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Money Management

Invesco AUM rises 3.1% on heels of Guggenheim ETF acquisition

Invesco (IVZ)'s assets under management totaled $963.3 billion as of June 30, up 3.1% from the end of the previous quarter and 12.2% higher than a year earlier, the company announced Thursday in its quarterly earnings statement.

Invesco added about $38 billion in assets under management in the second quarter from the April 6 acquisition of Guggenheim Investments' exchange-traded fund business, said Loren M. Starr, Invesco's chief financial officer, during a conference call with analysts.

Invesco's AUM would have been down about 1% in the second quarter without the Guggenheim acquisition.

Invesco's investment strategies experienced total net outflows of $6.2 billion in the three months ended June 30, compared to net inflows of $300 million in the prior quarter and net inflows of $2.4 billion in the second quarter 2017.

All of the company's net outflows in the second quarter stemmed from Invesco's actively managed strategies — net outflows in the quarter from active strategies totaled $8.4 billion, continuing the pattern of net outflows for the category with net outflows of $1.5 billion in three months ended March 31 and net outflows of $200 million in the second quarter a year earlier.

About $2 billion of Invesco's total outflows in the second quarter came from the firm's actively managed value equity strategies, said Mr. Starr on the call.

Martin L. Flanagan, Invesco's president and CEO, attributed the redemptions from value equity approaches to current market conditions, during the conference call.

"We've not seen such a concentrated (negative) market impact on value equities in 10 years," Mr. Flanagan said, noting that the magnitude of performance dispersion between growth and value stocks was "extreme."

He added that investor sentiment about value equity investing, particularly for retail investors, changed dramatically this year, resulting in outflows.

By contrast, net inflows to passively managed strategies in the quarter ended June 30 totaled $400 million vs. net inflows of $1.8 billion in the prior quarter and net inflows of $500 million in the year-earlier quarter.

The company's non-management fee-earnings business, which includes the firm's PowerShares and Guggenheim ETF offerings, had net inflows of $900 million in the quarter ended June 30 vs. net outflows of $400 million in the prior quarter and net outflows of $700 million a year earlier.

Institutional money market funds saw net inflows of $900 million in the quarter ended June 30, compared to $400 million of net inflows in the quarter ended March 30 and $2.8 billion in net inflows in the quarter ended June 30, 2017.

Net revenue was $1.36 billion for the second quarter, up 0.4% from the previous quarter and 8.5% higher from the second quarter last year.

Net income was $245.1 million, down 3.5% compared to the previous three months and up 2.3% from the year-earlier quarter.