0100020003000400050006000700080009000
2013 2014 2015
US Retail Canada UK Cross-Border Asia-Pacific
63%
26%
2% 9%
UK-domiciled fund
Lux-domiciled fund (RoW)
US-domiciled fund
Segregated accounts
Total strategy AUM – US$11.1bn
Historical AUM (US$M)
Net Flows (US$M)
Why this matters Global pension assets – December 2015
88
Country Total assets 2015 (USD billion) Assets/GDP ratio (%)6
Australia 1,484 119.6 Brazil1 180 10.0 Canada 1,525 97.0 Chile 159 66.4 France 151 6.2 Germany2 427 12.7 Hong Kong 123 39.9 India 94 4.3 Ireland 128 56.1 Japan3 2,746 66.7 Malaysia 190 60.6 Mexico 177 15.2 Netherlands 1,378 183.6 South Africa 181 57.2 South Korea 545 39.1 Spain 41 3.3 Switzerland4 804 118.7 UK 3,204 111.9 US5 21,779 121.2 Total 35,438 80.0
Source: Willis Towers Watson, Global Pensions Asset Study 2016. 1 Only include pension assets from closed entities. 2 Only include pension assets for company pension schemes. 3 Does not include the unfunded benefit obligation of corporate pension plans (account receivables). 4 Only includes autonomous pension funds. Does not consider insurance companies assets. 5 Includes IRAs. 6 Assets/GDP ratio for individual markets are calculated in local currency terms, and total Assets/GDP ratio is calculated in USD.
What is a Diversified Growth Fund (DGF)? Taking a cue from across the pond …
DGFs started as solutions for UK pension plans to de-risk significantly out of equities in 2006 following a significant equity market decline, pension regulation changes and new accounting rules. Today:
Gaining traction: DGFs continue to attract assets in the UK, growing to roughly US$200bn in AUM with expectation to grow beyond US$300bn in AUM by 2019.1
Extending reach: DGFs are spreading across the globe into Continental Europe, Asia, Australia and the United States.
In the US today, strategies like ours are currently considered as ‘liquid alternatives.’2 But with a pensions market in the US >US$20trn vs >US$3trn in the UK there is a significant growth opportunity.
89
Source: Diversified Growth Funds, Market Intelligence. Spence Johnson Ltd. 2015, Invesco. 1 AUM represented by funds defined by Spencer Johnson Ltd., under the DGF brand. 2 As compared to less liquid vehicles such as hedge funds and private equity.
Global Targeted Returns Strategy
Idea generation: Cross fertilization of ideas with Invesco Perpetual and Invesco asset class specialists
Risk management: An experienced Multi Asset team running a highly diversified portfolio
Implementation: Leveraging Invesco’s infrastructure to attain the best expression of investment ideas across asset classes
90
A market with significant growth opportunity
Investing in ideas
Discussion topics
91
Uniquely positioned to meet client needs Marty Flanagan
Factor investing Bernhard Langer Dan Draper
Fixed income Greg McGreevey
Alternatives and multi-asset Colin Meadows
Real estate Scott Dennis
Global Targeted Returns David Millar
Financial overview Loren Starr
Well positioned as a global leader Marty Flanagan
Questions
Invesco outlook – discussion topics
92
Benefits of diversification
Capital management policy
66%
3%
13%
10%
8%
48%
6%
9%
24%
13%
We are diversified as a firm Delivering a diverse set of solutions to meet client needs
93
As of December 31, 2015. Source: Invesco Ltd.
By client domicile By channel By asset class
$510.7 $21.7
$104.2 $75.4 $63.6
$775.6 Total
U.S. Canada U.K. Europe Asia
(4.0)% (15.9)% (0.9)%
6.0% 9.1%
(2.1)%
1-Yr Change ($ billions)
$514.8 $260.8
$775.6 Total
Retail Institutional
(3.3)% 0.3%
(2.1)%
1-Yr Change ($ billions)
$370.9 $48.1 $64.6
$187.9 $104.1
Total
Equity Balanced Money Market Fixed Income Alternatives
(3.5)% (4.9)%
(15.6)% 3.5% 4.8%
(2.1)%
1-Yr Change ($ billions)
$775.6
66%
34%
Our strategic focus generated strong financial results
94
*Adjusted share price as of July 29, 2005 **Adjusted diluted EPS Non-GAAP financial measures, please see appendix page 114-115 for reconciliation to most relevant GAAP measure. Source: Invesco Ltd.
Adjusted operating income $ Millions
1,494
513
879 1,046 1,012
1,292
1,495
5 YR CAGR +11.2% (2010 to 2015) -0.1%
2015
2014
2013
2012
2011
2010 2005
Ending AUM $ Billions
776
406
600 607 667
779 792 5 YR CAGR +5.3% (2010 to 2015)
-2.0%
2015
2014
2013
2012
2011
2010
2005 Avg. AUM
384
517
618
645
726
790
795
Adjusted operating margin Percent
41.0
24.1
36.3 37.5 35.7 39.7 41.4
5 YR CAGR +2.7% (2010 to 2015)
-1.0% (-0.4 ppts)
2010 2005 2015
2014
2013
2012
2011
Share Price Dollars
33.48
11.97
24.06 20.09
26.09
36.40 39.52 5 YR CAGR +6.8%
(2010 to 2015)
-15.3%
2015
2014
2013
2012
2011
2010
2005* EPS** 0.74 1.34 1.63 1.65 2.13 2.51 2.44 P/E 19.1 18.0 12.3 15.8 17.1 15.7 13.7
Long-term net flows are diversified across region, asset class & channel
95
Note: Organic Growth is defined as long-term net sales divided by Beginning-of-period AUM. Source: Invesco Ltd.
Annual Long-Term Net flows, by region (US $ billions)
8.9 9.5
2.9 0.5
3.8 7.4
2.2
10.3
-2.5
4.7 3.1 5.5
10.2
21.6
8.2
16.3
Americas EMEA
2014 2013 2012
Annual Long-Term Net flows, by asset class (US $ billions)
6.1 2015
Organic Growth(%) 2.4 2.0 0.5 0.1 3.2 5.3 8.7 5.8 -5.0 9.6 5.7 9.5
Organic Growth(%)
-4.0 2.4 -1.7 -1.4 5.6 1.0 2.8 5.5 45.6 14.0 3.9 2.8 -4.3 7.3 11.1 10.1
Asia Pacific 1.7 3.2 1.1 2.1
Total
1.7 3.2 1.1 2.1
-10.8
6.9
-6.7 -5.2
12.4
2.5 7.2
10 12.4 6.1
-2.1
1.4
-3.8
6.1 9.8 10.1 10.2
21.6
8.2
16.3
Alternatives Balanced Fixed Income Total Equity
10.2
21.3
5.0 2.9
0.0 0.3 3.2
13.4 10.2
21.6
8.2
16.3
Retail Institutional Total Organic Growth(%)
2.7 5.0 1.0 0.5 0.0 0.1 1.2 5.2 1.7 3.3 1.0 2.0
Annual Long-Term Net flows, by channel (US $ billions)
Benefits of diversification Invesco’s global diversification has lead to consistent growth and lower volatility compared to industry average
96
Note: Organic growth is based on average annual net long term flows dividend by beginning period AUM from 2011-2015. Averages exclude IVZ. Companies represented include: Affiliated Managers, AB Global, Ameriprise, BlackRock, Bank of New York Mellon, Eaton Vance, Federated, Franklin Resources, Janus, Legg Mason, T. Rowe Price, and Waddell & Reed. Source: Invesco Ltd.
H
L
F
J
E
D
IVZ B
A
C G
K
I
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%
Average Organic growth
Standard Deviation
Average Organic Growth = 0.4%
Average Standard Deviation = 3.2%
IVZ Targeted Organic Growth Rate of 3-5%
Benefits of diversification Despite more consistent positive organic growth, Invesco trades at a discount to peers
97
Note: Organic growth is based on FY 2015 net long term flows divided by beginning of period AUM. Averages exclude IVZ. Forward P/E multiple is as of 12/31/2015 on FY 2016 earnings estimates from Factset Companies represented include: Affiliated Managers, AB Global, Ameriprise, BlackRock, Bank of New York Mellon, Eaton Vance, Federated, Franklin Resources, Janus, Legg Mason. T. Rowe Price., and Waddell & Reed.
2015 Organic growth
Forward P/E Multiple
8.0
9.0
10.0
11.0
12.0
13.0
14.0
15.0
16.0
17.0
18.0
-12.0% -10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0%
A
D
B
E
IVZ
G
K H
C
J
L
I
F
Capital management philosophy
Our capital management priorities support growth of the business while maintaining financial strength
Our capital management priorities have evolved with the growth and success of our business
Our capital management policy is executed in a manner consistent with our desire to maintain a strong, investment-grade credit rating
– Reinvestment in the business – This is primarily in the form of seed capital for new products and co-investments
– Steady annual growth of dividends
– Share repurchase
– Strength of the balance sheet including ~$1 billion cash buffer in excess of European regulatory and liquidity requirements
98
Capital management philosophy
M&A is not an explicit capital priority for Invesco and any potential transaction will have to meet stringent corporate requirements
Enhances our ability to meet client needs
Aligns with Invesco’s long-term strategy
Further leverages Invesco’s global operating platform
Compelling strategic rationale and cultural alignment
Meets financial criteria:
– Internal Rate of Return (IRR) in excess of 20%
– Cash payback within 7 years
– Accretive to earnings in year one
99
3.9%
26.5%
77.1%
12.4%
-0.5% 2011 2012 2013 2014 2015
13% 16% 17% 9% 20%
23% 27%
1%
60% 57%
64% 57%
82%
20% 23%
10%
2011 2012 2013 2014 2015
Equity Fixed Income Alternatives Balanced
Capital management philosophy Invesco’s seed capital composition has changed with the company’s evolution over time
100
Source: Invesco Ltd.
$ of new products seeded (in millions) Growth rate (%) of new product seeding
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
2005 2015
(millions)
Market Cap $5.3B
Market Cap $12.3B
Capital Returned to Shareholders
Since 2005 $6.0B
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Cumulative return of capital Market capitalization comparison
Capital management philosophy A long-term commitment to executing our strategy and delivering consistent results for shareholders
101
(millions)
Dividends Buyback
Cumulative return of capital since 2005: $6.0 billion
New Management Team and Strategy
*Market Capitalization data as of March 16, 2016
Source: Invesco Ltd.
Capital management philosophy Total outstanding shares have declined 8% since peaking in 2011 post the Van Kampen acquisition
102
Source: Invesco Ltd.
Annual weighted average shares outstanding (millions)
# of shares (in millions) issued
41.5
5.9 5.8 5.2 4.6 4.4 9.4
18.8
11.1 13.9
7.4
15.5
463.2 464.7
453.8 448.5
435.6
429.3
2010 2011 2012 2013 2014 2015
# of shares (in millions) repurchased
30m shares issued as consideration to Morgan Stanley
Capital management philosophy The $1 billion in dividends and buybacks paid out in 2015 represents an increase of 32% over 2014
103
For dividend information reported values represent fiscal year Non-GAAP financial measures, please see appendix page 117 for reconciliation to most relevant GAAP measure. Sources: Invesco Ltd.
$ amount of dividends paid
Total payout ratio (dividends + buyback / cash flow)
$ amount of shares repurchased
$198 $221 $289 $380 $424 $454 $192
$436 $265
$470 $270
$549
70%
82%
62%
78%
65%
97%
2010 2011 2012 2013 2014 2015
Discussion topics
104
Uniquely positioned to meet client needs Marty Flanagan
Factor investing Bernhard Langer Dan Draper
Fixed income Greg McGreevey
Alternatives and multi-asset Colin Meadows
Real estate Scott Dennis
Global Targeted Returns David Millar
Financial overview Loren Starr
Well positioned as a global leader Marty Flanagan
Questions
Our continued investment in the business is fully aligned with client demand trends
105
Client demand themes Invesco’s positioning
Search for yield
In 2007, began expansion of global fixed income platform, which today supports the full range of single-sector and multi-sector capabilities
Continue to expand the full range of income-related capabilities, including equities, fixed income and alternatives
“Barbelling” and the shift to passive, beta and ETF products
Continued to expand our comprehensive range of all-weather, high-conviction capabilities
Began factor investing in 1983
Added Invesco PowerShares in 2006 – smart beta line remains broadest, most diverse in the industry
Continue to accelerate our ETF business globally
Multi-asset strategies and absolute return
Introduced risk parity strategy in 2008
Built new Invesco Perpetual multi-asset team beginning in 2012; expanding to new markets
Invesco Quantitative Strategies added global market neutral capability in 2008
Our continued investment in the business is fully aligned with client demand trends
106
Client demand themes Invesco’s positioning
Growing demand for alternatives
Entered direct real estate business in 1991; completed the globalization of our real estate capabilities by adding the Asia team in 2010
Expanded into private equity through WL Ross & Co. in 2006
Continued to broaden our range of alternative strategies with the launch of more than 40 liquid alternatives offerings globally beginning in 2011; today the range represents one of the most comprehensive lineups in the industry
Increasing demand for solutions and new advice models
Invesco Solutions builds and manages goal-oriented, multi-asset strategies aligned to client outcomes
Early entrant into the digital advice space through the addition of Jemstep in 2016
Invesco Solutions builds and manages goal-oriented, multi-asset strategies
Expertise in evaluating investment strategies and constructing portfolios designed to meet specific client goals
Independent group within Invesco’s broader Investments group
Not affiliated with any one investment team; flexibility to tap into Invesco’s broad range of investment capabilities
Substantial experience working across investment teams globally
Combines rigorous research, quantitative analysis and qualitative capabilities review with a pragmatic assessment of current market dynamics
107
Invesco Solutions has access to a comprehensive array of resources and capabilities around the world
108
Data as of June 30, 2015. Data subject to change. 1 Number in parentheses represents total number of team members.
Invesco Solutions Substantial resources to support investment selection and ongoing monitoring1
US Product Development (9)
Global Performance Measurement & Risk (94)
Product & Market Research (11)
Product Management (26)
Breadth of investment management expertise
Invesco Fixed Income Global liquidity Stable value Global and US
broad fixed Global alternatives
and bank loans
Invesco Global Core Equity Emerging markets International and
global equity US equity
Invesco Perpetual Global and regional
equity: UK, European, Asian, Japanese and emerging markets
Multi-asset Fixed Income
Invesco Real Estate Global direct real
estate Global public real
estate
Invesco Private Capital Private equity
funds of funds Customized
portfolios
Invesco Global Asset Allocation Global macro Risk parity Commodities Active balanced
solutions
Invesco Quantitative Strategies Quantitative equity Enhanced Long/short
strategies
WL Ross & Co. Distressed and
restructuring private equity
Energy private equity
Invesco Asia Pacific Asia Ex-Japan Greater China Japan Australia
Invesco Fundamental Equity US growth equity US value equity International and
global growth Sector equity Balanced portfolios
Invesco Canada Canadian regional,
sector and global equity
Canadian and Global fixed
Balanced Portfolios
Invesco PowerShares Index-based and
actively managed ETFs
Domestic and international
Fixed income Commodities
A strong and growing presence in key markets across the globe
109
A strong and growing presence in the Americas US Canada Top 10 brand equity in US retail and institutional 1
#4 Best Places to Work in Money Management for 2015 from Pensions & Investments
5th largest advisor-sold fund family2
Over 85% of Invesco US open-end mutual funds’ AUM in top half of Morningstar and Lipper peer groups for ten-year time period
Top 5 brand equity Canada retail Top 10 overall Advisor Perception 5th largest ETF provider 11th largest advisor-sold fund family Rank #2 of AUM in Top Half of peers for
3-year and 5-year periods among competitors
A strong and growing presence in EMEA
Top 10 manager in Morningstar’s Offshore Chinese/Greater China Equities Universe of 135 funds Top 7 Japanese equity manager among foreign asset managers5
In Hong Kong, won “Best Institutional House” and the “Regional Best Client Servicing” awards (Asia Asset Management Best of the Best Awards 2015)
71% and 75% of assets rank in the top half of peer group over the respective 3- and 5-years in Asia Pacific Japan Advantage strategy ranks 1st in 5-year performance in the Mercer Universe of 50 funds China JV awarded “Best China A-share Manager” for three-year performance and its CIO was named “CIO of the
Year” in China by Asia Asset Management (Best of the Best Awards 2015)
A strong and growing presence in Asia Pacific
UK Largest retail asset manager in the UK with $64B in
AUM; #1 brand with UK advisors 99% of funds rank in the top half of their peer
group over 3-years3
65% of funds’ assets are in funds with 4 or 5- star Morningstar rating3
Cross Border retail Top 10 manager in European Cross Border Retail, with $49B
in assets; ranked #9 by gross sales, #52 by net sales (Broadridge SalesWatch)4
70% of funds rank in the top half of their peer group over 3-years
Best European Asset Management Companies (European Funds Trophy) in 2016
Any reference to a rating, ranking or an award is not a guarantee of performance and is not consistent over time. For additional information, please see slide 126.
We are uniquely positioned to meet client needs
110
Success driver Invesco position
Deep understanding of client needs
Deep knowledge of clients and their evolving needs
Comprehensive, all-weather, high-conviction, fundamental and factor investing product line
Demonstrated ability to combine a broad range of capabilities to construct portfolios aligned with client investment objectives by channel and by region
Focus and experience
A pure focus on investment management
Strong investment reputation
Independence
Proven management team with a solid track record
Delivery of investment excellence
Specialized, stable investment teams with discrete investment perspectives and experience across diverse market cycles
Disciplined, repeatable investment philosophy and processes
Strong risk management and oversight
Compensation aligned with performance and client interests
Organizational strength
Broad and deep global footprint
Solid margins, financial stability, and resources to continue long-term investment in the business
Employee survey results demonstrate highly engaged and motivated staff
We are uniquely positioned to meet client needs
111
It is the totality of our organization that makes Invesco highly differentiated in the marketplace and positions us for growth and success over the long term
Channels
Asset classes
Geographies
Independent Depth and breadth of capabilities
Diversification across channels, asset classes and geographies
Search for yield
Barbelling (factor and fundamental investing)
Multi-asset solutions and absolute return
Growing demand for alternatives
Increasing demand for solutions
Discussion topics
112
Uniquely positioned to meet client needs Marty Flanagan
Factor investing Bernhard Langer Dan Draper
Fixed income Greg McGreevey
Alternatives and multi-asset Colin Meadows
Real estate Scott Dennis
Global Targeted Returns David Millar
Financial overview Loren Starr
Well positioned as a global leader Marty Flanagan
Questions
Appendix
113
Reconciliation of US GAAP results to non-GAAP results – 2005, 2010-2015
114
($ millions) 2015 2014 2013 2012 2011 2010 2005 Reconciliation of Operating revenues to Adjusted operating revenues:
Operating revenues, U.S. GAAP basis 5122.9 5147.1 4644.6 4050.4 3982.3 3385.9 2872.6 Proportional share of revenues, net of third-party distribution expenses, from joint venture investments 61 56.7 51.7 37.5 41.4 42.2 - Third party distribution, service and advisory expenses (1579.9) (1630.7) (1489.2) (1308.2) (1279.4) (1051) (753.3) CIP 39.2 35.2 37.9 41 47.3 45 5.5 Other reconciling items - - 7 15.3 - - - Net revenues 3643.2 3608.3 3252 2836 2791.6 2422.1 2124.8
Reconciliation of Operating income to Adjusted operating income:
Operating income, U.S. GAAP basis 1358.4 1276.9 1120.2 842.6 882.1 579.4 407.9
Proportional share of net operating income from joint venture investments 27.4 25.9 21.3 15.7 19.2 22.9 - CIP 63.2 69.8 73 72.5 60.3 54.9 16.3 Acquisition/disposition related adjustments 12.8 12.6 23 31.4 66.7 188 25.9 Compensation expense related to market valuation changes in deferred compensation plans 4.3 11.5 25.1 14.3 5.8 9.3 - Other reconciling items 27.6 98.3 29.5 35.6 12.1 24.2 62.6 Adjusted operating income 1493.7 1495 1292.1 1012.1 1046.2 878.1 512.7
Operating margin* 26.5% 24.8% 24.1% 20.8% 22.2% 17.1% 14.2% Adjusted operating margin** 41.0% 41.4% 39.7% 35.7% 37.5% 36.3% 24.1%
Reconciliation of Net income attributable to Invesco Ltd. to Adjusted net income attributable to Invesco Ltd.: Net income attributable to Invesco Ltd., U.S. GAAP basis 968.1 988.1 940.3 677.1 729.7 465.7 219.8
CIP, eliminated upon consolidation 40.4 (7.8) 8.7 10.7 (20.2) (6.8) - Acquisition/disposition related adjustments, net of tax 14 36.2 (23.8) 21.9 62.3 148.1 31.8 Deferred compensation plan market valuation changes and dividend income less compensation expense, net of tax 5.9 (0.3) (12.6) (7.4) 2.5 (5.3) - Other reconciling items, net of tax 20.3 78.6 40.7 46.3 (15.2) 17.0 48.0 Adjusted net income attributable to Invesco Ltd. 1048.7 1094.8 953.3 748.6 759.1 618.7 299.6
Average shares outstanding - diluted 429.3 435.6 448.5 453.8 464.7 463.2 402.5
Diluted EPS 2.26 2.27 2.10 1.49 1.57 1.01 0.55 Adjusted diluted EPS*** 2.44 2.51 2.13 1.65 1.63 1.34 0.74
*Operating margin is equal to operating income divided by operating revenues.
**Adjusted operating margin is equal to adjusted operating income divided by net revenues.
***Adjusted diluted EPS is equal to adjusted net income attributable to Invesco Ltd. divided by the weighted average shares outstanding amount used in the calculation of diluted EPS.
Reconciliation of US GAAP results to non-GAAP information – 2010-2015
115
($ millions) 2015 2014 2013 Reconciliation of net cash provided by operating activities before consolidation to U>S. GAAP net cash provided by operating activities
Before consolidation (non-GAAP)
Impact of Consolidation
Total (U.S. GAAP)
Before consolidation (non-GAAP)
Impact of Consolidation
Total (U.S. GAAP)
Before consolidation (non-GAAP)
Impact of Consolidation
Total (U.S. GAAP)
Net Income 1,010.3 (46.1) 964.2 990.0 11.1 1,001.1 946.8 36.0 982.8
(Purchase)/sale of trading investments (159.0) - (159.0) (2.7) - (2.7) 5.4 - 5.4 Other adjustments to reconcile net income to net cash provided by operating activities 224.2 42.6 266.8 163.7 (11.6) 152.1 87.0 (47.6) 39.4 Changes in operating assets and liabilities (34.6) (13.3) (47.9) (76.2) (23.7) (99.9) 35.2 26.4 61.6 (Increase)/decrease in cash held by CIP - 39.9 39.9 - 148.5 148.5 - (298.9) (298.9) (Increase)/decrease in cash held by CSIP (10.5) - (10.5) 1.3 - 1.3 (10.1) - (10.1) Net cash provided by/(used in) operating activities 1,030.4 23.1 1,053.5 1,076.1 124.3 1,200.4 1,064.3 (284.1) 780.2
($ millions) 2012 2011 2010 Reconciliation of net cash provided by operating activities before consolidation to U>S. GAAP net cash provided by operating activities
Before consolidation (non-GAAP)
Impact of Consolidation
Total (U.S. GAAP)
Before consolidation (non-GAAP)
Impact of Consolidation
Total (U.S. GAAP)
Before consolidation (non-GAAP)
Impact of Consolidation
Total (U.S. GAAP)
Net Income 687.9 (100.6) 587.3 709.4 (107.5) 601.9 456.1 181.4 637.5
(Purchase)/sale of trading investments (7.2) - (7.2) (11.0) - (11.0) (60.4) - (60.4) Other adjustments to reconcile net income to net cash provided by operating activities 176.8 106.0 282.8 231.4 159.2 390.6 232.6 (114.0) 118.6 Changes in operating assets and liabilities 14.6 (22.0) (7.4) (127.0) (153.9) (280.9) - 46.8 46.8 (Increase)/decrease in cash held by CIP - (36.2) (36.2) - 264.2 264.2 - (336.2) (336.2) (Increase)/decrease in cash held by CSIP - - - - - - (27.1) - (27.1) Net cash provided by/(used in) operating activities 872.1 (52.8) 819.3 802.8 162.0 964.8 601.2 (222.0) 379.2
5.3% 6.1%
10.4%
12.3%
12.4% 14.5%
19.4%
19.6% Dividend ($1.9B)
Buyback ($2.2B)
Currency/Commodity ($3.8B)
Intellidex ($4.5B)
Momentum ($4.6B)
Other ($5.5B)
Fundamental ($7.1B)
Low Volatility ($7.2B)
Smart Beta Breakdown
56.6 70.1
96.9 96.8 97.9
58.2 72.1
99.7 100.2 101.7
0
40
80
120
2011 2012 2013 2014 2015
Americas Canada EMEA Total
Historical AUM
PowerShares Financial Performance
116
17.6
27.6
17.6 20.9
-11.1
-18.5 -13.0
-18.2
6.5 9.1 4.6 2.7
-30
-20
-10
0
10
20
30
2012 2013 2014 2015
Gross Sales Gross Redemptions Net long-term flows
Long-term Flows ($B)
Total Smart Beta AUM = $36.8B
Ending AUM by Year ($B) (CAGR = 14.95%)
Data as of December 31, 2015 (includes QQQ)
Data as of December 31, 2015 (Ex-QQQ)
Invesco Quantitative Strategies - Financial Performance
117
66% 71% 82%
47% 53% 53%
8% 5%
34%
2nd quartile 1st quartile AUM above benchmark
1 yr. 3 yr. 5 yr.
Investment Performance
2.8
6.3
9.6 12.1
-4.5 -5.4 -6.8 -7.1
-1.7
0.9 2.8
5.0
2012 2013 2014 2015 Gross sales Gross redemptions Net long-term flows
Long-term Flows
11%
16%
1% 3%
32% 1%
1%
23%
14%
IQS Strategy Breakdown
Core
Enhanced
Long Short
Mkt Neutral
Low Vol
Growth
Small Cap
Passive
Balanced
6.8 8.6 10.7 11.3
8.9 13.4
15.4 18.8
3.7
3.9 3.7
4.0
19.5
25.8 29.8
34.1
2012 2013 2014 2015
Asia-Pac EMEA Americas Total
Ending AUM by Year ($B) Total IQS AUM = $34.1b
Historical AUM (Client Domicile)
Long-term Flows ($B)
117
Invesco Fixed Income is focused on delivering strong investment performance for our clients
118
89%
11%
83%
17%
86%
14%
16%
72%
12% 20%
70%
10% 17%
79%
4%
1-Year 3-Year 5-Year December 31, 2015
December 31, 2015
Past performance is not a guide to future returns. Aggregate performance analysis – asset weighted. * Excludes passive products, closed-end funds, fund of funds with component funds managed by Invesco, stable value building block funds and CDOs. Certain
funds and products were excluded from the analysis because of limited benchmark or peer group data. Had these been available, results may have been different. Data as of December 31, 2015. AUM included above represents 29.5% of total IVZ assets, as of December 31, 2015. Peer group rankings are sourced from a widely-used third party ranking agency in each fund’s market (Lipper, Morningstar, Mercer, eVestment Alliance) and asset-weighted in USD. Rankings are as of prior quarter-end for most institutional products. See the AUM Disclosure slide for a further explanation of how composites are measured. Performance assumes the reinvestment of dividends. Past performance is not indicative of future results and may not reflect an investor’s experience. Any reference to a rating, ranking or an award is not a guarantee of investment performance and is not constant over time. Please see slides 127 – 129.
% above benchmark
% below benchmark
Percent of IFI actively managed assets in the first or second quartile*
% in the 2nd quartile of peer group
% in the bottom half of peer group
% in the 1st quartile of peer group
65.5
27.6
13.4 0.9
2.3
16.0
23.6
51.0
22.1 Global Liquidity
Bank Loans
Multi Sector
Emerging Markets
High Yield
Global IG
Municipals
Stable Value
Structures
IFI AUM = $222.3* bn
Invesco Fixed Income offers a comprehensive range of single and multi-sector solutions to meet client objectives
119
*AUM is unadjusted and does not include $11.5bn in assets for co-managed and manual adjustments.
Source: Invesco, as of 12/31/15
Industry vs. Invesco Real Estate Capital flows
120
Source: FPL Advisory Group. Data as of Q4 2015.
Americas 60%
Europe 18%
Middle East 1%
Asia 21%
FPL Peer Comparison (%)
Americas 61%
Europe 24%
Asia 15%
Invesco Real Estate (%)
Inve
stor
Dom
icile
Q
uad
ran
t
Direct Equity 78%
Securities 10%
Direct Debt 12%
FPL Peer Comparison (%)
Direct Equity 84%
Securities 16%
Invesco Real Estate (%)
Financial performance
121
Source: Invesco Real Estate as of December 31, 2015
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
2011 2012 2013 2014 2015
Flow
s ($
in M
illio
ns)
Gross Sales Gross Redemptions Net Long-Term Flows
16.0 14.7 15.3
8.7
11.8
15.3 14.0 14.5
7.9
10.9
15.2 13.6 13.6
6.3 8.5
0
5
10
15
20
1 Year 3 Year 5 Year 10 Year SinceInception
Invesco NCREIF Real Estate (Leveraged)-GrossInvesco NCREIF Real Estate (Leveraged)-NetNFI-ODCE (Equal Weighted)
0
20
40
60
80
2011 2012 2013 2014 2015
North America Direct Global SecuritiesEurope Direct Asia Direct
$25.9 40%
$7.4 12%
$5.3 8%
$25.8 40%
NA Direct
Europe Direct
Asia Direct
Global Securities
Business Line (Total AUM = $64.4 BN) Growth in Our Assets Under Management
48.3 50.7 55.7
64.1 64.4
Long-term Flows Invesco NCREIF Real Estate Composite (Leveraged) (%)
(10/92-12/15)
Industry vs. Invesco Real Estate Capital flows
122 *Direct Real Estate Only Source: FPL Advisory Group. Data as of Q4 2015.
Inve
stm
ent
Str
ateg
y*
Core 73%
High Yield 27%
FPL Peer Comparison (%)
Core 80%
High Yield 20%
Invesco Real Estate (%)
Veh
icle
Typ
e
Open-end Fund 32%
Closed-end Fund 13%
Separate Account
42%
Other 13%
FPL Peer Comparison (%)
Open-end Fund 38%
Closed-end Fund 9%
Separate Account
37%
Other 16%
Invesco Real Estate (%)
Global Targeted Returns Schedule of investment performance (1)
123
Gross rate of return
(%)
Net rate of return
(%)
Benchmark return
(%)
Composite 3-Yr Ann
St Dev (%)
Benchmark 3-Yr Ann
St Dev (%)
No of portfolios
Composite assets
(GBP mn)
% of firm assets
Total firm assets1
(GBP bn)
Composite dispersion
(%)
2015 2.82 1.23 0.58 n/a n/a 1 4733 1.2 390.2 n/a
2014 9.54 7.84 0.55 n/a n/a 1 860 0.2 375.1 n/a
2013 (3 months)
2.84 2.43 0.13 n/a n/a 1 171 0.0 345.9 n/a
Annualised compound rates of return ending 31 December 2015.
1 year 2.82 1.23 0.58
Since inception (30/09/2013)
6.74 5.09 0.56
Past performance is not a guide to future returns.
Invesco Worldwide has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPS®). The composite creation date is 4 February 2014. 1Refers to Note 1 on next slide.
Global Targeted Returns Schedule of investment performance (2)
Invesco Worldwide claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Invesco Worldwide has been independently verified for the periods 1st January 2003 through 31st December 2015. The legacy firms that constitute Invesco Worldwide have been verified since 2001 or earlier. The verification reports are available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation. The composite creation date is 4 February 2014.
1. Invesco Worldwide ("The Firm") manages a broad array of investment strategies around the world. The Firm comprises U.S.-based Invesco Advisers, Inc. (excluding Unit Investment Trusts) and all wholly owned Invesco firms outside of North America. All entities within the Firm are directly or indirectly owned by Invesco Ltd. Invesco Canada Ltd. is also a GIPS-compliant firm whose assets are managed by a subsidiary of Invesco Ltd. Invesco Senior Secured Management, Inc. Invesco Private Capital, Inc. and Invesco PowerShares Capital Management LLC are also affiliates of the Firm. Each is an SEC-registered investment adviser and is marketed as a separate entity. Invesco Great Wall Fund Management Co. Ltd is a fund management company established under China Securities Regulatory Commission’s approval. Their assets are excluded from total Firm assets. During 2012 new guidance was issued requiring firm assets be calculated net of leverage. This guidance will be applied for years ending 2012 and forward
2. Portfolios within this composite are in GBP base currency and aim to achieve a positive total return in all market conditions over a rolling 3 year period. The composite portfolios target a gross return of 5% per annum above 3 month UK LIBOR (or an equivalent reference rate) and aim to achieve this with less than half the volatility of global equities, over the same rolling 3 year period. The composite portfolios seek to achieve their objective by using a range of investment strategies and techniques to invest actively in a broad selection of asset classes across all economic sectors worldwide.
3. The composite returns are benchmarked to the BBA LIBOR GBP 3M. The benchmark is used for comparative purposes only and generally reflects the risk or investment style of the product. Investments made by the Firm for the portfolios it manages according to respective strategies may differ significantly in terms of security holdings, industry weightings, and asset allocation from those of the benchmark. Accordingly, investment results and volatility will differ from those of the benchmark.
124
Source: Invesco as at 31 December 2015.
Global Targeted Returns Schedule of investment performance (3)
4. Valuations and portfolio total returns are computed and stated in Pound Sterling. The Firm consistently values all portfolios each month on a trade date basis. Accrual accounting is used for all interest and dividend income. Past performance is not an indication of future results.
5. Composite dispersion is measured by the standard deviation across asset-weighted portfolio returns represented within the composite for the full year. The three-year annualized standard deviation measures the variability of the composite and the benchmark returns over the preceding 36-month period. The standard deviation is not presented where there is less than 36 months or fewer than five portfolios in the composite.
6. Gross-of-fee performance results are presented before management and custodial fees and are net of trading expenses, non-reclaimable withholding tax on dividends (where material), interest income and capital gains.
7. The representative retail management fee is as follows:
8. The minimum portfolio size for the composite is USD 5,000,000.
9. A complete list and description of Firm composites and performance results is available upon request.
10. Additional information regarding policies for valuing portfolios, calculating performance, and preparing compliant presentations is available upon request.
125
Source: Invesco as at 31 December 2015.
Additional Information
126
Americas 1. Source: Cogent Reports 2. September 30, 2015. US advisor-sold fund family is determined by the majority of a firm’s long-term assets classified in the sales force and ETF distribution channels by ICI. Sales force is defined as funds sold primarily through a network of broker-dealers. Sources for the stats are Invesco Canada, Morningstar Research Inc. Source: © 2015 Morningstar Research Inc.; Invesco Canada Calculated by taking the quartile rank for all of a fund company’s stand-alone mutual funds and calculating the percentage of a firm’s assets that are ranked 1st or 2nd quartile. This process was applied to each time period shown. Mutual fund trusts and corporate class versions of the same mandate were included, only one series of the same mutual fund was used in the calculation which is the oldest share class. Money Market funds and fund-of-funds were excluded from the analysis. Trimark Advantage Bond Fund and Trimark Floating Rate Income Fund were also excluded due to lack of comparability in their CIFSC categories (High Yield Category). Analysis based on Canadian-domiciled funds. EMEA All data as of 29 February 2016 unless otherwise stated. Sources: Lipper AssetWatch; Morningstar; Future Thinking (Q4 2015). Funds ranking excludes fund-of-funds and passively managed products. 3 Excludes fund-of-funds and passively managed products. UK funds: This makes use of the Investment Association (IA) peer ranking for each ICVC’s primary share class. Cross-border Funds: This makes use of the Morningstar peer ranking of the primary share class of Luxembourg and Ireland domiciled funds and excludes Money Market funds and ETF’s. Source: Morningstar/Lipper as at 29 February 2016 . Only funds with a Morningstar rating are included. 4 Source: Broadridge SalesWatch as of 31 January 2016 – Third-party Retail only, excludes ETFs, Money Market, Property and Fund of Funds Asia Pacific All data as of February 2016, unless otherwise stated. 5 Data as of September 2015; Source: Internal Data, WIND, Morningstar, Japan Investment Advisers Association, Mercer, Religare AMC
Peer universes
127
All Invesco composites fall under one of three categories. Composites comprised 100% of institutional money, segregated accounts and the like, for the purposes of this exercise, are designated “Institutional Only Composites” and are measured against peers via the appropriate eVestment universe. Similarly, composites comprised solely of open ended funds are deemed “Retail Only Composites” and are compared against the appropriate Morningstar, Lipper or iMoneyNet universe. Composites that include both segregated accounts and open-ended funds are deemed hybrid composites. Hybrid composites in which segregated accounts make up more than half of all assets are measured as “Institutional Only” composites, while composites in which open-ended make up more than half of assets are measured as “Retail Only” composites. All composites measured as “Retail Only” use the performance of the share class with the longest track record. Above is a detailed break out of where each of those composites fall.
Institutional Only Composites Peer Universe1 Year 3 Year 5 Year
US Short Term Government Merrill 1-3 Limited Discretion eVestment: U.S. Short Duration Fixed Income 180 180 180US Short Term Government 1-3 Limited Discretion eVestment: U.S. Short Duration Fixed Income 180 180 180US Mortgage-backed Securities Limited Discretion eVestment: U. S. Mortgage Backed Fixed Income 36 36 36US Intermediate Limited Discretion eVestment: U.S. Intermediate Duration Fixed Income 195 195 195US Intermediate Bond eVestment: U.S. Intermediate Duration Fixed Income 195 195 195US High Quality Core eVestment: U.S. Core Fixed Income 254 254 254US Full Discretion Core Limited eVestment: U.S. Core Plus Fixed Income 159 159 159US Diversif ied Return Intermediate eVestment: U.S. Intermediate Duration Fixed Income 195 195 195US Diversif ied Return Core eVestment: U.S. Core Fixed Income 254 254 254U.S. Mortgage-Backed Securities eVestment: U. S. Mortgage Backed Fixed Income 36 36 36Treasury 1-3 Year Limited Discretion eVestment: U.S. Short Duration Fixed Income 180 180 180Stable Value Investment Grade Strategy - Book Value (Separate Account) eVestment: eA Stable Value Fixed Income 27 27 27Stable Value AAA or Better Strategy - Book Value eVestment: eA Stable Value Fixed Income 27 27 27Stable Value A or Better Strategy - Book Value eVestment: eA Stable Value Fixed Income 27 27 27Invesco US Unconstrained Senior Loan Composite - USD eVestment: U.S. Floating-Rate Bank Loan Fixed Income 87 87 87Invesco Zodiac US Senior Loan Composite - GBP eVestment: U.S. Floating-Rate Bank Loan Fixed Income 87 87 87Invesco Zodiac US Senior Loan Composite - EUR eVestment: U.S. Floating-Rate Bank Loan Fixed Income 87 87 87Invesco Zodiac US Senior Loan Composite - AUD eVestment: U.S. Floating-Rate Bank Loan Fixed Income 87 87 87Invesco Zodiac U.S. Senior Loan Composite - CHF eVestment: U.S. Floating-Rate Bank Loan Fixed Income 87 87 87Invesco Intermediate Insurance eVestment: U.S. Intermediate Duration Fixed Income 195 195 195Invesco Commingled Institutional Loan Composite eVestment: US Floating-Rate Bank Loan Fixed Income 87 87 87Gov/Credit Accounts Limited Discretion eVestment: U.S. Core Fixed Income 254 254 254US Short Term Bond eVestment: U.S. Short Duration Fixed Income 180 180 180
Members in Peer Universe
Hybrid Retail Composites Peer Universe1 Year 3 Year 5 Year
Emerging Market Bond Morningstar: Offshore OE Global Emerging Markets Bond 152 118 76Invesco High Yield Lipper: US OE High Yield 655 531 431Invesco Liquid Assets Composite Lipper: US OE Instl Money Market 254 249 243
Members in Peer Universe
Hybrid Institutional Composites Peer Universe1 Year 3 Year 5 Year
NA NA -- -- --
Members in Peer Universe
Peer universes
128
Retail Only Composites Peer Universe1 Year 3 Year 5 Year
USD - 1 Week Cash Composite Morningstar: Offshore OE USD Money Market 46 44 41US Corporate Credit Composite Lipper: US OE Corporate Debt Funds BBB-Rated 207 179 155UK Gilt Corporate Bond Composite Morningstar: Offshore OE GBP Diversif ied Bond 45 41 35UK Gilt Composite Morningstar: Offshore OE GBP Government Bond 29 29 22RMB Fixed Income Composite Morningstar: Offshore OE RMB Bond 25 20 1Invesco U.S. Mortgage Composite Lipper: US OE U.S. Mortgage 122 107 89Invesco U.S. Government Composite Lipper: US OE Intermediate U.S. Government 70 69 66Invesco U.S. Dollar Composite iMoneyNet: STIC Global US Dollar Liquidity 148 132 109Invesco Treasury Composite Lipper: US OE Instl U.S. Treasury Money Market 158 150 148Invesco Limited Term Municipal Income Composite Lipper: US OE Short-Intmdt Municipal Debt 58 55 52Invesco Tax-Free Cash Reserve Composite Lipper: US OE Instl Tax-Exempt Money Market 114 113 111Invesco STIC Prime Composite Lipper: US OE Instl Money Market 254 249 243Invesco Sterling Composite iMoneyNet: STIC Global Sterling Liquidity 102 88 70Invesco Short Term Bond Composite Lipper: US OE Short Investment Grade Debt 299 257 210Invesco Premier U.S. Government Money Composite Lipper: US OE U.S. Government Money Market 80 79 79Invesco Premier Tax-Exempt Composite Lipper: US OE Tax-Exempt Money Market 73 73 71Invesco Pennsylvania Tax Free Income Composite Lipper: US OE Pennsylvania Municipal Debt 58 54 54Invesco New York Tax Free Income Composite Lipper: US OE New York Municipal Debt 100 94 86Invesco Municipal Income Composite Lipper: US OE General & Insured Municipal Debt 259 224 208Invesco Money Market Composite Lipper: US OE Money Market 176 175 169Invesco ITM HY Bond - Monthly Income Morningstar: Japan OE World High Yield Bond 65 44 35Invesco Intermediate Term Municipal Income Composite Lipper: US OE Intermediate Municipal Debt 215 191 158Invesco High Yield Municipal Composite Lipper: US OE High Yield Municipal Debt 144 117 110Invesco High Yield Composite Lipper: US CE High Yield Funds (Leveraged) 34 30 25Invesco Government Tax Advantage Composite Lipper: US OE Instl U.S. Government Money Market 183 168 161Invesco Government and Agency Composite Lipper: US OE Instl U.S. Government Money Market 183 168 161Invesco Euro Composite iMoneyNet: STIC Global Euro Liquidity 57 49 39Invesco Emerging Markets Debt Composite - Canada Morningstar: Canada OE Global Fixed Income 265 147 80Invesco Emerging Market Corporate Bond Morningstar: Offshore OE Global Emerging Markets Corporate Bond 69 42 15Invesco Core Plus Bond Composite Lipper: US OE Core Plus Bond 207 189 167Invesco Commingled Retail Loan Composite Lipper: US OE Loan Participation 208 169 111Invesco Canadian Money Market Composite Morningstar: Canada OE Canadian Money Market 220 194 170Invesco California Tax-Free Income Composite Lipper: US OE California Municipal Debt 127 115 109International (ex US) Bond Composite Lipper: US OE International Income 126 104 79Global Investment Grade Corporate Bond Morningstar: Offshore OE Global Corporate Bond - USD Hedged 43 34 18Global High Income Morningstar: Offshore OE Global High Yield Bond 89 65 41Extra Income Bond Composite Morningstar: Austria OE EUR High Yield Bond 58 49 32European Fixed Income Composite Morningstar: Offshore OE EUR Diversif ied Bond 220 201 168
Members in Peer Universe
Peer universes
129
Retail Only Composites Peer Universe1 Year 3 Year 5 Year
Euro-Inflation - Linked Bond Composite Morningstar: Offshore OE EUR Inflation-Linked Bond 32 30 26Euro Short Term Bond Composite Morningstar: Offshore OE EUR Diversif ied Bond - Short Term 72 64 56Euro - 1 Week Cash Composite Morningstar: Offshore OE Money Market - Other 72 69 62Emerging Market Bond (Austria Retail) Composite Morningstar: Austria OE Global Emerging Markets Bond - EUR Biased 82 65 47Emerging Local Currencies Debt Unconstrained Morningstar: Offshore OE Global Emerging Markets Bond - Local Currency 97 73 42Emerging Local Currencies Debt Lipper: US OE Emerging Markets Local Currency Debt Fds 102 82 36Australian (Treasury) Bond Active Composite Morningstar: Japan OE Asia/Pacif ic Bond 66 40 25Asian Bond Composite Morningstar: Offshore OE Asia Bond 36 23 13Invesco Strategic Income Composite Lipper: US OE Multi-Sector Income 284 N/A N/AInvesco Strategic Real Return Composite Lipper: US OE Inflation Protected Bond 224 N/A N/AInvesco Active Multi-Sector Credit Euro Hedged Morningstar: Offshore OE Global Flexible Bond-EUR Hedged 77 43 24Invesco Unconstrained Bond Composite Lipper: US OE Alternative Credit Focus 265 N/A N/ATrimark U.S. Money Market Composite Morningstar: Canada OE US Money Market 31 31 29Invesco Global Aggregate Bond – Unhedged Morningstar: Offshore OE Global Bond 168 145 117
Members in Peer Universe
Unrated CompositesUS Enhanced Core Index Invesco Non-Investment Grade Convertible Bond Investment Grade Convertible BondUS Enhanced Cash Limited Discretion Invesco Mortgage Backed Agency Focused Invesco Global Investment Grade Corporate EUR HedgedUK Restricted Sterling Gilt Composite Invesco ITM HY Bond - Global High Yield Invesco Active Multi-Sector Credit CompositeTreasury & Agency Invesco Global Investment Grade Credit Invesco Conservative Income CompositeSterling Fixed Income Constrained Bond <15 Year Composite Invesco Emerging Market Bond SRI (Austria Segregated) EUR Hedged Invesco Allocation Fund CompositeStable Value Other Book Value Composite Invesco Corporate Credit Limited Invesco Client Specif ic Corporate CreditStable Value Non-Qualif ied All GIC Composite Book Value Global Bond Synthetic Composite Bank Loan PM Rollup- Constrained 1Invesco Zodiac European Senior Loan Composite - GBP Global Bond Ex-Japan composite Bank Loan PM Rollup- Constrained 2Invesco European Unconstrained Senior Loan Composite - EUR Global Bond - EUR - Aggregate Composite Bank Loans PM Rollup- Constrained 3Invesco US Buy Hold 1 Invesco US High Yield - BB Average Rating Composite Bank Loan PM Rollup- Constrained Hedged JPYInvesco Structured Credit Limited Eurozone Fixed Income Bank Loan PM Rollup- Unconstrained 1Invesco Short Term Investment Composite European Fixed Income Pan European Bond Composite Bank Loan PM Rollup- Unconstrained 2Invesco Private Trust Composite