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What changed in Invesco's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Invesco's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+427 added−410 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-23)

Top changes in Invesco's 2023 10-K

427 paragraphs added · 410 removed · 326 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

29 edited+8 added−17 removed19 unchanged
Biggest changeOur Global ESG team provides support and analysis, while our investment managers maintain discretion on portfolio decisions. 4 Ta ble of Contents The following sets forth our major managed investment objectives by asset class: Equity Fixed Income Balanced Alternatives Money Market ● Custom Solutions ● Custom Solutions ● Custom Solutions ● Custom Solutions ● Custom Solutions ● Environmental, Social and Governance ● Environmental, Social and Governance ● Environmental, Social and Governance ● Environmental, Social and Governance ● Cash Plus ● Core/Value/Growth Style ● Buy and Hold ● Balanced Risk ● Absolute Return ● Government/Treasury ● Emerging Markets ● Convertibles ● Global/Regional ● Commodities ● Prime ● International/Global ● Core/Core Plus ● Single Country ● Currencies ● Taxable ● Large/Mid/Small Cap ● Emerging Markets ● Target Date ● Direct Lending ● Tax-Free ● Low Volatility/Defensive ● Government Bonds ● Target Risk ● Distressed Debt ● Passive/Enhanced ● High-Yield Bonds ● Traditional Balanced ● Financial Structures ● Regional/Single Country ● International/Global ● Global Macro ● Smart Beta/Factor-based ● Investment Grade Credit ● Infrastructure and MLPs ● Thematic/Sector ● Multi-Sector ● Long/Short Equity ● Municipal Bonds ● Managed Futures ● Passive/Enhanced ● Multi-Alternatives ● Regional/Single Country ● Private Real Estate ● Short/Ultra-Short Duration ● Public Real Estate Securities ● Stable Value ● Senior Secured Loans ● Structured Securities ● Smart Beta/Factor-based Distribution Channels Retail AUM typically originate from clients investing into funds available to the public in the form of shares or units.
Biggest changeOur asset classes, broadly defined, include equity, fixed income, balanced, alternatives and money market. 5 Ta ble of Contents The following sets forth our major managed investment objectives by asset class: Equity Fixed Income Balanced Alternatives Money Market ● Core/Value/Growth Style ● Buy and Hold ● Balanced Risk ● Absolute Return ● Cash Plus ● Custom Solutions ● Convertibles ● Custom Solutions ● Commodities ● Custom Solutions ● Emerging Markets ● Core/Core Plus ● ESG ● Currencies ● Government/Treasury ● Environmental, Social and Governance (ESG) ● Custom Solutions ● Global/Regional ● Custom Solutions ● Prime ● International/Global ● Emerging Markets ● Single Country ● Direct Lending ● Taxable ● Large/Mid/Small Cap ● ESG ● Target Risk ● Distressed Debt ● Tax-Free ● Low Volatility/Defensive ● Government Bonds ● Traditional Balanced ● ESG ● Passive/Enhanced ● High-Yield Bonds ● Financial Structures ● Regional/Single Country ● International/Global ● Global Macro ● Smart Beta/Factor-based ● Investment Grade Credit ● Infrastructure and MLPs ● Thematic/Sector ● Multi-Sector ● Long/Short Equity ● Municipal Bonds ● Managed Futures ● Passive/Enhanced ● Multi-Alternatives ● Regional/Single Country ● Private Real Estate ● Short/Ultra-Short Duration ● Public Real Estate Securities ● Smart Beta/Factor-based ● Senior Secured Loans ● Stable Value ● Structured Securities Distribution Channels Retail AUM typically originate from clients investing into funds available to the public in the form of shares or units.
There are few independent investment managers with teams as globally diverse as Invesco's and with the same breadth and depth of investment capabilities and vehicles. We offer multiple investment objectives within the various asset classes and products that we manage.
There are few independent investment managers with teams as globally diverse as Invesco's and the same breadth and depth of investment capabilities and vehicles. We offer multiple investment objectives within the various asset classes and products that we manage.
Management Contracts We derive substantially all of our revenues from investment management contracts. Fees vary with the type of assets being managed, with higher fees earned on actively managed equity and balanced accounts, along with real estate and other alternative asset products, and lower fees earned on fixed income, money market and stable value accounts and ETFs.
Management Contracts We derive substantially all of our revenues from investment management contracts. Fees vary with the type of assets being managed, with higher fees earned on actively managed equity and balanced accounts, along with real estate and other alternative asset products, and with lower fees earned on fixed income, money market and stable value accounts, and ETFs.
Our framework leverages two governance structures: (i) our Global Performance and Risk Committee oversees the management of core investment risks; and (ii) our Enterprise Risk Management Committee oversees the management of all other business- and strategy-related risks.
Our framework leverages two governance structures: (i) our Global Investment Risk and Performance Committee oversees the management of core investment risks; and (ii) our Enterprise Risk Management Committee oversees the management of all other business- and strategy-related risks.
We make available free of charge on our website, www.invesco.com/corporate, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statement and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. 8 Ta ble of Contents
We make available free of charge on our website, www.invesco.com/corporate, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statement and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. 9 Ta ble of Contents
A network of regional, business unit and risk-specific management committees, with oversight by the Enterprise Risk Management Committee, provides ongoing identification, assessment, management and monitoring of existing and emerging risks across all domains of our business. Available Information The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers at www.sec.gov.
A network of regional, business unit and risk-specific management committees, with oversight by the Enterprise Risk Management Committee, provides ongoing identification, assessment, management, monitoring, and reporting of existing and emerging risks across all domains of our business. Available Information The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers at www.sec.gov.
Generally, distributors, investment advisors and consultants take into consideration longer-term investment performance (e.g., three-year and five-year performance) in their selection of investment products and manager recommendations to their clients. Third-party ratings may also influence client investment decisions.
Generally, distributors, investment advisors and consultants take into consideration longer-term investment performance (e.g., three-year and five-year performance) in their selection of investment products and recommendations to their clients. Third-party ratings may also influence client investment decisions.
We draw on this comprehensive range of capabilities to provide customized solutions designed to deliver key outcomes aligned to client needs. With approximately 8,600 employees and an on-the-ground presence in more than 20 countries, Invesco is well positioned to meet the needs of investors across the globe.
We draw on this comprehensive range of capabilities to provide solutions designed to deliver key outcomes aligned to client needs. With approximately 8,500 employees and an on-the-ground presence in more than 20 countries, Invesco is well positioned to meet the needs of investors across the globe.
Through our focus on these areas, we seek to deliver better outcomes for clients and generate competitive investment results, positive net flows, increased AUM and associated revenues. We measure relative investment performance by comparing our investment capabilities to competitors' products, industry benchmarks and client investment objectives.
Through our focus on these areas, we seek to deliver better outcomes for clients, generate competitive investment results and positive net flows, and increase AUM and revenues. We measure relative investment performance by comparing our investment capabilities to competitors' products, industry benchmarks and client investment objectives.
See the company's disclosures regarding the changes in AUM for the year ended December 31, 2022 in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Assets Under Management” section for additional information regarding the changes in AUM.
See the company's disclosures regarding the changes in AUM for the year ended December 31, 2023 in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Assets Under Management” for additional information regarding the changes in AUM.
As of December 31, 2022, the company had 8,611 employees with an on-the-ground presence in over 20 countries (December 31, 2021: 8,513 ). Our employees are not covered under collective bargaining agreements. The company is committed to reducing our impact on the environment.
As of December 31, 2023, the company had 8,489 (December 31, 2022: 8,611 ) employees with an on-the-ground presence in over 20 countries. Our employees are not covered under collective bargaining agreements. The company is committed to reducing our impact on the environment.
AUM Diversification One of Invesco's competitive strengths is the diversification of AUM by client domicile, distribution channel and asset class. We serve clients in more than 110 countries. The following tables present a breakdown of AUM by client domicile, distribution channel and asset class as of December 31, 2022.
AUM Diversification One of Invesco's competitive strengths is the diversification of AUM by client domicile, distribution channel and asset class. We serve clients in more than 120 countries. The following tables present a breakdown of AUM by client domicile, distribution channel and asset class as of December 31, 2023.
Institutional Institutional AUM were $536.9 billion at December 31, 2022. We offer a broad suite of domestic and global strategies, including traditional and quantitative equities, fixed income (including money market funds for institutional clients), real estate, financial structures and absolute return strategies. Regional sales forces distribute our products and provide services to clients and intermediaries around the world.
Institutional Institutional AUM were $543.3 billion at December 31, 2023. We offer a broad suite of domestic and global strategies, including traditional and quantitative equities, fixed income (including money market funds for institutional clients), real estate, financial structures and absolute return strategies. Regional sales forces distribute our products and provide services to clients and intermediaries around the world.
We offer retail products within all of the major asset classes. Our retail products are primarily distributed through third-party financial intermediaries, including major wire houses, fund supermarkets, regional broker-dealers, insurance companies, banks and financial planners in the Americas, and independent brokers and financial advisors, banks and supermarket platforms in EMEA and APAC.
We offer retail products within all of the major asset classes. Our retail products are primarily distributed through third-party financial intermediaries, including major wire houses, direct wealth platforms, regional broker-dealers, insurance companies, banks and financial planners in the Americas, and independent brokers and financial advisors, banks and direct wealth platforms in EMEA and APAC.
In addition, Invesco Great Wall Fund Management Company Limited (IGW or Invesco Great Wall), our joint venture in China, is one of the largest Sino-foreign managers of equity products in China, with total AUM of approximately $89.3 billion at December 31, 2022. We provide our retail clients with one of the industry's most robust and comprehensive product lines.
In addition, Invesco Great Wall Fund Management Company Limited (IGW or Invesco Great Wall), our joint venture in China, is one of the largest Sino-foreign managers of equity products in China, with total AUM of approximately $83.6 billion at December 31, 2023. We provide our retail clients with one of the industry's most robust and comprehensive product lines.
We have a significant presence in the retail and institutional markets within the investment management industry in the Americas, Europe, Middle East and Africa (EMEA) and Asia-Pacific (APAC), serving clients in more than 110 countries. As of December 31, 2022, the firm managed approximately $1.4 trillion in assets for investors around the world.
We have a significant presence in the retail and institutional markets within the investment management industry in the Americas, Europe, Middle East and Africa (EMEA) and Asia-Pacific (APAC), serving clients in more than 120 countries. As of December 31, 2023, the firm managed approximately $1.6 trillion in assets for investors around the world.
Item 1. Business Introduction Invesco Ltd. (the Parent) and its consolidated subsidiaries (collectively, Invesco or the company) is an independent investment management firm dedicated to delivering an investment experience that helps people get more out of life. Our comprehensive range of active, passive and alternative investment capabilities has been constructed over many years to help clients achieve their investment objectives.
Item 1. Business Introduction Invesco Ltd. (the Parent) and its consolidated subsidiaries (collectively, Invesco or the company) is an independent investment management firm dedicated to delivering a superior investment experience. Our comprehensive range of active, passive and alternative investment capabilities has been constructed over many years to help clients achieve their investment objectives.
The Americas and EMEA retail operations rank among the largest by AUM in their respective markets. As of December 31, 2022, Invesco's U.S. retail business, including our ETFs franchise, is a top 10 asset manager in the U.S. by total AUM, and Invesco's retail business in EMEA is among the largest non-proprietary investment managers in the retail channel.
The Americas and EMEA retail operations rank among the largest by AUM in their respective markets. As of December 31, 2023, Invesco's U.S. retail business, including our ETFs franchise, is among the leading asset managers in the U.S., and Invesco's retail business in EMEA is among the largest non-proprietary investment managers in the retail channel.
The following lists our primary investment vehicles by distribution channel: Retail Institutional ● Closed-end Mutual Funds ● Collective Trust Funds ● ETFs ● ETFs ● Individual Savings Accounts ● Institutional Separate Accounts ● Investment Companies with Variable Capital ● Open-end Mutual Funds ● Investment Trusts ● Private Funds ● Open-end Mutual Funds ● Separately Managed Accounts ● Société d'investissement à Capital Variable ● Unit Investment Trusts (UITs) ● Variable Insurance Funds 5 Ta ble of Contents Retail Retail AUM were $872.3 billion at December 31, 2022.
The following lists our primary investment vehicles by distribution channel: Retail Institutional ● Closed-end Mutual Funds ● Collective Trust Funds ● Exchange-traded funds (ETFs) ● ETFs ● Individual Savings Accounts ● Institutional Separate Accounts ● Investment Companies with Variable Capital ● Open-end Mutual Funds ● Investment Trusts ● Private Funds ● Open-end Mutual Funds ● Separately Managed Accounts (SMA) ● Société d'investissement à Capital Variable ● Unit Investment Trusts (UITs) ● Variable Insurance Funds 6 Ta ble of Contents Retail Retail AUM were $1,042.0 billion at December 31, 2023.
We believe the steps we have taken over the past decade strengthened our ability to understand, anticipate and meet client needs and will help ensure Invesco is well-positioned to compete within our industry over the long term.
These dynamics are driving fundamental changes within the industry and, we believe, will drive increasing consolidation. We believe the steps we have taken over the past decade strengthened our ability to understand, anticipate and meet client needs and will help ensure Invesco is well-positioned to compete within our industry over the long term.
Passive ($ in billions) Total 1-Yr Change c Active 976.2 (9.8) % c Passive 433.0 (18.1) % Total 1,409.2 Corporate Responsibility and Human Capital Invesco’s long-term success depends on our ability to retain, develop, engage and attract top talent.
Passive (in billions) Total 1-Yr Change c Active $ 985.3 0.9 % c Passive 600.0 38.6 % Total $ 1,585.3 Corporate Responsibility and Human Capital Invesco’s long-term success depends on our ability to retain, develop, engage and attract top talent.
All new employees are required to take unconscious bias training. Our employees are also encouraged to participate in any of our twelve business resource groups where employees with diverse backgrounds, experiences and perspectives can connect. Our business resource groups are sponsored by senior leaders and are designed by employees, for employees.
Our employees are also encouraged to participate in any of our various employee resource groups 8 Ta ble of Contents where employees with diverse backgrounds, experiences and perspectives can connect. Our employee resource groups are sponsored by senior leaders and are designed by employees, for employees.
A key focus of our business is fostering a strong investment culture and providing the support that enables our investment teams to maintain well-performing investment capabilities. We believe the ability to leverage the capabilities of our investment teams to help clients across the globe achieve their investment objectives is a significant differentiator for our firm.
We believe the ability to leverage the capabilities of our investment teams to help clients across the globe achieve their investment objectives is a significant differentiator for our firm.
Industry Trends Trends around the world continue to transform the investment management industry and underscore the need to be well diversified with broad capabilities globally and across asset classes: • Distribution partners are becoming more selective and continuing to maintain fewer relationships and partners, reducing the number of trusted investment managers with whom they work.
(Information contained on our website shall not be deemed to be part of, or be incorporated into, this document.) Industry Trends Trends around the world continue to transform the investment management industry and underscore the need to be well diversified with broad capabilities globally: Individuals and Institutions expect personalized outcomes and experience. • Distribution partners are becoming more selective and continuing to maintain fewer relationships and partners, reducing the number of trusted investment managers with whom they work. • Clients and distribution partners are demanding more from investment managers.
By Client Domicile ($ in billions) Total 1-Yr Change c Americas 999.4 (11.8) % c EMEA 186.3 (19.4) % c APAC 223.5 (9.6) % Total 1,409.2 6 Ta ble of Contents By Distribution Channel ($ in billions) Total 1-Yr Change c Retail 872.3 (21.2) % c Institutional 536.9 6.4 % Total 1,409.2 By Asset Class ($ in billions) Total 1-Yr Change c Equity 637.0 (24.3) % c Fixed Income 313.7 (6.3) % c Balanced 67.1 (24.3) % c Money Market 203.5 36.8 % c Alternatives 187.9 (4.7) % Total 1,409.2 Active vs.
By Client Domicile (in billions) Total 1-Yr Change c Americas $ 1,133.9 13.5 % c EMEA 215.9 15.9 % c APAC 235.5 5.4 % Total $ 1,585.3 7 Ta ble of Contents By Distribution Channel (in billions) Total 1-Yr Change c Retail $ 1,042.0 19.5 % c Institutional 543.3 1.2 % Total $ 1,585.3 By Asset Class (in billions) Total 1-Yr Change c Equity $ 823.7 29.3 % c Fixed Income 325.7 3.8 % c Balanced 62.7 (6.6) % c Money Market 192.7 (5.3) % c Alternatives 180.5 (3.9) % Total $ 1,585.3 Active vs.
We take a unified approach to our business and present our financial statements and other disclosures under the single operating segment “investment management.” We believe one of Invesco's greatest strengths is our separate, distinct investment teams in multiple markets across the globe.
We take a unified approach to our business and present our financial statements and other disclosures under the single operating segment “investment management.” A key focus of our business is fostering a strong investment culture and providing the support that enables our investment teams to maintain well-performing investment capabilities.
As an integrated global investment manager, we are keenly focused on meeting clients' needs and operating effectively and efficiently.
Act like owners for all stakeholders • Be disciplined stewards of firm resources with a focus on profitable growth. • Invest in the success of our clients, our shareholders, and ourselves. As an integrated global investment manager, we are keenly focused on meeting clients' needs and operating effectively and efficiently.
We offer multiple investment objectives within the various asset classes and products that we manage. Our asset classes, broadly defined, include equity, fixed income, balanced, alternatives and money market. We offer custom solutions across all asset classes and increasingly incorporate financially material ESG considerations into our investment capabilities and processes.
We offer multiple investment objectives within the various asset classes and products that we manage.
We believe that diversity and inclusion are both moral and business imperatives. We are committed to further strengthening diversity at all levels and in all functions across our global business as evidenced by our Chief Executive Officer (CEO) and senior managing directors including a diversity and inclusion goal in their performance goals.
We believe that diversity and inclusion are good for business. We are committed to further strengthening diversity at all levels and in all functions across our global business. Increasing representation of women and diverse employees remains a focus for Invesco, as does building a more inclusive work environment. All employees are required to take periodic unconscious bias training.
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(Information contained on our website shall not be deemed to be part of, or be incorporated into, this document.) 2 Ta ble of Contents Strategy The company focuses on four key long-term strategic objectives that are designed to sharpen our focus on client needs, further strengthen our business over time and help ensure our long-term success: • Achieve strong, long-term investment performance across distinct investment capabilities with clearly articulated investment philosophies and processes, aligned with client needs; • Be instrumental to our clients' success by delivering our distinctive investment capabilities worldwide to meet their needs; • Harness the power of our global platform by continuously improving execution effectiveness to enhance quality and productivity, and allocating our resources to the opportunities that will best benefit clients and our business; and • Perpetuate a high-performance organization by driving greater transparency, accountability, diversity of thought, fact-based decision making and execution at all levels.
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While performance remains paramount, competitive pricing, best-in class experience and value-added services (including portfolio analytics and consultative solutions) increasingly differentiate managers. • The U.S. and China will continue to be the dominant global wealth markets.
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Invesco provides a comprehensive range of capabilities, a robust set of value-added services and investment solutions that deliver key outcomes aligned to their investment objectives. • Clients and distribution partners are also demanding more from investment managers. While investment performance remains paramount, competitive pricing, client engagement and value-added services (including portfolio analytics and consultative solutions) increasingly differentiate managers.
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Global asset management leaders will need a considerable footprint in these markets. 4 Ta ble of Contents Structural shifts in client portfolio allocations. • Private market allocations continue to increase and become a meaningful part of retail portfolios, driving industry fee growth as well as innovation and democratization. • Beta, factor, and index offerings will continue to be core to portfolios in transparent, efficient markets.
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Clients and distribution partners are also increasingly discerning and focused on greater value for their money. Invesco delivers competitive pricing, investor education, thought leadership, digital platforms and other value-added services that enhance the client experience.
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In this space, clients will demand ease of access and competitive pricing. • Investors have been selecting active strategies, while placing a high bar on proven superior risk-adjusted returns. • Investors have been favoring fixed income strategies in response to unpredictable market conditions and the higher interest rate environment. • Investors have been shifting their investment strategies toward lower fee offerings, and we believe this trend will continue.
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The firm is also working to enhance the client user experience through digital marketing (web, mobile, social) and improved service. • Investors continue to demand alternative, passive and smart beta strategies. As a consequence, the industry is seeing client demand for certain active core equities portfolios decline as a share of global flows.
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Leading asset managers must quickly curate options that solve clients’ problems. • Investment capabilities will be delivered efficiently and seamlessly using technologies, platforms, and vehicles. • Investment managers are finding new ways of leveraging data and analytics to create insights that will provide strategic advantage and drive investment, distribution, and operational excellence. • Winners will invest in talent and skills across new ecosystems, requiring new ways of working and strategic partnerships to drive synergies and scale.
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Invesco is the 4th largest exchange-traded funds (ETFs) provider globally. Invesco sponsors 72 ETFs each with greater than $500 million in AUM. Invesco also has a strong lineup of alternative and multi-asset strategies supported by ongoing product development. • Environmental, social and governance (ESG) investing is one of the fastest-growing segments of the asset management industry.
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Strategy At Invesco, we seek to drive sustainable profitable growth by delivering capabilities that build enduring partnerships and create better outcomes for our clients.
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Invesco offers a broad range of ESG investment capabilities, which enables clients to align their investments with their values. Our approach is "client-led" and "investment-driven" – that is, we seek to offer clients investment products tailored to their specific investment objectives.
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The company focuses on four key long-term strategic objectives that are designed to sharpen our focus on client needs, further strengthen our business over time and help ensure our long-term success: Deliver the excellence our clients expect • Achieve strong, long-term investment performance. • Deliver a quality investment process and a frictionless experience with superior engagement. • Provide advice and solutions to help our clients best manage their portfolios and succeed with their own clients.
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We offer a broad range of ESG capabilities for clients seeking strategies that align with their interests and investment objectives. We deliver these capabilities through equities, fixed income, multi-asset, alternatives, real estate, ETFs and custom solutions.
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Grow high demand investment offerings • Deliver ahead of clients’ expectations through product innovation, investment styles, and packaging options. • Focus our offerings at the intersection of high opportunity markets and high demand capabilities.
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We also integrate financially material ESG considerations in our investment capabilities. • The asset management industry is experiencing pressure on net revenue yield, arising from increased use of low-fee passive products and further concentration within channel distribution partners (which increases their ability to negotiate pricing). • Regulatory activity remains at increased levels and is influencing competitive dynamics.
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Create an environment where talented people thrive • Attract and develop high performing, diverse talent with skills aligned to deliver against business outcomes. • Create an inclusive and engaging culture that values diversity of thought which enables us to work as one team to deliver better outcomes.
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Increased regulatory scrutiny of asset managers has focused on many areas, including transparency/unbundling of fees, inducements, conflicts of interest, capital, liquidity, solvency, leverage, operational risk management, controls and compensation. Invesco continues to work proactively with regulators around the world to better understand and help shape the evolving regulatory landscape.
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Efforts to further modernize and strengthen our global platform will enhance our ability to 3 Ta ble of Contents compete effectively across markets while complying with the variety of applicable regulatory regimes.
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This is a key differentiator for large, scaled firms such as Invesco. • Although the developed markets in the U.S. and Europe are the two largest markets for financial assets by a wide margin, other key emerging markets in the world, such as Greater China, are growing faster and are positioned for greater future growth over the long term.
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In particular, the Chinese mutual fund management industry has grown from zero to nearly $4 trillion, and it is expected to become the second-largest fund management market in the world by 2025 with nearly $6 trillion in assets. Building on nearly two decades' presence in the market, Invesco is the largest foreign-owned asset manager with an onshore presence in China.
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Additionally, population age differences between emerging and developed markets will result in differing investment needs and horizons among countries. Asset allocation and retirement savings schemes also differ substantially among countries.
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We believe firms such as Invesco, with experience across a variety of key markets and diversified investment capabilities and product types, are best positioned to meet clients' needs in this global competitive landscape. • Technology advances are impacting core elements of the investment management industry, which lags other industries in its use of technology.
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Clients increasingly seek to interact digitally with their investment portfolios. This is leading to established managers investing in and/or acquiring technology platforms. As the investment management business becomes more complex, automation will become increasingly important to serve clients effectively and efficiently.
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Invesco is leveraging technology across its business and exploring opportunities to work with third-party technology firms to enhance our clients' investment experience. In addition, over the past few years, Invesco has made investments in its digital wealth business, intelliflo. These dynamics are driving fundamental changes within the industry and, we believe, will drive increasing consolidation.
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Increasing representation of women and other underrepresented employees remains a focus for Invesco, as does building a more inclusive work environment. At the end of 2022, our global workforce was 40% female and 60% male (2021: 39% female and 61% male), with 7 Ta ble of Contents 37% of senior managers worldwide being women (2021: 35%).

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

119 edited+46 added−17 removed96 unchanged
Biggest changeIn addition, recent new or updated rules and legal requirements for international transfers of personal data from Europe and Asia have created additional complexity for global organizations around the use and management of personal data within these legal frameworks, particularly in light of our ongoing migration to integrated global cloud-based systems and services. • Regulations promulgated to address perceptions that the asset management industry, or certain of its entities or activities, pose systematic risks to the financial system, including regulations aiming at addressing liquidity concerns in open-end funds (in particular bank loan, fixed income and money market funds).
Biggest changeChina’s PIPL introduced new reporting and disclosure requirements for organizations transferring personal data outside of China. • Regulations promulgated to address perceptions that the asset management industry, or certain of its entities or activities, pose systematic risks to the financial system. • Regulations aimed at addressing concerns regarding open-end funds that invest in less liquid asset classes.
Failure to comply with client contractual requirements and/or investment guidelines could result in costs of correction, damage awards or regulatory fines and penalties against us and loss of revenues due to client terminations.
Failure to comply with client contractual requirements and/or investment guidelines could result in costs of correction, damage awards and/or regulatory fines and penalties against us and loss of revenues due to client terminations.
In particular, the integration of sustainability risks, the disclosure of information on the ESG characteristics of EU products and the integration of the investors’ ESG preferences at the point of sale have had a significant impact on the features of EU products and on investment management activities.
In particular, the integration of sustainability risks, the disclosure of information on the ESG characteristics of EU products and the integration of investors’ ESG preferences at the point of sale have had a significant impact on the features of EU products and on investment management activities.
Depending upon the scope of any such requirements, Invesco could be disadvantaged in retaining key employees vis-à-vis private companies, including hedge fund sponsors. • With respect to certain privately offered investment vehicles, the SEC has proposed rules to prohibit certain activities of the managers of such vehicles, including obtaining exculpation or limitations on liability for negligent acts, potentially increasing our potential liability as managers of these products.
Depending upon the scope of any such requirements, Invesco could be disadvantaged in retaining key employees vis-à-vis private companies, including hedge fund sponsors. • With respect to certain privately offered investment vehicles, the SEC proposed rules to prohibit certain activities of the managers of such vehicles, including obtaining exculpation or limitations on liability for negligent acts, potentially increasing our potential liability as managers of these products.
Changes in the distribution channels on which we depend could reduce our net income and hinder our growth. We sell substantially all of our retail investment products through a variety of third-party financial intermediaries. Increasing competition for these distribution channels could nevertheless cause our distribution costs to rise, which would lower our net income.
Changes in the distribution channels on which we depend could reduce our net income and hinder our growth. We sell substantially all of our retail investment products through a variety of third-party financial intermediaries. Increasing competition for these distribution channels could cause our distribution costs to rise, which would lower our net income.
Our financial condition or liquidity could be adversely affected if certain of our subsidiaries are unable to distribute funds to us. All of our regulated European Union (EU) and U.K. subsidiaries are subject to consolidated capital requirements under applicable EU and U.K. requirements, and we maintain capital within this European sub-group to satisfy these regulations.
Our financial condition or liquidity could be adversely affected if certain of our subsidiaries are unable to distribute funds to us. All of our regulated European Union (EU) and U.K. subsidiaries are subject to capital requirements under applicable EU and U.K. requirements, and we maintain capital within this European sub-group to satisfy these regulations.
In addition, changes in individual and corporate income tax rates, including the capital gains and dividend tax rates, could cause investors to view certain investment products less favorably and reduce investor demand for the products and services we offer, which could have an adverse effect on our AUM, revenues and net income.
In addition, changes in individual and corporate income tax rates, including the capital gains and dividend tax rates, could cause investors to view certain investment products we manage less favorably and reduce investor demand for the products and services we offer, which could have an adverse effect on our AUM, revenues and net income.
There can be no assurance, however, that a claim or claims will be covered by insurance or, if covered, will not exceed coverage limits, or that an insurer will meet its obligations regarding coverage, or that coverage will continue to be available on a cost effective basis.
There can be no assurance, however, that a claim will be covered by insurance or, if covered, will not exceed coverage limits, that an insurer will meet its obligations regarding coverage, or that coverage will continue to be available on a cost effective basis.
Our credit facility imposes operating covenants that impact our ability to conduct certain activities and, if amounts borrowed under it were subject to accelerated repayment, we might not have sufficient assets or liquidity to repay such amounts in full. Our credit facility requires us to maintain specified financial ratios, including maximum debt-to-earnings and minimum interest coverage ratios.
Our credit agreement imposes operating covenants that impact our ability to conduct certain activities and, if amounts borrowed under it were subject to accelerated repayment, we might not have sufficient assets or liquidity to repay such amounts in full. Our credit agreement requires us to maintain specified financial ratios, including maximum debt-to-earnings and minimum interest coverage ratios.
In this regard: • In the event of extreme circumstances, including economic, political or business crises, such as a widespread systemic failures or disruptions in the global or regional financial systems or failures of firms that have significant obligations as counterparties on financial instruments, we may suffer significant declines in AUM and severe liquidity or valuation issues in managed investment products in which client and company assets are invested, all of which would adversely affect our operating results, financial condition, liquidity, credit ratings, ability to access capital markets and ability to retain and attract key employees.
In this regard: • In the event of extreme circumstances, including an economic, political or business crisis, such as a widespread systemic failures or disruptions in the global or regional financial systems or failures of firms that have significant obligations as counterparties on financial instruments, we may suffer significant declines in AUM and severe liquidity or valuation issues in managed investment products in which client and company assets are invested, all of which would adversely affect our operating results, financial condition, liquidity, credit ratings, ability to access capital markets and ability to retain and attract key employees.
Our reputation and business prospects may also be damaged if we do not, or are perceived not to, effectively prepare for the potential business and operational opportunities and risks associated with climate change, including through the development and marketing of effective and competitive new products and services designed to address our clients’ climate risk-related investment objectives.
Our reputation and business prospects may also be damaged if we do not, or are perceived not to, effectively prepare for the potential business and operational opportunities and risks associated with climate change, including the development and marketing of effective and competitive new products and services designed to address certain clients’ climate risk-related investment objectives.
Following the completion of a strategic transaction, we may have to rely on the seller to provide administrative and other support, including financial reporting and internal controls, to the acquired business for a period of time. There can be no assurance that such sellers will do so in a manner that is acceptable to us.
Following the completion of a strategic acquisition, we may have to rely on the seller to provide administrative and other support, including financial reporting and internal controls, to the acquired business for a period of time. There can be no assurance that such sellers will do so in a manner that is acceptable to us.
We believe that, in addition to factors specific to our company, rating agency concerns include the fact that our revenues are exposed to equity market volatility and the potential impact from regulatory changes to the industry. Additionally, the rating agencies could decide to downgrade the entire investment management industry, based on their perspective of future growth and solvency.
We believe that, in addition to factors specific to our company, rating agency concerns include the fact that our revenues are exposed to financial market volatility and the potential impact from regulatory changes to the industry. Additionally, the rating agencies could decide to downgrade the entire investment management industry, based on their perspective of future growth and solvency.
We continue to face market pressures regarding fee levels in many products, including low fee, passively managed products which compete with our actively managed products. Our competitors include many investment management firms and other financial institutions. Some of these institutions have greater capital and other resources, and offer more comprehensive lines of products and services, than we do.
We continue to face market pressures regarding fee levels in many products, including low fee, passively managed products that compete with our actively managed products. Our competitors include many investment management firms and other financial institutions. Some of these institutions have greater capital and other resources, and offer more comprehensive lines of products and services, than we do.
MassMutual is entitled to designate an individual to serve on our board so long as it beneficially owns at least (i) 10% of our issued and outstanding shares of common stock or (ii) (x) 5% of our issued and outstanding shares of common stock and (y) $2.0 billion in aggregate liquidation preference of our Series A preferred shares.
MassMutual is entitled to designate an individual to serve on our board so long as it beneficially owns at least (i) 10% of our issued and outstanding shares of common stock or (ii) 5% of our issued and outstanding shares of common stock and $2.0 billion in aggregate liquidation preference of our Series A preferred shares.
If a director or officer of a Bermuda company is found to have breached such director’s duties to that company, the director may be held personally liable to the company in respect of that breach of duty. 21 Ta ble of Contents Class actions and derivative actions are generally not available to shareholders under the laws of Bermuda.
If a director or officer of a Bermuda company is found to have breached such director’s duties to that company, the director may be held personally liable to the company in respect of that breach of duty. 23 Ta ble of Contents Class actions and derivative actions are generally not available to shareholders under the laws of Bermuda.
The credit facility also contains customary affirmative operating covenants and negative covenants that, among other things, restrict certain of our subsidiaries' ability to incur debt and restrict our ability to transfer assets, merge, make loans and other investments and create liens. The breach of any covenant could result in a default under the credit facility.
The credit agreement also contains customary affirmative operating covenants and negative covenants that, among other things, restrict certain of our subsidiaries' ability to incur debt and restrict our ability to transfer assets, merge, make loans and other investments and create liens. The breach of any covenant could result in a default under the credit agreement.
These developments in the application of antitrust and competition laws to our business could impede our ability to provide certain products or limit the AUM of certain investment strategies that we provide. • Guidelines regarding the structure and components of fund manager compensation and other additional rules and regulations and disclosure requirements.
These developments in the application of antitrust and competition laws to our business could impede our ability to provide certain products or limit the AUM of certain investment strategies that we provide. • Guidelines regarding the structure and components of fund manager compensation and other related rules, regulations and disclosure requirements.
Invesco and certain related entities have in recent years been subject to various legal proceedings, including civil litigation and governmental investigations and enforcement actions. These actions can arise from normal business operations and/or matters that have been the subject of previous regulatory reviews.
We and certain related entities have in recent years been subject to various legal proceedings, including civil litigation and governmental investigations and enforcement actions. These actions can arise from normal business operations and/or matters that have been the subject of previous regulatory reviews.
In the event of any such default, lenders that are party to the credit facility could refuse to make further extensions of credit to us and require all amounts borrowed under the credit facility, together with accrued interest and other fees, to be immediately due and payable.
In the event of any such default, lenders that are party to the credit agreement could refuse to make further extensions of credit to us and require all amounts borrowed under the credit agreement, together with accrued interest and other fees, to be immediately due and payable.
Strategic transactions also pose the risk that any business we acquire may lose customers or employees or could underperform relative to expectations. We could also experience financial or other setbacks if potential or actual transactions encounter unanticipated problems, including problems related to closing or integration.
Strategic transactions also pose the risk that any business we acquire may lose customers or employees or could underperform relative to expectations. We could also experience financial or other setbacks if potential or actual acquisitions or divestitures encounter unanticipated problems, including problems related to closing or integration.
Regulatory inquiries, investigations or findings of wrongdoing, intentional or unintentional misrepresentation of our products and services in advertising materials, public relations information, social media or other external communications, operational failures (including portfolio management errors or cyber breaches), employee dishonesty or other misconduct and rumors, among other things, can substantially damage our reputation, even if they are baseless or eventually satisfactorily addressed.
Regulatory inquiries, investigations or findings of wrongdoing, intentional or unintentional misrepresentation of our products and services in regulatory filings, product literature, advertising materials, public relations information, social media or other external communications, operational failures (including portfolio management errors or cyber breaches), employee dishonesty or other misconduct and rumors, among other things, can substantially damage our reputation, even if they are baseless or eventually satisfactorily addressed.
These needs could present operational issues or require significant capital spending and may require us to reevaluate the current value and/or expected useful lives of the technology we use, which could negatively impact our AUM, revenues, and net income.
These needs could present operational issues or require significant capital and may require us to reevaluate the current value and/or expected useful lives of the technology we use, which could negatively impact our AUM, revenues, net income and liquidity.
If any indebtedness under the credit facility were subject to accelerated repayment and if we had at that time a significant amount of outstanding debt under the credit facility, we might not have sufficient liquid assets to repay such indebtedness in full.
If any indebtedness under the credit agreement were subject to accelerated repayment and if we had at that time a significant amount of outstanding debt under the credit agreement, we might not have sufficient liquid assets to repay such indebtedness in full.
Additionally, we have investments in fixed income assets, including collateralized loan obligations (CLOs), real estate-related loans, commercial loans and seed money in fixed income funds, the valuation of which could change with changes in interest and default rates.
Additionally, we have investments in fixed income assets, including collateralized loan obligations (CLOs), real estate-related loans, commercial loans and seed capital in fixed income funds, the valuation of which could change with changes in interest and default rates.
If our significant shareholders sell substantial amounts of our common stock, or express an intention to sell or there is the perception that such sales may occur, that action could have a significant impact on our common share trading price.
If our significant shareholders sell substantial amounts of our common stock or express an intention to sell, or there is the perception that such sales may occur, such actions could have a significant impact on our common share trading price.
Our credit facility borrowing rates are tied to our credit ratings. A reduction in our long-term credit ratings could increase our borrowing costs, could limit our access to the capital markets and may result in outflows, thereby reducing AUM, revenues and net income.
Our credit agreement borrowing rates are tied to our credit ratings. A reduction in our long-term credit ratings could increase our borrowing costs, could limit our access to the capital markets and may result in outflows, thereby reducing AUM, revenues and net income.
While we maintain controls to seek to prevent, detect and correct any errors, e ven effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Any errors in the underlying models or model assumptions could have unanticipated and adverse consequences on our business and reputation.
While we maintain controls to seek to prevent, detect and correct any errors, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Any errors in the underlying models or model assumptions could have unanticipated and adverse consequences on our business and reputation.
As further described below, material deterioration of these factors, and others defined by each rating agency, could result in downgrades to our credit ratings, thereby limiting our ability to access additional financing, the cost of such financing and our ability to maintain investment management mandates, particularly in the institutional channel.
As further described below, any material deterioration of these factors, and others defined by each rating agency, could result in downgrades to our credit ratings, thereby limiting our ability to access additional financing, increasing the cost of such financing and/or limiting our ability to maintain investment management mandates, particularly in the institutional channel.
To help protect against these risks, we purchase insurance in amounts, and against potential losses and liabilities, that we consider appropriate, where such insurance is available at prices we deem reasonable.
To help protect against these risks, we purchase insurance in amounts and at deductible levels, and against potential losses and liabilities, that we consider appropriate, where such insurance is available at prices we deem reasonable.
In such an event, we believe our operational size, multiple office locations and our existing back-up systems should mitigate adverse impacts. Nevertheless, we could still experience near-term operational problems with regard to particular areas of our operations.
In such an event, we believe our operational size, multiple office locations and our existing back-up systems should mitigate adverse impacts. Nevertheless, given our global presence, we could still experience near-term operational problems with regard to particular areas of our operations.
In recent years, certain regulatory developments have also added downward pressures regarding fee levels. Civil litigation and governmental investigations and enforcement actions could adversely affect our AUM and future net income and increase our costs of doing business.
In recent years, certain regulatory developments have also added to downward pressures on our fee levels. Civil litigation and governmental investigations and enforcement actions could adversely affect our AUM and future net income and increase our costs of doing business.
In addition, transfers of cash between international jurisdictions may have adverse tax consequences. As of December 31, 2022, our minimum regulatory capital requirement was $639.8 million. Complying with our regulatory commitments may result in an increase in the capital requirements applicable to the European sub-group.
In addition, transfers of cash between international jurisdictions may have adverse tax consequences. As of December 31, 2023, our minimum regulatory capital requirement was $395.8 million. Complying with our regulatory commitments may result in an increase in the capital requirements applicable to the European sub-group.
Although we take protective measures, including measures to effectively secure information through system security technology, and seek to continually monitor and develop our systems to protect our technology infrastructure and data from misappropriation or corruption, our technology systems may still be vulnerable to unauthorized access as a result of an external attack, actions by employees or vendors with access to our systems, computer malware or other events that have a security impact and that result in the disclosure or release of confidential information inadvertently or through malfeasance, or result in the loss (temporarily or permanently) of data, applications or systems.
Although we take protective measures, including measures to effectively secure information through system security technology, have many controls, processes, digital backup and recovery processes in place, and seek to continually monitor and develop our systems to protect our technology infrastructure and data from misappropriation or corruption, our technology systems may still be vulnerable to unauthorized access as a result of an external attack, actions by employees or vendors with access to our systems, computer malware or other events that have a security impact and that result in the disclosure or release of confidential information inadvertently or through malfeasance, or result in the loss (temporarily or permanently) of data, applications or systems.
Any damage to our reputation could impede our ability to attract and retain clients and key personnel, and lead to a reduction in the amount of our AUM, any of which could have a material adverse effect on our revenues, net income or liquidity. The soundness of other financial institutions could adversely affect us or the client portfolios we manage.
Any damage to our reputation could impede our ability to attract and retain clients and key personnel, and lead to a reduction in the amount of our AUM, any of which could have a material adverse effect on our revenues, net income or liquidity. 15 Ta ble of Contents The lack of soundness of other financial institutions could adversely affect us or the client portfolios we manage.
As a result of regulatory requirements, certain of these subsidiaries may be required to limit their dividends to the company. Risks Related to Strategic Transactions We may engage in strategic transactions that could create risks. We regularly review, an d from time-to-time engage in strategic transactions, some of which may be material.
Finally, as a result of regulatory requirements, certain of these subsidiaries may be required to limit their dividends to the company. Risks Related to Strategic Transactions We may engage in strategic transactions that could create risks. We regularly review, and from time-to-time engage in strategic transactions, some of which may be material.
The failure or negative performance of products offered by competitors may have a negative impact on similar Invesco products irrespective of our performance. Many competitors offer similar products to those offered by us, and the failure or negative performance of competitors’ products could lead to a loss of confidence in similar Invesco products, irrespective of the performance of our products.
The failure or negative performance of products offered by competitors may have a negative impact on similar Invesco products irrespective of our performance. 13 Ta ble of Contents Many competitors offer similar products to those offered by us, and the failure or negative performance of competitors’ products could lead to a loss of confidence in similar Invesco products, irrespective of the performance of our products.
In the U.K., an in-depth reshape of wholesale market rules is being debated and will aim at improving the functioning and competitiveness of the U.K. financial markets following the exit from the EU. • Limitations on holdings of certain physical commodity futures contracts and other physical commodity related derivatives positions under regulations of the CFTC which could result in capacity constraints for our products that employ physical commodities as part of their investment strategy. • Regulations impacting the standard of care that financial intermediaries providing investment recommendations owe to retail investors, under the SEC’s Regulation Best Interest and retirement plans and account holders, under the DOL’s Employee Retirement Income Security Act of 1974 (ERISA) fiduciary investment advice rules.
In the U.K., an in-depth reshape of wholesale market rules has been started and will aim at improving the functioning and competitiveness of the U.K. financial markets following the exit from the EU. • Limitations on ownership or control of certain physical commodity futures contracts and other physical commodity related derivatives positions under regulations of the CFTC which could result in capacity constraints for our products that employ these instruments as part of their investment strategy. • Limitations on holdings of certain physical commodity futures contracts and other physical commodity related derivatives positions under regulations of the CFTC which could result in capacity constraints for our products that employ physical commodities as part of their investment strategy. • Regulations impacting the standard of care that financial intermediaries providing investment recommendations owe to retail investors, under the SEC’s Regulation Best Interest and retirement plans and account holders, under the DOL’s Employee Retirement Income Security Act of 1974 (ERISA) fiduciary investment advice rules.
If we were to experience a disaster or other business continuity problem, such as a pandemic or other natural or man-made disaster, our continued success will depend, in part, on the availability of our personnel, our office facilities and the proper functioning of our computer, telecommunication and other related systems and operations.
If we were to experience a man-made or natural disaster, health crisis or pandemic, such as new variant of COVID-19, or other business continuity problem, our continued success will depend, in part, on the availability of our personnel, our office facilities and the proper functioning of our computer, telecommunication and other related systems and operations.
Certain institutional investors using money market products and other short-term duration fixed income products for cash management purposes may shift these investments to direct investments in comparable instruments in order to realize higher yields. These redemptions would reduce AUM, thereby reducing our revenues.
Certain institutional investors using money market products and other short-term duration fixed income products for cash management purposes may shift these investments to 10 Ta ble of Contents direct investments in comparable instruments in order to realize higher yields. These redemptions would reduce AUM, thereby reducing our revenues and net income.
Substantially all of our operations are conducted through our subsidiaries. As a result, our cash flow and our ability to fund operations are dependent upon the earnings of our subsidiaries and the distribution of earnings, intercompany loans or other payments by our subsidiaries to us.
As a result, our cash flow and ability to fund operations are dependent upon the earnings of our subsidiaries and the distribution of earnings, intercompany loans or other payments by our subsidiaries to us.
We issued perpetual preferred stock having a value of approximate ly $4 billion, wh ich could adversely affect our ability to raise additional capital and may limit our ability to fund other priorities. We issued approximately $4 billion of 5.9% fixed rate perpetual preferred stock in connection with the acquisition of OppenheimerFunds Inc. in May 2019.
We issued perpetual preferred stock having a value of approximately $4 billion, which could adversely affect our ability to raise additional capital and may limit our ability to fund other priorities. We issued approximately $4 billion of 5.9% fixed rate perpetual preferred stock in connection with the acquisition of OppenheimerFunds Inc.
Poor investment performance (on a relative or absolute basis) as compared to third-party benchmarks or competitive products has in the past led, and could in the future lead, to a decrease in sales of our products and stimulate redemptions from existing products, each of which could lower the overall level of AUM and reduce our management fees.
Poor investment performance (on a relative or absolute basis) as compared to third-party benchmarks or competitive products has in the past led, and could in the future lead, to a termination of investment management agreements, a decrease in sales of our products and stimulate redemptions from existing products, each of which could lower the overall level of AUM, reduce our management fees and negatively impact our revenues and net income.
We record tax liabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional taxes will be due. We adjust these liabilities periodically due to changes in interpretations of tax laws, status of tax authority examinations and new regulatory or judicial guidance that could impact the relative merits and risks of tax positions.
We accrue tax liabilities for certain tax issues based on our estimate of whether, and the extent to which, additional taxes may be due. We adjust these liabilities periodically due to changes in interpretations of tax laws, status of tax authority examinations and new regulatory or judicial guidance that could impact the relative merits and risks of tax positions.
Any delays or inaccuracies in obtaining pricing information, processing such transactions or such reports or other breaches and errors and any inadequacies in other customer service, could result in reimbursement obligations or other liabilities, or alienate clients or distributors and potentially give rise to claims against us.
Any delays or inaccuracies in obtaining pricing information, processing transactions or reports, other breaches and errors and/or any inadequacies in customer service, could result in reimbursement obligations or other liabilities, or alienate clients or distributors and/or claims against us.
We cannot at this time predict the full impact of potential legal and regulatory changes, changes in the interpretation of existing laws and regulations or possible enforcement proceedings on our business.
We cannot predict the full impact of legal and regulatory changes, changes in the interpretation of existing laws and regulations or possible enforcement proceedings on our business.
A failure to continue to innovate and introduce successful new products and services or to manage effectively the risks associated with such products and services may impact our market share relevance and may cause our AUM, revenue and earnings to decline.
A failure to continue to innovate and introduce successful new products and services or to manage effectively the risks associated with such products and services may impact our market share relevance and may cause our AUM, revenues and net income to decline.
A substantial portion of the products and services we offer are regulated by the SEC, Financial Industry Regulatory Authority, the Commodity Future Trading Commission (CFTC), the National Futures Association, the Department of Labor (DOL) and the Texas Department of Banking in the United States and by the Financial Conduct Authority (FCA), the Prudential Regulatory Authority in the United Kingdom and the Securities Futures Commission of Hong Kong (SFC) and the China Securities Regulatory Commission.
A substantial portion of the products and services we offer are regulated by the SEC, Financial Industry Regulatory Authority, the Commodity Future Trading Commission (CFTC), the National Futures Association, the Department of Labor (DOL) and the Texas Department of Banking in the U.S. and by the Financial Conduct Authority (FCA), and the Securities Futures Commission of Hong Kong (SFC) and the China Securities Regulatory Commission in Hong Kong and China, respectively.
Such changes have imposed, and may continue to impose, new compliance costs and/or capital requirements or impact Invesco in other ways that could have a material adverse impact on our revenue, net income or liquidity.
Such changes have imposed, and are likely to continue to impose, new compliance costs and/or capital requirements or impact Invesco in other ways that could have a material adverse impact on our AUM, revenues, net income or liquidity.
This may impact the levels and composition of our AUM and also negatively impact investor sentiment, which could result in reduced or negative flows. • Changes to U.S. tax, tariff and import/export regulations and economic sanctions may have a negative effect on global or regional economic conditions, financial markets and our business.
This volatility, including volatility arising from tensions between the U.S. and China, may impact the level and composition of our AUM and also negatively impact investor sentiment, which could result in reduced or negative flows. • Changes to tax, tariff and import/export regulations and economic sanctions may have a negative effect on global or regional economic conditions, financial markets and our business.
Additionally, these factors could impact our ability to realize the carrying value of our goodwill and other intangible assets. • Illiquidity and/or volatility of the global or regional fixed income and/or equity markets could negatively affect our ability to manage client inflows and outflows or to timely meet client redemption requests. • Uncertainties regarding geopolitical developments, such as nation state sovereignty, border disputes, diplomatic developments, social instability or changes in governmental policies, can produce volatility in global financial markets.
Additionally, these factors could impact our ability to realize the carrying value of our goodwill and other intangible assets. • Illiquidity and/or volatility of the global or regional risk asset markets could negatively affect our ability to manage investment products in which client and company assets are invested or client inflows and outflows or to timely meet client redemption requests. • Uncertainties regarding geopolitical developments, such as nation state sovereignty, border disputes, diplomatic developments, social instability or changes in governmental policies, can produce volatility in global financial markets and regulatory environments.
The extent to which our business, revenues, AUM and net income are further affected by the COVID‐19 pandemic will largely depend on future developments, which cannot be accurately predicted and are uncertain, including the duration and severity of the pandemic and the length of time it will take for the economy to recover, along with potentially more permanent impacts on how we operate and serve our clients.
The extent to which our business, revenues, AUM and net income are affected by a future pandemic or a new variant of COVID-19 will largely depend on new events or future developments, which cannot be accurately predicted and are uncertain, including the duration, severity and the length of time it will take for the economy to recover from the negative impacts on human capital and potentially more permanent impacts on how we operate and serve our clients.
In addition, technology is subject to rapid advancements and changes and our competitors may, from time to time, implement newer technologies or more advanced platforms for their services and products, including digital advisers and other advanced electronic systems, which could adversely affect our business if we are unable to remain competitive.
In addition, technology is subject to rapid advancements and changes and our competitors may, from time to time, implement newer technologies or more advanced platforms for their services and products, including digital advisers, low cost, high speed financial applications and services and investment platforms based on artificial intelligence and other advanced electronic systems, which could adversely affect our business if we are unable to remain competitive.
Our competitors can increase their market share to our detriment by reducing fees. The increasing size and market influence of certain distributors of our products and of certain direct competitors may have a negative impact on our ability to compete at the same levels of profitability in the future.
The increasing size and market influence of certain distributors of our products and of certain direct competitors may have a negative impact on our ability to compete at the same levels of profitability in the future.
If we fail, or appear to fail, to address successfully and promptly the underlying causes of any poor investment performance, we 10 Ta ble of Contents may be unsuccessful in reversing such under performance and our future business prospects would likely be negatively affected and redemptions could negatively impact our revenues and net income.
If we fail, or appear to fail, to address successfully and promptly the underlying causes of any poor investment performance, we may be unsuccessful in reversing such under performance, which could result in client loss or redemptions and the loss of future business prospects, both of which would negatively impact our revenues and net income.
Implementing any such upgrades, updates or other changes or replacements for our systems may be expensive and time-consuming, could divert management’s focus away from core business activities and may adversely affect our business if additional or unanticipated time or resources are necessary to complete any such changes to our systems, if such changed systems do not operate as anticipated or if other unforeseen issues arise in connection with any such changes to our systems.
Implementing any such upgrades, updates or other changes or replacements for our systems may be expensive and time-consuming, could divert management’s focus away from core business activities and may adversely affect our business if additional or unanticipated time or resources are necessary to complete any such changes to our systems.
In the EU, the ongoing review of the undertakings for the collective investment in transferable securities (UCITS) and alternative investment fund managers directive frameworks is expected to introduce new rules regarding the use of certain liquidity management tools (e.g., swing pricing, anti-dilution and side pockets etc.) by UCITS and alternative investment funds, including enhanced reporting on the use of such tools.
In the EU, the amendments to the undertakings for the collective investment in transferable securities (UCITS) and alternative investment fund managers directive frameworks have been agreed to and introduce new rules regarding the use of certain liquidity management tools (e.g., swing pricing, anti-dilution and side pockets etc.) by UCITS and alternative investment funds.
This issuance may limit our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes, may restrict our ability to pay dividends to holders of common shares in certain circumstances, may increase our vulnerability to general economic and industry conditions, and will require a significant portion of cash flow from operations to make required dividend payments to preferred shareholders. 16 Ta ble of Contents Failure to maintain adequate corporate and contingent liquidity may cause our AUM, liquidity and net income to decline, as well as harm our prospects for growth.
This issuance may limit our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes, may restrict our ability to pay dividends to holders of common shares in certain circumstances, may increase our vulnerability to general economic and industry conditions, and will require a significant portion of cash flow from operations to make required dividend payments to preferred shareholders.
The willingness of clients to enter into transactions in which such a conflict might arise may be affected if we fail - or appear to fail - to deal appropriately with conflicts of interest.
The willingness of clients to enter into transactions in which such a conflict might arise may be affected if we fail - or appear to fail - to deal appropriately with conflicts of interest. In addition, potential or perceived conflicts could give rise to litigation or regulatory enforcement actions.
These risks include negative market perception, diminished sales effectiveness and regulatory and litigation consequences associated with greenwashing claims or driven by association with clients, industries or products that may be inconsistent with our other clients’ ESG priorities or stated positions on climate change issues. If our reputation is harmed, we could suffer losses in our AUM, revenues and net income.
These risks include negative market perception, diminished sales effectiveness and regulatory and litigation consequences associated with greenwashing claims or driven by association with certain clients, industries or products that may be inconsistent with our other clients’ ESG priorities or stated positions on climate change issues.
Failure to obtain funds and/or financing, or any adverse change to the cost of obtaining such funds and/or financing, may cause our AUM, revenue and net income to decline, curtail our operations and limit or impede our prospects for growth. Distribution of earnings of our subsidiaries may be subject to limitations, including net capital requirements.
Failure to obtain funds and/or financing, or any adverse change to the cost of obtaining such funds and/or financing, may cause our AUM, revenues and net income to decline, curtail our operations and limit or impede our prospects for growth.
The rights of preferred shareholders may supersede the rights of common shareholders; • shareholders may only remove directors for “cause” (defined in our Bye-Laws to mean willful misconduct or gross negligence which is materially injurious to the company, fraud or embezzlement, or a conviction of, or a plea of “guilty” or “no contest” to, a felony); 22 Ta ble of Contents • our Board of Directors is authorized to expand its size and fill vacancies; and • shareholders cannot act by written consent unless the consent is unanimous.
The rights of preferred shareholders may supersede the rights of common shareholders; • shareholders may only remove directors for “cause” (defined in our Bye-Laws to mean willful misconduct or gross negligence which is materially injurious to the company, fraud or embezzlement, or a conviction of, or a plea of “guilty” or “no contest” to, a felony); • our Board of Directors is authorized to expand its size and fill vacancies; and • shareholders cannot act by written consent unless the consent is unanimous. 24 Ta ble of Contents General Risk Factors Our ability to maintain our credit ratings and to access the capital markets in a timely manner should we seek to do so depends on a number of factors.
Significant errors for which we are responsible could impact our reputation, results of operations, financial condition or liquidity. 12 Ta ble of Contents Our investment advisory agreements are subject to termination or non-renewal, and our fund and other investors may withdraw their assets at any time. Substantially all our revenues are derived from investment management agreements.
Significant errors by the company could impact our reputation, AUM, revenues, net income or liquidity. Our investment advisory agreements are subject to termination or non-renewal, and our fund and other investors may withdraw their assets at any time. 14 Ta ble of Contents Substantially all our revenues are derived from investment management agreements.
Our access to equity and debt markets on reasonable terms may be limited by adverse market conditions, including tax and interest rates, a reduction in our long- or short-term credit ratings, or changes in government regulations.
Failure to maintain adequate liquidity could lead to unanticipated costs and force us to revise existing strategic and business initiatives. Our access to equity and debt markets on reasonable terms may be limited by adverse market conditions, including tax and interest rates, a reduction in our long- or short-term credit ratings, or changes in government regulations.
Certain provisions impose additional disclosure burdens on public companies. Certain proposals could impose requirements for more widespread disclosures of compensation to highly-paid individuals.
Certain proposals could impose requirements for more widespread disclosures of compensation to highly-paid individuals.
The introduction of new technologies presents new challenges and new potential risks to us. On an ongoing basis, we need to upgrade and improve our technology, including our data processing, financial, accounting, shareholder servicing and trading systems.
On an ongoing basis, we need to upgrade and improve our technology, including our data processing, financial, accounting, shareholder servicing and trading systems.
Although we seek to assess regularly and improve our existing business continuity plans, a major disaster, a disaster that affected certain important operating areas, or our inability to recover successfully should we experience a disaster or other business continuity problem, could materially interrupt our business operations and cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability. 15 Ta ble of Contents Our business is vulnerable to deficiencies and failures in support systems and customer service functions that could lead to breaches and errors or reputational harm, resulting in loss of customers or claims against us or our subsidiaries.
Although we seek to regularly assess and improve our existing business continuity plans, a major disaster, a disaster that affected certain important operating areas, or our inability to successfully recover should we experience a disaster or other business continuity problem, could materially interrupt our business operations and cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability.
Our failure to properly perform and monitor our operations or our otherwise suffering deficiencies and failures in these systems or service functions due to a failure of a third-party service provider or other key vendor could result in material financial loss or costs, regulatory actions, breach of client contracts, reputational harm or legal claims and liability, which in turn could have a negative effect on our AUM, revenues and net income.
Our failure to properly perform and monitor our operations, including data management, or our otherwise suffering deficiencies and failures in these systems or service functions due to a failure of a third-party service provider or other key vendor could result in material financial loss or costs, regulatory actions, breach of client contracts, reputational harm or legal claims and liability, which in turn could have a negative effect on our AUM, revenues and net income. 17 Ta ble of Contents Risks Related to Accounting, Capital Management and Liquidity The carrying value of goodwill and other intangible assets on our balance sheet could become impaired, which would adversely affect our results of operations.
We are also dependent on the effectiveness of our information and cyber security infrastructure, policies, procedures and capabilities to protect our computer and telecommunications systems and the data that reside on or are transmitted through them.
We are also dependent on the effectiveness of our information and cyber security infrastructure, policies, procedures and capabilities to protect our technology and digital systems and the data that reside on or are transmitted through them, including data provided by third parties that is significant to portions of our business and products.
Without limiting the generality of the foregoing, regulators in the U.S. and other jurisdictions have taken and can be expected to continue to take a more aggressive posture on bringing enforcement proceedings.
The regulatory environment in which we operate frequently changes, and we have seen a significant increase in regulatory changes, actions and scrutiny in recent years. Without limiting the generality of the foregoing, regulators in the U.S. and other jurisdictions have taken and can be expected to continue to take a more aggressive posture in bringing enforcement proceedings.
Bribery Act and anti-money-laundering laws and regulations that will increase compliance and record keeping obligations of the company. • Regulations promulgated to address risks of fraud, malfeasance or other adverse consequences stemming from cyber-attacks, and ensure the digital operational resilience of firms.
Bribery Act and anti-money-laundering laws that may increase our compliance costs and burdens and regulatory enforcement risk. • Regulations promulgated to address risks of fraud, malfeasance, adverse consequences stemming from cyber-attacks and/or cross-border data transfer, and to ensure the digital operational resilience of firms.
In particular, the new EU Digital Operational Resilience Act will harmonize the requirements applying to Information and Communication Technology risk management, outsourcing and operational resilience in the financial sector. • The application of antitrust and similar competition laws to the asset management industry, including proposed amendments to the U.S.
In particular, the new EU Digital Operational Resilience Act will harmonize the requirements applying to Information and Communication Technology risk management, outsourcing and operational resilience in the financial sector.
Furthermore, the fees we earn vary with the types of assets being managed, with higher fees earned on actively managed equity and balanced accounts, real estate and other alternative asset products, and lower fees earned on fixed income, stable value accounts and passively managed products.
Furthermore, the fees we earn vary with the types of assets being managed, with higher fees earned on actively managed equity and balanced accounts, alternative asset products, and lower fees earned on fixed income, stable value accounts and passively managed products. Our revenues and net income may decline further if clients continue to shift their investments to lower fee accounts.
New regulations in this area could negatively impact our existing products that employ leverage or derivatives and could impede our ability to bring new products to market. • EU and U.K. regulations pertaining to integrating ESG topics have materially impacted the asset management industry in EU member states and in the U.K.
New regulations in this area could negatively impact our existing products that employ leverage or derivatives and could impede our ability to bring new products to market and can raise our compliance costs associated with sponsoring and managing products that employ leverage or derivatives. • EU and U.K. regulations pertaining to integrating ESG topics.
A review of EMIR is due to start in 2023. Also in the EU, the European Commission is preparing amendments to the Markets in Financial Instruments Directive/Markets in Financial Instruments Regulation framework to amend trading and improve transparency rules.
Also in the EU, the European Commission finalized amendments to the Markets in Financial Instruments Directive/Markets in Financial Instruments Regulation framework to amend trading and improve transparency rules through the creation of a new consolidated tape.
Risks Related to Regulatory and Legal Matters We operate in an industry that is highly regulated in most countries, and any enforcement action or significant changes in the laws or regulations governing our business or industry or enforcement actions against us could decrease our AUM, revenues and net income.
Risks Related to Regulatory and Legal Matters We operate in an industry that is highly regulated in most countries, and any enforcement action or significant changes in the laws or regulations governing our business or industry could decrease our AUM, revenues, net income and liquidity. 19 Ta ble of Contents As with all investment management companies, our activities are highly regulated in almost every country in which we conduct business.
Such measures are progressing at various stages, but several may become effective around the same time, which would put additional pressure on our subsidiaries.
Such measures are progressing at various stages, but several may become effective around the same time, which would put additional pressure on our subsidiaries. Such measures in the EU generally have been, are being or will or would be implemented by national legislation in member states.
Institutional clients may elect to terminate their relationships with us or reduce the aggregate amount of AUM, generally on short notice. Any termination of or failure to renew a significant number of these agreements, or any other loss of a significant number of our clients or AUM, would adversely affect our revenues, net income, and liquidity.
Any termination of or failure to renew a significant number of these agreements, or any other loss of a significant number of our clients or AUM, would adversely affect our revenues, net income, and liquidity.
Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment of tax that is materially different from our current estimate of tax liabilities, an increase in the cost of our tax compliance or adversely affect our future net income and liquidity.
Due to the complexity of these tax issues, the ultimate resolution may result in a payment of tax that is materially different from the liability that has been accrued or an increase in the cost of our tax compliance, which could have an adverse effect on our net income and liquidity.
Any loss of confidence in a product type could lead to withdrawals, redemptions and liquidity issues in such products, which could have a material adverse effect on our results of operations, financial condition or liquidity. 11 Ta ble of Contents Risks Related to Operations and Technology Our investment management professionals and other key employees are a vital part of our ability to attract and retain clients, and the loss of key individuals or a significant portion of those professionals could result in a reduction of our AUM, revenues and net income.
Risks Related to Talent, Operations and Technology Our investment management professionals and other key employees are a vital part of our ability to attract and retain clients, and the loss of key individuals or a significant portion of those professionals could result in a reduction of our AUM, revenues and net income.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our registered office is located in Hamilton, Bermuda, and our corporate headquarters is in leased office space at 1555 Peachtree Street N.E., Suite 1800, Atlanta, Georgia, 30309, U.S.A. In addition, Invesco's future headquarters, which will also be leased, will be located at 1331 Spring Street, Suite 2500, Atlanta, Georgia, 30309, U.S.A.
Biggest changeItem 2. Properties Our registered office is located in Hamilton, Bermuda, and our corporate headquarters is in leased office space at 1331 Spring Street, Suite 2500, Atlanta, Georgia, 30309, U.S.A.
Our principal regional centers are maintained in leased facilities, except as noted below, in the following locations: • Americas: 11 Greenway Plaza, Houston, Texas 77046; 225 Liberty St, New York City, New York 10281 • EMEA: Perpetual Park, Henley-on-Thames, Oxfordshire, RG9 1HH, United Kingdom (owned facilities) • APAC: Champion Tower, No. 3 Garden Road, Hong Kong We maintain a global enterprise center in Hyderabad, India in leased facilities at DivyaSree Orion in the Ranga Reddy District of Hyderabad, India.
Our principal regional centers are maintained in leased facilities, except as noted below, in the following locations: • Americas: 11 Greenway Plaza, Houston, Texas 77046; 225 Liberty St, New York City, New York 10281 • EMEA: Perpetual Park, Henley-on-Thames, Oxfordshire, RG9 1HH, United Kingdom (owned facilities) • APAC: 1 Connaught Place, Central, Hong Kong We maintain a global enterprise center in Hyderabad, India in leased facilities at DivyaSree Orion in the Ranga Reddy District.
We lease office space in over 20 countries. 23 Ta ble of Contents
We lease office space in over 20 countries.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans The equity compensation plan information required in Item 201(d) of Regulation S-K is set forth in the definitive Proxy Statement for the company's annual meeting of shareholders, which will be filed with the SEC no later than 120 days after the close of the fiscal year ended December 31, 2022 and is incorporated by reference in this Report. 25 Ta ble of Contents Repurchases of Equity Securities The following table shows common share repurchase activity during the three months ended December 31, 2022: Month Total Number of Common Shares Purchased (1) Average Price Paid Per Common Share Total Number of Common Shares Purchased as Part of Publicly Announced Plans or Programs (2) Approximate Dollar Value of Common Shares that May Yet Be Purchased Under the Plans or Programs (2) (millions) October 1 - 31, 2022 8,697 $ 14.24 — $ 532.2 November 1 - 30, 2022 6,407 $ 19.26 — $ 532.2 December 1 - 31, 2022 201,989 $ 19.01 — $ 532.2 217,093 — ____________ (1) An aggregate of 217,093 common shares were surrendered to us by Invesco employees to satisfy tax withholding obligations in connection with the vesting of equity awards during the three months ended December 31, 2022.
Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans The equity compensation plan information required in Item 201(d) of Regulation S-K is set forth in the definitive Proxy Statement for the company's annual meeting of shareholders, which will be filed with the SEC no later than 120 days after the close of the fiscal year ended December 31, 2023 and is incorporated by reference in this Report. 27 Ta ble of Contents Repurchases of Equity Securities The following table shows common share repurchase activity during the three months ended December 31, 2023: Month Total Number of Common Shares Purchased (1) Average Price Paid Per Common Share Total Number of Common Shares Purchased as Part of Publicly Announced Plans or Programs (2) Approximate Dollar Value of Common Shares that May Yet Be Purchased Under the Plans or Programs (2) (millions) October 1 - 31, 2023 126,856 $ 13.53 — $ 382.2 November 1 - 30, 2023 12,596 $ 13.84 — $ 382.2 December 1 - 31, 2023 11,872 $ 16.80 — $ 382.2 151,324 — ____________ (1) An aggregate of 151,324 common shares were surrendered to us by Invesco employees to satisfy tax withholding obligations in connection with the vesting of equity awards during the three months ended December 31, 2023.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common shares are listed and traded on the NYSE under the symbol “IVZ.” At January 31, 2023, there were approximately 5,000 holders of record of our common shares.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common shares are listed and traded on the NYSE under the symbol “IVZ.” At January 31, 2024, there were approximately 5,000 holders of record of our common shares.
The following graph illustrates the cumulative total shareholder return of our common shares over the five-year period beginning from the market close on the last trading day of 2017 through and including the last trading day in the fiscal year ended December 31, 2022 and compares it to the cumulative total return of the S&P 500 Index and to a group of peer investment management companies.
The following graph illustrates the cumulative total shareholder return of our common shares over the five-year period beginning from the market close on the last trading day of 2018 through and including the last trading day in the fiscal year ended December 31, 2023 and compares it to the cumulative total return of the Standard & Poor's (S&P) 500 Index and to a group of peer investment management companies.
(2) At December 31, 2022, a balanc e of $532.2 million remains available under the common share repurchase authorization approved by the Board on July 22, 2016. 26 Ta ble of Contents Item 6. [Reserved]
(2) At December 31, 2023, a balanc e of $382.2 million remains available under the common share repurchase authorization approved by the Board on July 22, 2016. 28 Ta ble of Contents Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeForeign Exchange Rates During the year ended December 31, 2022, we experienced a decrease in AUM of $26.1 billion due to changes in foreign exchange rates (December 31, 2021: AUM decreased by $6.3 billion). 32 Ta ble of Contents Changes in our AUM by channel, asset class, and client domicile, and average AUM by asset class, are presented below: Total AUM by Channel (1) $ in billions Total Retail Institutional December 31, 2021 1,610.9 1,106.5 504.4 Long-term inflows 330.3 243.9 86.4 Long-term outflows (330.8) (257.5) (73.3) Net long-term flows (0.5) (13.6) 13.1 Net flows in non-management fee earning AUM (3.2) 0.9 (4.1) Net flows in money market funds 56.4 1.8 54.6 Total net flows 52.7 (10.9) 63.6 Reinvested distributions 15.2 14.8 0.4 Market gains and losses (243.5) (227.3) (16.2) Foreign currency translation (26.1) (10.8) (15.3) December 31, 2022 1,409.2 872.3 536.9 December 31, 2020 1,349.9 947.1 402.8 Long-term inflows 426.8 301.2 125.6 Long-term outflows (345.4) (265.7) (79.7) Net long-term flows 81.4 35.5 45.9 Net flows in non-management fee earning AUM 20.6 20.2 0.4 Net flows in money market funds 39.7 3.3 36.4 Total net flows 141.7 59.0 82.7 Reinvested distributions 31.6 31.1 0.5 Market gains and losses 94.0 69.0 25.0 Foreign currency translation (6.3) 0.3 (6.6) December 31, 2021 1,610.9 1,106.5 504.4 December 31, 2019 1,226.2 878.2 348.0 Long-term inflows 310.9 221.6 89.3 Long-term outflows (326.6) (267.6) (59.0) Net long-term flows (15.7) (46.0) 30.3 Net flows in non-management fee earning AUM (5.1) 7.2 (12.3) Net flows in money market funds 14.3 2.0 12.3 Total net flows (6.5) (36.8) 30.3 Reinvested distributions 16.9 16.3 0.6 Market gains and losses 103.0 85.4 17.6 Foreign currency translation 10.3 4.0 6.3 December 31, 2020 1,349.9 947.1 402.8 ____________ See accompanying notes immediately following these AUM tables. 33 Ta ble of Contents Active AUM by Channel (1) $ in billions Total Retail Institutional December 31, 2021 1,082.5 631.7 450.8 Long-term inflows 197.9 117.0 80.9 Long-term outflows (226.2) (157.5) (68.7) Net long-term flows (28.3) (40.5) 12.2 Net flows in money market funds 56.4 1.8 54.6 Total net flows 28.1 (38.7) 66.8 Reinvested distributions 15.2 14.8 0.4 Market gains and losses (125.6) (115.6) (10.0) Foreign currency translation (24.0) (10.1) (13.9) December 31, 2022 976.2 482.1 494.1 December 31, 2020 979.3 601.1 378.2 Long-term inflows 260.2 163.5 96.7 Long-term outflows (242.0) (167.9) (74.1) Net long-term flows 18.2 (4.4) 22.6 Net flows in non-management fee earning AUM (0.1) (0.1) — Net flows in money market funds 39.7 3.3 36.4 Total net flows 57.8 (1.2) 59.0 Reinvested distributions 31.6 31.1 0.5 Market gains and losses 18.3 (0.1) 18.4 Foreign currency translation (4.5) 0.8 (5.3) December 31, 2021 1,082.5 631.7 450.8 December 31, 2019 929.2 602.4 326.8 Long-term inflows 204.3 128.0 76.3 Long-term outflows (236.1) (178.6) (57.5) Net long-term flows (31.8) (50.6) 18.8 Net flows in non-management fee earning AUM — (0.1) 0.1 Net flows in money market funds 14.3 2.0 12.3 Total net flows (17.5) (48.7) 31.2 Reinvested distributions 16.9 16.3 0.6 Market gains and losses 40.8 27.5 13.3 Foreign currency translation 9.9 3.6 6.3 December 31, 2020 979.3 601.1 378.2 ____________ See accompanying notes immediately following these AUM tables. 34 Ta ble of Contents Passive AUM by Channel (1) $ in billions Total Retail Institutional December 31, 2021 528.4 474.8 53.6 Long-term inflows 132.4 126.9 5.5 Long-term outflows (104.6) (100.0) (4.6) Net long-term flows 27.8 26.9 0.9 Net flows in non-management fee earning AUM (3.2) 0.9 (4.1) Total net flows 24.6 27.8 (3.2) Market gains and losses (117.9) (111.7) (6.2) Foreign currency translation (2.1) (0.7) (1.4) December 31, 2022 433.0 390.2 42.8 December 31, 2020 370.6 346.0 24.6 Long-term inflows 166.6 137.7 28.9 Long-term outflows (103.4) (97.8) (5.6) Net long-term flows 63.2 39.9 23.3 Net flows in non-management fee earning AUM 20.7 20.3 0.4 Total net flows 83.9 60.2 23.7 Market gains and losses 75.7 69.1 6.6 Foreign currency translation (1.8) (0.5) (1.3) December 31, 2021 528.4 474.8 53.6 December 31, 2019 297.0 275.8 21.2 Long-term inflows 106.6 93.6 13.0 Long-term outflows (90.5) (89.0) (1.5) Net long-term flows 16.1 4.6 11.5 Net flows in non-management fee earning AUM (5.1) 7.3 (12.4) Total net flows 11.0 11.9 (0.9) Market gains and losses 62.2 57.9 4.3 Foreign currency translation 0.4 0.4 — December 31, 2020 370.6 346.0 24.6 ____________ See accompanying notes immediately following these AUM tables. 35 Ta ble of Contents Total AUM by Asset Class (2) $ in billions Total Equity Fixed Income Balanced Money Market Alternatives December 31, 2021 1,610.9 841.6 334.8 88.6 148.8 197.1 Long-term inflows 330.3 143.7 119.3 15.2 — 52.1 Long-term outflows (330.8) (152.5) (102.4) (20.9) — (55.0) Net long-term flows (0.5) (8.8) 16.9 (5.7) — (2.9) Net flows in non-management fee earning AUM (3.2) 1.0 (4.2) — — — Net flows in money market funds 56.4 — — — 56.4 — Total net flows 52.7 (7.8) 12.7 (5.7) 56.4 (2.9) Reinvested distributions 15.2 11.1 1.6 1.2 — 1.3 Market gains and losses (243.5) (198.8) (27.3) (13.2) 1.1 (5.3) Foreign currency translation (26.1) (9.1) (8.1) (3.8) (2.8) (2.3) December 31, 2022 1,409.2 637.0 313.7 67.1 203.5 187.9 Average AUM 1,452.5 697.1 315.1 73.3 167.6 199.4 % of total average AUM 100.0 % 48.0 % 21.7 % 5.1 % 11.5 % 13.7 % December 31, 2020 1,349.9 689.6 296.4 78.9 108.5 176.5 Long-term inflows 426.8 205.0 118.1 48.5 — 55.2 Long-term outflows (345.4) (182.1) (76.8) (40.8) — (45.7) Net long-term flows 81.4 22.9 41.3 7.7 — 9.5 Net flows in non-management fee earning AUM 20.6 20.6 — — — — Net flows in money market funds 39.7 — — — 39.7 — Total net flows 141.7 43.5 41.3 7.7 39.7 9.5 Reinvested distributions 31.6 25.4 1.9 2.7 — 1.6 Market gains and losses 94.0 85.9 (2.0) (1.1) — 11.2 Foreign currency translation (6.3) (2.8) (2.8) 0.4 0.6 (1.7) December 31, 2021 1,610.9 841.6 334.8 88.6 148.8 197.1 Average AUM 1,499.9 778.3 316.1 86.5 131.1 187.9 % of total average AUM 100.0 % 51.9 % 21.1 % 5.8 % 8.7 % 12.5 % December 31, 2019 1,226.2 598.8 283.5 67.3 91.4 185.2 Long-term inflows 310.9 134.6 102.9 30.5 — 42.9 Long-term outflows (326.6) (167.4) (76.8) (29.7) — (52.7) Net long-term flows (15.7) (32.8) 26.1 0.8 — (9.8) Net flows in non-management fee earning AUM (5.1) 17.2 (22.3) — — — Net flows in money market funds 14.3 — — — 14.3 — Total net flows (6.5) (15.6) 3.8 0.8 14.3 (9.8) Reinvested distributions 16.9 11.5 2.3 1.8 — 1.3 Market gains and losses 103.0 92.2 4.7 7.1 1.2 (2.2) Foreign currency translation 10.3 2.7 2.1 1.9 1.6 2.0 December 31, 2020 1,349.9 689.6 296.4 78.9 108.5 176.5 Average AUM 1,194.9 573.1 275.3 65.1 108.4 173.0 % of total average AUM 100.0 % 48.0 % 23.0 % 5.4 % 9.1 % 14.5 % ____________ See accompanying notes immediately following these AUM tables. 36 Ta ble of Contents Active AUM by Asset Class (2) $ in billions Total Equity Fixed Income Balanced Money Market Alternatives December 31, 2021 1,082.5 389.6 293.1 87.4 148.8 163.6 Long-term inflows 197.9 54.2 98.1 15.2 — 30.4 Long-term outflows (226.2) (83.3) (89.7) (20.8) — (32.4) Net long-term flows (28.3) (29.1) 8.4 (5.6) — (2.0) Net flows in money market funds 56.4 — — — 56.4 — Total net flows 28.1 (29.1) 8.4 (5.6) 56.4 (2.0) Reinvested distributions 15.2 11.1 1.6 1.2 — 1.3 Market gains and losses (125.6) (86.4) (22.4) (12.9) 1.1 (5.0) Foreign currency translation (24.0) (7.7) (7.7) (3.8) (2.8) (2.0) December 31, 2022 976.2 277.5 273.0 66.3 203.5 155.9 Average AUM 988.2 309.6 275.2 72.3 167.5 163.6 % of total average AUM 100.0 % 31.3 % 27.8 % 7.3 % 17.0 % 16.6 % December 31, 2020 979.3 383.2 259.4 77.9 108.5 150.3 Long-term inflows 260.2 70.9 103.5 48.3 — 37.5 Long-term outflows (242.0) (98.9) (67.9) (40.8) — (34.4) Net long-term flows 18.2 (28.0) 35.6 7.5 — 3.1 Net flows in non-management fee earning AUM (0.1) (0.1) (0.1) 0.1 — — Net flows in money market funds 39.7 — — — 39.7 — Total net flows 57.8 (28.1) 35.5 7.6 39.7 3.1 Reinvested distributions 31.6 25.4 1.9 2.7 — 1.6 Market gains and losses 18.3 10.8 (1.3) (1.2) — 10.0 Foreign currency translation (4.5) (1.7) (2.4) 0.4 0.6 (1.4) December 31, 2021 1,082.5 389.6 293.1 87.4 148.8 163.6 Average AUM 1,050.2 401.5 275.0 85.4 131.1 157.2 % of total average AUM 100.0 % 38.2 % 26.2 % 8.1 % 12.5 % 15.0 % December 31, 2019 929.2 381.7 224.6 66.4 91.4 165.1 Long-term inflows 204.3 61.2 90.3 30.4 — 22.4 Long-term outflows (236.1) (104.4) (65.3) (29.7) — (36.7) Net long-term flows (31.8) (43.2) 25.0 0.7 — (14.3) Net flows in money market funds 14.3 — — — 14.3 — Total net flows (17.5) (43.2) 25.0 0.7 14.3 (14.3) Reinvested distributions 16.9 11.5 2.3 1.8 — 1.3 Market gains and losses 40.8 30.8 5.5 7.1 1.2 (3.8) Foreign currency translation 9.9 2.4 2.0 1.9 1.6 2.0 December 31, 2020 979.3 383.2 259.4 77.9 108.5 150.3 Average AUM 892.9 335.7 234.5 64.1 108.4 150.2 % of total average AUM 100.0 % 37.6 % 26.3 % 7.2 % 12.1 % 16.8 % ____________ See accompanying notes immediately following these AUM tables. 37 Ta ble of Contents Passive AUM by Asset Class (2) $ in billions Total Equity Fixed Income Balanced Money Market Alternatives December 31, 2021 528.4 452.0 41.7 1.2 — 33.5 Long-term inflows 132.4 89.5 21.2 — — 21.7 Long-term outflows (104.6) (69.2) (12.7) (0.1) — (22.6) Net long-term flows 27.8 20.3 8.5 (0.1) — (0.9) Net flows in non-management fee earning AUM (3.2) 1.0 (4.2) — — — Total net flows 24.6 21.3 4.3 (0.1) — (0.9) Market gains and losses (117.9) (112.4) (4.9) (0.3) — (0.3) Foreign currency translation (2.1) (1.4) (0.4) — — (0.3) December 31, 2022 433.0 359.5 40.7 0.8 — 32.0 Average AUM 464.3 387.6 39.9 0.9 — 35.9 % of total average AUM 100.0 % 83.5 % 8.6 % 0.2 % — % 7.7 % December 31, 2020 370.6 306.4 37.0 1.0 — 26.2 Long-term inflows 166.6 134.1 14.6 0.2 — 17.7 Long-term outflows (103.4) (83.2) (8.9) — — (11.3) Net long-term flows 63.2 50.9 5.7 0.2 — 6.4 Net flows in non-management fee earning AUM 20.7 20.7 0.1 (0.1) — — Total net flows 83.9 71.6 5.8 0.1 — 6.4 Market gains and losses 75.7 75.1 (0.7) 0.1 — 1.2 Foreign currency translation (1.8) (1.1) (0.4) — — (0.3) December 31, 2021 528.4 452.0 41.7 1.2 — 33.5 Average AUM 449.7 376.8 41.1 1.1 — 30.7 % of total average AUM 100.0 % 83.8 % 9.2 % 0.2 % — % 6.8 % December 31, 2019 297.0 217.1 58.9 0.9 — 20.1 Long-term inflows 106.6 73.4 12.6 0.1 — 20.5 Long-term outflows (90.5) (63.0) (11.5) — — (16.0) Net long-term flows 16.1 10.4 1.1 0.1 — 4.5 Net flows in non-management fee earning AUM (5.1) 17.2 (22.3) — — — Total net flows 11.0 27.6 (21.2) 0.1 — 4.5 Market gains and losses 62.2 61.4 (0.8) — — 1.6 Foreign currency translation 0.4 0.3 0.1 — — — December 31, 2020 370.6 306.4 37.0 1.0 — 26.2 Average AUM 301.9 237.5 40.8 0.8 — 22.9 % of total average AUM 100.0 % 78.6 % 13.5 % 0.3 % — % 7.6 % ____________ See accompanying notes immediately following these AUM tables. 38 Ta ble of Contents Total AUM by Client Domicile (3) $ in billions Total Americas APAC EMEA (4) December 31, 2021 1,610.9 1,132.5 247.3 231.1 Long-term inflows 330.3 184.0 76.6 69.7 Long-term outflows (330.8) (193.8) (62.5) (74.5) Net long-term flows (0.5) (9.8) 14.1 (4.8) Net flows in non-management fee earning AUM (3.2) (3.6) 1.1 (0.7) Net flows in money market funds 56.4 58.3 (0.3) (1.6) Total net flows 52.7 44.9 14.9 (7.1) Reinvested distributions 15.2 14.9 — 0.3 Market gains and losses (243.5) (191.3) (22.6) (29.6) Foreign currency translation (26.1) (1.6) (16.1) (8.4) December 31, 2022 1,409.2 999.4 223.5 186.3 December 31, 2020 1,349.9 959.9 171.3 218.7 Long-term inflows 426.8 213.2 139.0 74.6 Long-term outflows (345.4) (197.7) (71.8) (75.9) Net long-term flows 81.4 15.5 67.2 (1.3) Net flows in non-management fee earning AUM 20.6 15.9 2.4 2.3 Net flows in money market funds 39.7 35.7 4.1 (0.1) Total net flows 141.7 67.1 73.7 0.9 Reinvested distributions 31.6 31.2 0.1 0.3 Market gains and losses 94.0 74.4 5.9 13.7 Foreign currency translation (6.3) (0.1) (3.7) (2.5) December 31, 2021 1,610.9 1,132.5 247.3 231.1 December 31, 2019 1,226.2 879.5 128.6 218.1 Long-term inflows 310.9 176.2 64.1 70.6 Long-term outflows (326.6) (206.7) (44.8) (75.1) Net long-term flows (15.7) (30.5) 19.3 (4.5) Net flows in non-management fee earning AUM (5.1) 3.6 0.7 (9.4) Net flows in money market funds 14.3 10.9 3.1 0.3 Total net flows (6.5) (16.0) 23.1 (13.6) Reinvested distributions 16.9 16.6 0.1 0.2 Market gains and losses 103.0 79.3 13.7 10.0 Foreign currency translation 10.3 0.5 5.8 4.0 December 31, 2020 1,349.9 959.9 171.3 218.7 ____________ See accompanying notes immediately following these AUM tables. 39 Ta ble of Contents Active AUM by Client Domicile (3) $ in billions Total Americas APAC EMEA (4) December 31, 2021 1,082.5 724.5 208.8 149.2 Long-term inflows 197.9 104.0 69.3 24.6 Long-term outflows (226.2) (133.4) (56.1) (36.7) Net long-term flows (28.3) (29.4) 13.2 (12.1) Net flows in non-management fee earning AUM — — 0.1 (0.1) Net flows in money market funds 56.4 58.3 (0.3) (1.6) Total net flows 28.1 28.9 13.0 (13.8) Reinvested distributions 15.2 14.9 — 0.3 Market gains and losses (125.6) (96.0) (16.3) (13.3) Foreign currency translation (24.0) (1.5) (14.5) (8.0) December 31, 2022 976.2 670.8 191.0 114.4 December 31, 2020 979.3 656.9 163.4 159.0 Long-term inflows 260.2 113.6 110.5 36.1 Long-term outflows (242.0) (125.4) (67.4) (49.2) Net long-term flows 18.2 (11.8) 43.1 (13.1) Net flows in non-management fee earning AUM (0.1) (0.2) 0.1 — Net flows in money market funds 39.7 35.7 4.1 (0.1) Total net flows 57.8 23.7 47.3 (13.2) Reinvested distributions 31.6 31.2 0.1 0.3 Market gains and losses 18.3 12.8 0.3 5.2 Foreign currency translation (4.5) (0.1) (2.3) (2.1) December 31, 2021 1,082.5 724.5 208.8 149.2 December 31, 2019 929.2 639.5 123.7 166.0 Long-term inflows 204.3 108.6 61.3 34.4 Long-term outflows (236.1) (147.2) (42.6) (46.3) Net long-term flows (31.8) (38.6) 18.7 (11.9) Net flows in money market funds 14.3 10.9 3.1 0.3 Total net flows (17.5) (27.7) 21.8 (11.6) Reinvested distributions 16.9 16.6 0.1 0.2 Market gains and losses 40.8 27.9 12.0 0.9 Foreign currency translation 9.9 0.6 5.8 3.5 December 31, 2020 979.3 656.9 163.4 159.0 ____________ See accompanying notes immediately following these AUM tables. 40 Ta ble of Contents Passive AUM by Client Domicile (3) $ in billions Total Americas APAC EMEA (4) December 31, 2021 528.4 408.0 38.5 81.9 Long-term inflows 132.4 80.0 7.3 45.1 Long-term outflows (104.6) (60.4) (6.4) (37.8) Net long-term flows 27.8 19.6 0.9 7.3 Net flows in non-management fee earning AUM (3.2) (3.6) 1.0 (0.6) Total net flows 24.6 16.0 1.9 6.7 Market gains and losses (117.9) (95.3) (6.3) (16.3) Foreign currency translation (2.1) (0.1) (1.6) (0.4) December 31, 2022 433.0 328.6 32.5 71.9 December 31, 2020 370.6 303.0 7.9 59.7 Long-term inflows 166.6 99.6 28.5 38.5 Long-term outflows (103.4) (72.3) (4.4) (26.7) Net long-term flows 63.2 27.3 24.1 11.8 Net flows in non-management fee earning AUM 20.7 16.1 2.3 2.3 Total net flows 83.9 43.4 26.4 14.1 Market gains and losses 75.7 61.6 5.6 8.5 Foreign currency translation (1.8) — (1.4) (0.4) December 31, 2021 528.4 408.0 38.5 81.9 December 31, 2019 297.0 240.0 4.9 52.1 Long-term inflows 106.6 67.6 2.8 36.2 Long-term outflows (90.5) (59.5) (2.2) (28.8) Net long-term flows 16.1 8.1 0.6 7.4 Net flows in non-management fee earning AUM (5.1) 3.6 0.7 (9.4) Total net flows 11.0 11.7 1.3 (2.0) Market gains and losses 62.2 51.4 1.7 9.1 Foreign currency translation 0.4 (0.1) — 0.5 December 31, 2020 370.6 303.0 7.9 59.7 ____________ (1) Channel refers to the internal distribution channel from which the AUM originated.
Biggest changeForeign Exchange Rates During the year ended December 31, 2023, we experienced a decrease in AUM of $0.4 billion due to changes in foreign exchange rates (December 31, 2022: AUM decreased $26.1 billion; December 31, 2021: AUM decreased $6.3 billion). 34 Ta ble of Contents Total AUM by Channel (1) 2023 2022 2021 (in billions) Total Retail Institutional Total Retail Institutional Total Retail Institutional Beginning Assets (January 1) $ 1,409.2 $ 872.3 $ 536.9 $ 1,610.9 $ 1,106.5 $ 504.4 $ 1,349.9 $ 947.1 $ 402.8 Long-term inflows 299.1 219.9 79.2 330.3 243.9 86.4 426.8 301.2 125.6 Long-term outflows (288.9) (214.5) (74.4) (330.8) (257.5) (73.3) (345.4) (265.7) (79.7) Net long-term flows 10.2 5.4 4.8 (0.5) (13.6) 13.1 81.4 35.5 45.9 Net flows in non-management fee earning AUM 6.2 5.9 0.3 (3.2) 0.9 (4.1) 20.6 20.2 0.4 Net flows in money market funds (11.1) 1.4 (12.5) 56.4 1.8 54.6 39.7 3.3 36.4 Total net flows 5.3 12.7 (7.4) 52.7 (10.9) 63.6 141.7 59.0 82.7 Reinvested distributions 11.5 11.0 0.5 15.2 14.8 0.4 31.6 31.1 0.5 Market gains and losses 161.1 145.2 15.9 (243.5) (227.3) (16.2) 94.0 69.0 25.0 Dispositions (1.4) — (1.4) — — — — — — Foreign currency translation (0.4) 0.8 (1.2) (26.1) (10.8) (15.3) (6.3) 0.3 (6.6) Ending Assets (December 31) $ 1,585.3 $ 1,042.0 $ 543.3 $ 1,409.2 $ 872.3 $ 536.9 $ 1,610.9 $ 1,106.5 $ 504.4 Total AUM by Client Domicile (3) 2023 2022 2021 (in billions) Total Americas APAC EMEA Total Americas APAC EMEA Total Americas APAC EMEA Beginning Assets (January 1) $ 1,409.2 $ 999.4 $ 223.5 $ 186.3 $ 1,610.9 $ 1,132.5 $ 247.3 $ 231.1 $ 1,349.9 $ 959.9 $ 171.3 $ 218.7 Long-term inflows 299.1 154.0 77.1 68.0 330.3 184.0 76.6 69.7 426.8 213.2 139.0 74.6 Long-term outflows (288.9) (156.0) (67.0) (65.9) (330.8) (193.8) (62.5) (74.5) (345.4) (197.7) (71.8) (75.9) Net long-term flows 10.2 (2.0) 10.1 2.1 (0.5) (9.8) 14.1 (4.8) 81.4 15.5 67.2 (1.3) Net flows in non-management fee earning AUM 6.2 7.2 (0.3) (0.7) (3.2) (3.6) 1.1 (0.7) 20.6 15.9 2.4 2.3 Net flows in money market funds (11.1) (11.7) 1.3 (0.7) 56.4 58.3 (0.3) (1.6) 39.7 35.7 4.1 (0.1) Total net flows 5.3 (6.5) 11.1 0.7 52.7 44.9 14.9 (7.1) 141.7 67.1 73.7 0.9 Reinvested distributions 11.5 11.3 — 0.2 15.2 14.9 — 0.3 31.6 31.2 0.1 0.3 Market gains and losses 161.1 130.4 6.3 24.4 (243.5) (191.3) (22.6) (29.6) 94.0 74.4 5.9 13.7 Dispositions (1.4) (1.4) — — — — — — — — — — Foreign currency translation (0.4) 0.7 (5.4) 4.3 (26.1) (1.6) (16.1) (8.4) (6.3) (0.1) (3.7) (2.5) Ending Assets (December 31) $ 1,585.3 $ 1,133.9 $ 235.5 $ 215.9 $ 1,409.2 $ 999.4 $ 223.5 $ 186.3 $ 1,610.9 $ 1,132.5 $ 247.3 $ 231.1 ____________ See accompanying notes immediately following these AUM tables. 35 Ta ble of Contents Total AUM by Asset Class (2) (in billions) Total Equity Fixed Income Balanced Money Market Alternatives January 1, 2023 $ 1,409.2 $ 637.0 $ 313.7 $ 67.1 $ 203.5 $ 187.9 Long-term inflows 299.1 151.3 104.5 12.4 — 30.9 Long-term outflows (288.9) (128.9) (102.2) (17.7) — (40.1) Net long-term flows 10.2 22.4 2.3 (5.3) — (9.2) Net flows in non-management fee earning AUM 6.2 6.1 0.1 — — — Net flows in money market funds (11.1) — — — (11.1) — Total net flows 5.3 28.5 2.4 (5.3) (11.1) (9.2) Reinvested distributions 11.5 7.2 1.8 1.3 0.3 0.9 Market gains and losses 161.1 149.3 9.8 (0.1) 0.6 1.5 Dispositions (1.4) — — — — (1.4) Foreign currency translation (0.4) 1.7 (2.0) (0.3) (0.6) 0.8 December 31, 2023 $ 1,585.3 $ 823.7 $ 325.7 $ 62.7 $ 192.7 $ 180.5 Average AUM $ 1,500.6 $ 723.0 $ 318.4 $ 64.7 $ 212.0 $ 182.6 % of total average AUM 100.0 % 48.2 % 21.2 % 4.3 % 14.1 % 12.2 % January 1, 2022 $ 1,610.9 $ 841.6 $ 334.8 $ 88.6 $ 148.8 $ 197.1 Long-term inflows 330.3 143.7 119.3 15.2 — 52.1 Long-term outflows (330.8) (152.5) (102.4) (20.9) — (55.0) Net long-term flows (0.5) (8.8) 16.9 (5.7) — (2.9) Net flows in non-management fee earning AUM (3.2) 1.0 (4.2) — — — Net flows in money market funds 56.4 — — — 56.4 — Total net flows 52.7 (7.8) 12.7 (5.7) 56.4 (2.9) Reinvested distributions 15.2 11.1 1.6 1.2 — 1.3 Market gains and losses (243.5) (198.8) (27.3) (13.2) 1.1 (5.3) Dispositions — — — — — — Foreign currency translation (26.1) (9.1) (8.1) (3.8) (2.8) (2.3) December 31, 2022 $ 1,409.2 $ 637.0 $ 313.7 $ 67.1 $ 203.5 $ 187.9 Average AUM $ 1,452.5 $ 697.1 $ 315.1 $ 73.3 $ 167.6 $ 199.4 % of total average AUM 100.0 % 48.0 % 21.7 % 5.1 % 11.5 % 13.7 % January 1, 2021 $ 1,349.9 $ 689.6 $ 296.4 $ 78.9 $ 108.5 $ 176.5 Long-term inflows 426.8 205.0 118.1 48.5 — 55.2 Long-term outflows (345.4) (182.1) (76.8) (40.8) — (45.7) Net long-term flows 81.4 22.9 41.3 7.7 — 9.5 Net flows in non-management fee earning AUM 20.6 20.6 — — — — Net flows in money market funds 39.7 — — — 39.7 — Total net flows 141.7 43.5 41.3 7.7 39.7 9.5 Reinvested distributions 31.6 25.4 1.9 2.7 — 1.6 Market gains and losses 94.0 85.9 (2.0) (1.1) — 11.2 Dispositions — — — — — — Foreign currency translation (6.3) (2.8) (2.8) 0.4 0.6 (1.7) December 31, 2021 $ 1,610.9 $ 841.6 $ 334.8 $ 88.6 $ 148.8 $ 197.1 Average AUM $ 1,499.9 $ 778.3 $ 316.1 $ 86.5 $ 131.1 $ 187.9 % of total average AUM 100.0 % 51.9 % 21.1 % 5.8 % 8.7 % 12.5 % ____________ See accompanying notes immediately following these AUM tables. 36 Ta ble of Contents Active AUM by Channel (1) 2023 2022 2021 (in billions) Total Retail Institutional Total Retail Institutional Total Retail Institutional Beginning Assets (January 1) $ 976.2 $ 482.1 $ 494.1 $ 1,082.5 $ 631.7 $ 450.8 $ 979.3 $ 601.1 $ 378.2 Long-term inflows 164.3 98.8 65.5 197.9 117.0 80.9 260.2 163.5 96.7 Long-term outflows (193.3) (126.0) (67.3) (226.2) (157.5) (68.7) (242.0) (167.9) (74.1) Net long-term flows (29.0) (27.2) (1.8) (28.3) (40.5) 12.2 18.2 (4.4) 22.6 Net flows in non-management fee earning AUM — 0.1 (0.1) — — — (0.1) (0.1) — Net flows in money market funds (11.1) 1.4 (12.5) 56.4 1.8 54.6 39.7 3.3 36.4 Total net flows (40.1) (25.7) (14.4) 28.1 (38.7) 66.8 57.8 (1.2) 59.0 Reinvested distributions 11.5 11.0 0.5 15.2 14.8 0.4 31.6 31.1 0.5 Market gains and losses 40.0 33.7 6.3 (125.6) (115.6) (10.0) 18.3 (0.1) 18.4 Dispositions (1.4) — (1.4) — — — — — — Foreign currency translation (0.9) 0.4 (1.3) (24.0) (10.1) (13.9) (4.5) 0.8 (5.3) Ending Assets (December 31) $ 985.3 $ 501.5 $ 483.8 $ 976.2 $ 482.1 $ 494.1 $ 1,082.5 $ 631.7 $ 450.8 Active AUM by Client Domicile (3) 2023 2022 2021 (in billions) Total Americas APAC EMEA Total Americas APAC EMEA Total Americas APAC EMEA Beginning Assets (January 1) $ 976.2 $ 670.8 $ 191.0 $ 114.4 $ 1,082.5 $ 724.5 $ 208.8 $ 149.2 $ 979.3 $ 656.9 $ 163.4 $ 159.0 Long-term inflows 164.3 78.0 61.1 25.2 197.9 104.0 69.3 24.6 260.2 113.6 110.5 36.1 Long-term outflows (193.3) (109.7) (55.0) (28.6) (226.2) (133.4) (56.1) (36.7) (242.0) (125.4) (67.4) (49.2) Net long-term flows (29.0) (31.7) 6.1 (3.4) (28.3) (29.4) 13.2 (12.1) 18.2 (11.8) 43.1 (13.1) Net flows in non-management fee earning AUM — — — — — — 0.1 (0.1) (0.1) (0.2) 0.1 — Net flows in money market funds (11.1) (11.7) 1.3 (0.7) 56.4 58.3 (0.3) (1.6) 39.7 35.7 4.1 (0.1) Total net flows (40.1) (43.4) 7.4 (4.1) 28.1 28.9 13.0 (13.8) 57.8 23.7 47.3 (13.2) Reinvested distributions 11.5 11.3 — 0.2 15.2 14.9 — 0.3 31.6 31.2 0.1 0.3 Market gains and losses 40.0 33.4 (1.0) 7.6 (125.6) (96.0) (16.3) (13.3) 18.3 12.8 0.3 5.2 Dispositions (1.4) (1.4) — — — — — — — — — — Foreign currency translation (0.9) 0.7 (5.4) 3.8 (24.0) (1.5) (14.5) (8.0) (4.5) (0.1) (2.3) (2.1) Ending Assets (December 31) $ 985.3 $ 671.4 $ 192.0 $ 121.9 $ 976.2 $ 670.8 $ 191.0 $ 114.4 $ 1,082.5 $ 724.5 $ 208.8 $ 149.2 ____________ See accompanying notes immediately following these AUM tables. 37 Ta ble of Contents Active AUM by Asset Class (2) (in billions) Total Equity Fixed Income Balanced Money Market Alternatives January 1, 2023 $ 976.2 $ 277.5 $ 273.0 $ 66.3 $ 203.5 $ 155.9 Long-term inflows 164.3 49.3 85.0 12.3 — 17.7 Long-term outflows (193.3) (64.5) (85.3) (17.6) — (25.9) Net long-term flows (29.0) (15.2) (0.3) (5.3) — (8.2) Net flows in money market funds (11.1) — — — (11.1) — Total net flows (40.1) (15.2) (0.3) (5.3) (11.1) (8.2) Reinvested distributions 11.5 7.2 1.8 1.3 0.3 0.9 Market gains and losses 40.0 31.9 7.8 (0.2) 0.6 (0.1) Dispositions (1.4) — — — — (1.4) Foreign currency translation (0.9) 1.5 (2.3) (0.3) (0.6) 0.8 December 31, 2023 $ 985.3 $ 302.9 $ 280.0 $ 61.8 $ 192.7 $ 147.9 Average AUM $ 992.3 $ 291.6 $ 273.1 $ 63.9 $ 212.0 $ 151.8 % of total average AUM 100.0 % 29.4 % 27.5 % 6.4 % 21.4 % 15.3 % January 1, 2022 $ 1,082.5 $ 389.6 $ 293.1 $ 87.4 $ 148.8 $ 163.6 Long-term inflows 197.9 54.2 98.1 15.2 — 30.4 Long-term outflows (226.2) (83.3) (89.7) (20.8) — (32.4) Net long-term flows (28.3) (29.1) 8.4 (5.6) — (2.0) Net flows in money market funds 56.4 — — — 56.4 — Total net flows 28.1 (29.1) 8.4 (5.6) 56.4 (2.0) Reinvested distributions 15.2 11.1 1.6 1.2 — 1.3 Market gains and losses (125.6) (86.4) (22.4) (12.9) 1.1 (5.0) Dispositions — — — — — — Foreign currency translation (24.0) (7.7) (7.7) (3.8) (2.8) (2.0) December 31, 2022 $ 976.2 $ 277.5 $ 273.0 $ 66.3 $ 203.5 $ 155.9 Average AUM $ 988.2 $ 309.6 $ 275.2 $ 72.3 $ 167.5 $ 163.6 % of total average AUM 100.0 % 31.3 % 27.8 % 7.3 % 17.0 % 16.6 % January 1, 2021 $ 979.3 $ 383.2 $ 259.4 $ 77.9 $ 108.5 $ 150.3 Long-term inflows 260.2 70.9 103.5 48.3 — 37.5 Long-term outflows (242.0) (98.9) (67.9) (40.8) — (34.4) Net long-term flows 18.2 (28.0) 35.6 7.5 — 3.1 Net flows in non-management fee earning AUM (0.1) (0.1) (0.1) 0.1 — — Net flows in money market funds 39.7 — — — 39.7 — Total net flows 57.8 (28.1) 35.5 7.6 39.7 3.1 Reinvested distributions 31.6 25.4 1.9 2.7 — 1.6 Market gains and losses 18.3 10.8 (1.3) (1.2) — 10.0 Dispositions — — — — — — Foreign currency translation (4.5) (1.7) (2.4) 0.4 0.6 (1.4) December 31, 2021 $ 1,082.5 $ 389.6 $ 293.1 $ 87.4 $ 148.8 $ 163.6 Average AUM $ 1,050.2 $ 401.5 $ 275.0 $ 85.4 $ 131.1 $ 157.2 % of total average AUM 100.0 % 38.2 % 26.2 % 8.1 % 12.5 % 15.0 % ____________ See accompanying notes immediately following these AUM tables. 38 Ta ble of Contents Passive AUM by Channel (1) 2023 2022 2021 (in billions) Total Retail Institutional Total Retail Institutional Total Retail Institutional Beginning Assets (January 1) $ 433.0 $ 390.2 $ 42.8 $ 528.4 $ 474.8 $ 53.6 $ 370.6 $ 346.0 $ 24.6 Long-term inflows 134.8 121.1 13.7 132.4 126.9 5.5 166.6 137.7 28.9 Long-term outflows (95.6) (88.5) (7.1) (104.6) (100.0) (4.6) (103.4) (97.8) (5.6) Net long-term flows 39.2 32.6 6.6 27.8 26.9 0.9 63.2 39.9 23.3 Net flows in non-management fee earning AUM 6.2 5.8 0.4 (3.2) 0.9 (4.1) 20.7 20.3 0.4 Total net flows 45.4 38.4 7.0 24.6 27.8 (3.2) 83.9 60.2 23.7 Market gains and losses 121.1 111.5 9.6 (117.9) (111.7) (6.2) 75.7 69.1 6.6 Foreign currency translation 0.5 0.4 0.1 (2.1) (0.7) (1.4) (1.8) (0.5) (1.3) Ending Assets (December 31) $ 600.0 $ 540.5 $ 59.5 $ 433.0 $ 390.2 $ 42.8 $ 528.4 $ 474.8 $ 53.6 Passive AUM by Client Domicile (3) 2023 2022 2021 (in billions) Total Americas APAC EMEA Total Americas APAC EMEA (4) Total Americas APAC EMEA Beginning Assets (January 1) $ 433.0 $ 328.6 $ 32.5 $ 71.9 $ 528.4 $ 408.0 $ 38.5 $ 81.9 $ 370.6 $ 303.0 $ 7.9 $ 59.7 Long-term inflows 134.8 76.0 16.0 42.8 132.4 80.0 7.3 45.1 166.6 99.6 28.5 38.5 Long-term outflows (95.6) (46.3) (12.0) (37.3) (104.6) (60.4) (6.4) (37.8) (103.4) (72.3) (4.4) (26.7) Net long-term flows 39.2 29.7 4.0 5.5 27.8 19.6 0.9 7.3 63.2 27.3 24.1 11.8 Net flows in non-management fee earning AUM 6.2 7.2 (0.3) (0.7) (3.2) (3.6) 1.0 (0.6) 20.7 16.1 2.3 2.3 Total net flows 45.4 36.9 3.7 4.8 24.6 16.0 1.9 6.7 83.9 43.4 26.4 14.1 Market gains and losses 121.1 97.0 7.3 16.8 (117.9) (95.3) (6.3) (16.3) 75.7 61.6 5.6 8.5 Foreign currency translation 0.5 — — 0.5 (2.1) (0.1) (1.6) (0.4) (1.8) — (1.4) (0.4) Ending Assets (December 31) $ 600.0 $ 462.5 $ 43.5 $ 94.0 $ 433.0 $ 328.6 $ 32.5 $ 71.9 $ 528.4 $ 408.0 $ 38.5 $ 81.9 ____________ See accompanying notes immediately following these AUM tables. 39 Ta ble of Contents Passive AUM by Asset Class (2) (in billions) Total Equity Fixed Income Balanced Money Market Alternatives January 1, 2023 $ 433.0 $ 359.5 $ 40.7 $ 0.8 $ — $ 32.0 Long-term inflows 134.8 102.0 19.5 0.1 — 13.2 Long-term outflows (95.6) (64.4) (16.9) (0.1) — (14.2) Net long-term flows 39.2 37.6 2.6 — — (1.0) Net flows in non-management fee earning AUM 6.2 6.1 0.1 — — — Total net flows 45.4 43.7 2.7 — — (1.0) Market gains and losses 121.1 117.4 2.0 0.1 — 1.6 Foreign currency translation 0.5 0.2 0.3 — — — December 31, 2023 $ 600.0 $ 520.8 $ 45.7 $ 0.9 $ — $ 32.6 Average AUM $ 508.3 $ 431.4 $ 45.3 $ 0.8 $ — $ 30.8 % of total average AUM 100.0 % 84.8 % 8.9 % 0.2 % — % 6.1 % January 1, 2022 $ 528.4 $ 452.0 $ 41.7 $ 1.2 $ — $ 33.5 Long-term inflows 132.4 89.5 21.2 — — 21.7 Long-term outflows (104.6) (69.2) (12.7) (0.1) — (22.6) Net long-term flows 27.8 20.3 8.5 (0.1) — (0.9) Net flows in non-management fee earning AUM (3.2) 1.0 (4.2) — — — Total net flows 24.6 21.3 4.3 (0.1) — (0.9) Market gains and losses (117.9) (112.4) (4.9) (0.3) — (0.3) Foreign currency translation (2.1) (1.4) (0.4) — — (0.3) December 31, 2022 $ 433.0 $ 359.5 $ 40.7 $ 0.8 $ — $ 32.0 Average AUM $ 464.3 $ 387.6 $ 39.9 $ 0.9 $ — $ 35.9 % of total average AUM 100.0 % 83.5 % 8.6 % 0.2 % — % 7.7 % January 1, 2021 $ 370.6 $ 306.4 $ 37.0 $ 1.0 $ — $ 26.2 Long-term inflows 166.6 134.1 14.6 0.2 — 17.7 Long-term outflows (103.4) (83.2) (8.9) — — (11.3) Net long-term flows 63.2 50.9 5.7 0.2 — 6.4 Net flows in non-management fee earning AUM 20.7 20.7 0.1 (0.1) — — Total net flows 83.9 71.6 5.8 0.1 — 6.4 Market gains and losses 75.7 75.1 (0.7) 0.1 — 1.2 Foreign currency translation (1.8) (1.1) (0.4) — — (0.3) December 31, 2021 $ 528.4 $ 452.0 $ 41.7 $ 1.2 $ — $ 33.5 Average AUM $ 449.7 $ 376.8 $ 41.1 $ 1.1 $ — $ 30.7 % of total average AUM 100.0 % 83.8 % 9.2 % 0.2 % — % 6.8 % ____________ See accompanying notes immediately following these AUM tables.
However, if we have not declared and paid or set aside for payment full quarterly dividends on the preferred stock for a particular dividend period, we may not declare or pay dividends on, or redeem, purchase or acquire, our common stock or other junior securities in the next succeeding dividend period.
However, if we have not declared and paid or set aside for payment full quarterly dividends on the preferred stock for a particular dividend period, we may not declare or pay dividends on, redeem, purchase or acquire our common stock or other junior securities in the next succeeding dividend period.
(3) EBITDA and Adjusted debt are non-GAAP financial measures that are used by management in connection with certain debt covenant calculations under our credit agreement.
(3) Covenant Adjusted EBITDA and Adjusted debt are non-GAAP financial measures that are used by management in connection with certain debt covenant calculations under our credit agreement.
Changes in estimate of uncertain tax positions occur periodically due to changes in interpretations of tax laws, the status of examinations by tax authorities and new regulatory or judicial guidance that could impact the relative merits and risk of tax positions. These changes, when they occur, impact tax expense and can materially impact results of operations.
Changes in the estimate of uncertain tax positions occur periodically due to changes in interpretations of tax laws, the status of examinations by tax authorities and new regulatory or judicial guidance that could impact the relative merits and risk of tax positions. These changes, when they occur, impact tax expense and can materially impact results of operations.
The following discussion and analysis of the results of operations and financial condition of Invesco should be read in conjunction with the “Forward-looking Statements” disclosure set forth in Part I and the “Risk Factors” set forth in Item 1A of Part I of this Annual Report on Form 10‑K, each of which describe our risks, uncertainties and other important factors in more detail.
The following discussion and analysis of the results of operations and financial condition of Invesco should be read in conjunction with the “Forward-looking Statements” disclosure set forth before Part I and the “Risk Factors” set forth in Item 1A of Part I of this Annual Report on Form 10‑K, each of which describe our risks, uncertainties and other important factors in more detail.
Intangible assets not subject to amortization are tested for impairment annually as of October 1 or more frequently if events or changes in circumstances indicate that the asset might be impaired. If a quantitative assessment is required, the impairment test consists of a comparison of the fair value of an intangible asset with its carrying amount.
Intangible assets not subject to amortization are tested for impairment annually as of October 1 or more frequently if events or changes in circumstances indicate that the asset might be impaired. If a quantitative assessment is required, the impairment test consists of a comparison of the fair value of an intangible asset to its carrying amount.
Holders of our preferred shares are eligible to receive dividends at an annual rate of 5.9% of the liquidation preference of $1,000 per share, or $59 per share per annum. The preferred stock dividend is payable quarterly on a non-cumulative basis when, if and as declared by our board of directors.
Holders of our preferred shares are eligible to receive dividends at an annual rate of 5.9% of the liquidation preference of $1,000 per share, or $59 per share per annum. The preferred dividend is payable quarterly on a non-cumulative basis when, if and as declared by our board of directors.
GAAP measures are operating revenues (and by calculation, gross revenue yield on AUM), operating income, operating margin, net income attributable to Invesco and diluted EPS. Each of these measures is discussed more fully below.
GAAP measures are Operating revenues (and by calculation, Gross revenue yield on AUM), Operating income, Operating margin, Net income/(loss) attributable to Invesco and Diluted EPS. Each of these measures is discussed more fully below.
(2) Performance fees are earned when certain performance metrics are achieved a nd QQQ ETFs do not earn net revenues. Therefore, net revenue yield is calculated excluding performance fees and QQQ AUM. Passive net revenue yield is calculated excluding QQQ AUM.
(2) Performance fees are earned when certain performance metrics are achieved a nd QQQ ETFs do not earn net revenues. Therefore, net revenue yield is calculated excluding performance fees and QQQ AUM.
The following are reconciliations of operating revenues, operating income (and by calculation, operating margin) and net income attributable to Invesco (and by calculation, diluted EPS) on a U.S. GAAP basis to a non-GAAP basis of net revenues, adjusted operating income (and by calculation, adjusted operating margin) and adjusted net income attributable to Invesco (and by calculation, adjusted diluted EPS).
The following are reconciliations of Operating revenues, Operating income/(loss) (and by calculation, Operating margin) and Net income/(loss) attributable to Invesco (and by calculation, Diluted EPS) on a U.S. GAAP basis to a non-GAAP basis of Net revenues, Adjusted operating income (and by calculation, Adjusted operating margin) and Adjusted net income attributable to Invesco (and by calculation, adjusted diluted EPS).
See the company’s disclosures regarding the changes in AUM during the year ended December 31, 2022 and December 31, 2021 in the “Assets Under Management” section above for additional information. Passive AUM generally earn a lower effective fee rate than active asset classes, and therefore, changes in the mix of AUM have an impact on revenues and net revenue yield.
See the company’s disclosures regarding the changes in AUM during the year ended December 31, 2023 and December 31, 2022 in the “Assets Under Management” section above for additional information. Passive AUM generally earn a lower effective fee rate than active asset classes, and therefore, changes in the mix of AUM have an impact on revenues and net revenue yield.
The company is required to consolidate certain of these managed funds from time-to-time, as discussed more fully in Item 8, Financial Statements and Supplementary Data, Note 1, "Accounting Policies -- Basis of Accounting and Consolidation." Investment products that are consolidated are referred to in this Report as CIP.
The company is required to consolidate certain of these managed funds from time-to-time, as discussed more fully in Part II, Item 8, Financial Statements and Supplementary Data, Note 1, "Accounting Policies -- Basis of Accounting and Consolidation." Investment products that are consolidated are referred to in this Report as CIP.
Since these plans are hedged economically, management believes it is useful to reflect the offset ultimately achieved from hedging the market exposure in the calculation of adjusted operating income (and by calculation, adjusted operating margin) and adjusted net income (and by calculation, adjusted diluted EPS) to produce results that will be more comparable period to period.
Since these plans are hedged economically, the company believes it is useful to reflect the offset ultimately achieved from hedging the market exposure in the calculation of Adjusted operating income (and by calculation, Adjusted operating margin) and Adjusted net income (and by calculation, Adjusted diluted EPS) to produce results that will be more comparable period to period.
The net flows in non-management fee earning AUM can be relatively short-term in nature and, due to the relatively low revenue yield, these can have a significant impact on overall net revenue yield. 30 Ta ble of Contents The AUM tables and the discussion below refer to certain AUM as long-term.
The net flows in non-management fee earning AUM can be relatively short-term in nature and, due to the relatively low revenue yield, these can have a significant impact on overall net revenue yield. 32 Ta ble of Contents The AUM tables and the discussion below refer to certain AUM as long-term.
Assets of CIP are not available for use by Invesco. Additionally, there is no recourse to Invesco for CIP debt. Policyholder assets and liabilities are equal and offsetting and have no impact on Invesco’s shareholder’s equity. (2) Amounts include accounts receivable, prepaid assets, property, equipment and software, right-of-use assets and other assets.
Assets of CIP are not available for use by Invesco. Additionally, there is no recourse to Invesco for CIP debt. Policyholder assets and liabilities are equal and offsetting and have no impact on Invesco’s shareholder’s equity. (2) Amounts include Accounts receivable, Property, equipment and software, and Other assets.
The company's economic risk with respect to each investment in CIP is limited to its equity ownership and any uncollected management and performance fees. The majority of the company's CIP balances are CLO-related. The collateral assets of the CLOs are held solely to satisfy the obligations of the CLOs.
The company's economic risk with respect to each investment in CIP is limited to its equity ownership, unfunded equity commitments and any uncollected management and performance fees. The majority of the company's CIP balances are CLO-related. The collateral assets of the CLOs are held solely to satisfy the obligations of the CLOs.
Long-term inflows and the underlying reasons for the movements in this line item include investments from new clients, existing clients adding new accounts/funds or contributions/subscriptions into existing accounts/funds. Long-term outflows reflect client redemptions from accounts/funds and include the return of invested capital on the maturity.
Long-term inflows and the underlying reasons for the movements in this line item include investments from new clients, existing clients adding new accounts/funds or contributions/subscriptions into existing accounts/funds. Long-term outflows reflect client redemptions from accounts/funds and include the return of invested capital upon maturity.
Critical Accounting Policies and Estimates Our significant accounting policies are disclosed in Item 8, Financial Statements and Supplementary Data - Note 1, “Accounting Policies." Critical accounting policies and estimates are those that require complex management judgment regarding matters that are highly uncertain at the time policies were applied and estimates were made.
Critical Accounting Policies and Estimates Our significant accounting policies are disclosed in Part II, Item 8, Financial Statements and Supplementary Data - Note 1, “Accounting Policies." Critical accounting policies and estimates are those that require complex management judgment regarding matters that are highly uncertain at the time policies were applied and estimates were made.
The tax effects related to the reconciling items have been calculated based on the tax rate attributable to the jurisdiction to which the transaction relates. Notes to the reconciliations follow the tables. Reconciliation of Operating revenues to Net revenues: $ in millions 2022 2021 2020 Operating revenues, U.S.
The tax effects related to the reconciling items have been calculated based on the tax rate attributable to the jurisdiction to which the transaction relates. Notes to the reconciliations follow the tables. Reconciliation of Operating revenues to Net revenues: (in millions) 2023 2022 2021 Operating revenues, U.S.
To assess the impact of CIP on the company's Results of Operations and Balance Sheet Discussion, refer to Part II, Item 8, Financial Statements, Note 19, "Consolidated Investment Products." 28 Ta ble of Contents Summary Operating Information Wherever a non-GAAP measure is referenced, a disclosure will follow in the narrative or in the note referring the reader to the Schedule of Non-GAAP Information, where additional details regarding the use of the non-GAAP measure by the company are disclosed, along with reconciliations of the most directly comparable U.S.
To assess the impact of CIP on the company's Results of Operations and Balance Sheet Discussion, refer to Part II, Item 8, Financial Statements and Supplementary Data, Note 19, "Consolidated Investment Products." 30 Ta ble of Contents Summary Operating Information Wherever a non-GAAP measure is referenced, a disclosure will follow in the narrative or in the note referring the reader to the Schedule of Non-GAAP Information, where additional details regarding the use of the non-GAAP measure by the company are disclosed, along with reconciliations of the most directly comparable U.S.
Net impact of CIP and related noncontrolling interests in consolidated entities The consolidation of investment products did not have an impact on net income attributable to Invesco for the years ended December 31, 2022 and 2021.
Net impact of CIP and related noncontrolling interests in consolidated entities The consolidation of investment products did not have an impact on Net income attributable to Invesco for the years ended December 31, 2023 and 2022.
GAAP basis to the balance sheet information excluding the impact of CIP and policyholder balances for the reasons outlined in footnote 1 to the table: As of December 31, 2022 As of December 31, 2021 Balance sheet information $ in millions U.S. GAAP Impact of CIP Impact of Policyholders As Adjusted U.S.
GAAP basis to the balance sheet information excluding the impact of CIP and policyholder balances for the reasons outlined in footnote 1 to the table: As of December 31, 2023 As of December 31, 2022 Balance sheet information (in millions) U.S. GAAP Impact of CIP Impact of Policyholders As Adjusted U.S.
Liquidity and Capital Resources Our capital structure, together with available cash balances, cash flows generated from operations, existing capacity under our credit facility and further capital market activities, if necessary, should provide us with sufficient resources to meet present and future cash needs, including operating, debt and other obligations as they come due and anticipated future capital requirements.
Liquidity and Capital Resources Our capital structure, together with available cash balances, cash flows generated from operations, existing capacity under our credit agreement and further capital market activities, if necessary, should provide us with sufficient resources to meet present and future cash needs, including operating expenses, debt and other obligations as they come due and anticipated future capital requirements.
We present net flows into money market funds separately because shareholders of those funds typically use them as short-term funding vehicles and because their flows are particularly sensitive to short-term interest rate movements.
We present net flows into money market funds separately because shareholders of those funds typically use them as short-term funding vehicles and the flows are particularly sensitive to short-term interest rate movements.
Our capital process is executed in a manner consistent with our desire to maintain strong, investment grade credit ratings. As of the date of our filing, Invesco held credit ratings of A3/Stable, BBB+/Stable and A/Stable from Moody's, S&P, and Fitch, respectively. Other Items Certain of our subsidiaries are required to maintain minimum levels of capital.
Our capital process is executed in a manner consistent with our desire to maintain strong, investment grade credit ratings. As of the date of our filing, Invesco held credit ratings of A3/Stable, BBB+/Stable and A/Stable from Moody's, S&P, and Fitch, respectively. Other Items Certain of our subsidiaries are required to maintain minimum levels of regulatory capital, liquidity, and working capital.
Summary operating information for 2022, 2021 and 2020 is presented in the table below. $ in millions, other than per common share amounts, operating margins and AUM Year ended December 31, U.S.
Summary operating information for 2023, 2022 and 2021 is presented in the table below. (in millions, other than per common share amounts, operating margins and AUM) Year ended December 31, U.S.
(6) Market movement on deferred compensation plan liabilities: Certain deferred compensation plan awards involve a return to the employee linked to the appreciation (depreciation) of specified investments. Invesco hedges economically the exposure to market movements for these investments.
(6) Market movement on deferred compensation plan liabilities: Certain deferred compensation plan awards involve a return to the employee linked to the appreciation (depreciation) of specified investments. The company hedges economically the exposure to market movements for these investments.
Assets held for policyholders and policyholder payables One of our subsidiaries, Invesco Pensions Limited, is an insurance company that was established to facilitate retirement savings plans in the U.K. The entity holds assets that are managed for its clients on its balance sheet with an equal and offsetting liability.
Assets held for policyholders and policyholder payables One of our subsidiaries, Invesco Pensions Limited, is an insurance company that was established to facilitate retirement savings plans in the U.K. The entity held assets that were managed for its clients on its balance sheet with an equal and offsetting liability.
See Item 8, Financial Statements and Supplementary Data - Note 19, “Consolidated Investment Products,” for additional details. 53 Ta ble of Contents Cash Flows Discussion The ability to consistently generate cash flow from operations in excess of dividend payments, common share repurchases, capital expenditures and ongoing operating expenses is one of our company's fundamental financial strengths.
See Part II, Item 8, Financial Statements and Supplementary Data - Note 19, “Consolidated Investment Products,” for additional details. 51 Ta ble of Contents Cash Flows Discussion The ability to consistently generate cash flow from operations in excess of dividend payments, common share repurchases, capital expenditures and ongoing Operating expenses is one of our company's fundamental financial strengths.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The discussion and analysis disclosed herein apply to material changes in the Consolidated Financial Statements for 2022 and 2021.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The discussion and analysis disclosed herein apply to material changes in the Consolidated Financial Statements for 2023 and 2022.
(2) Unusual or otherwise non-recurring gains and losses, as defined in our credit facility, are adjusted for in the determination of EBITDA. The insurance recoveries related to the OppenheimerFunds acquisition-related matter are considered unusual and have been removed from the determination of EBITDA.
(2) Unusual or otherwise non-recurring gains and losses, as defined in our credit agreement, are adjusted for in the determination of Covenant Adjusted EBITDA. The insurance recoveries related to the OppenheimerFunds acquisition-related matter are considered unusual and have been removed from the determination of Covenant Adjusted EBITDA.
The calculation of EBITDA above (a reconciliation from net income attributable to Invesco Ltd.) is defined by our credit facility agreement, and therefore net income attributable to Invesco is the most appropriate GAAP measure from which to reconcile to EBITDA.
The calculation of Covenant Adjusted EBITDA above (a reconciliation from net income attributable to Invesco Ltd.) is defined by our credit agreement, and therefore Net income attributable to Invesco Ltd. is the most appropriate GAAP measure from which to reconcile to Covenant Adjusted EBITDA.
The company believes that the consolidation of investment products may impact a reader’s analysis of our underlying results of operations and could result in investor confusion or the production of information about the company by analysts or external credit rating agencies that is not reflective of the underlying results of operations and financial condition of the company.
The company believes that the CIP may impact a reader’s analysis of our underlying results of operations and could result in investor confusion or the production of information about the company by analysts or external credit rating agencies that is not reflective of the underlying results of operations and financial condition of the company.
For the comparison of 2021 and 2020, see the Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of the company’s 2021 Annual Report on Form 10-K, filed with the SEC on February 18, 2022.
For the comparison of 2022 and 2021, see the Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of the company’s 2022 Annual Report on Form 10-K, filed with the SEC on February 22, 2023.
This retained cash can be used for general business purposes in the European sub-group in the countries where it is located. Due to the capital restrictions, the ability to transfer cash between certain jurisdictions may be limited. In addition, transfers of cash between international jurisdictions may have adverse tax consequences.
This retained cash can be used for general business purposes in the European sub-group in the countries where it is located. Due to the liquidity and working capital requirements, the ability to transfer cash between certain jurisdictions may be limited. In addition, transfers of cash between international jurisdictions may have adverse tax consequences.
The company recognizes any interest and penalties related to unrecognized tax benefits on the Consolidated Statements of Income as components of income tax expense. 58 Ta ble of Contents CIP Assessing if an entity is a variable interest entity (VIE) or voting interest entity (VOE) involves judgment and analysis on a structure-by-structure basis.
The company recognizes any interest and penalties related to unrecognized tax benefits (UTBs) on the Consolidated Statements of Income as components of income tax expense. CIP Assessing if an entity is a variable interest entity (VIE) or voting interest entity (VOE) involves judgment and analysis on a structure-by-structure basis.
GAAP basis to the cash flow information, excluding the impact of the cash flows of CIP for the reasons outlined in footnote 1 to the table: Cash flows information (1) Year ended December 31, 2022 Year ended December 31, 2021 Year ended December 31, 2020 $ in millions U.S. GAAP Impact of CIP Excluding CIP U.S.
GAAP basis to the cash flow information, excluding the impact of the cash flows of CIP for the reasons outlined in footnote 1 to the table: Cash flows information (1) Year ended December 31, 2023 Year ended December 31, 2022 Year ended December 31, 2021 (in millions) U.S. GAAP Impact of CIP As Adjusted U.S.
The average AUM for Invesco Great Wall was $93.5 billion in 2022 (2021: $84.0 billion, 2020: $50.0 billion). Additionally, t he U.S. GAAP gross revenue yield is not a good measure because the numerator of the U.S.
The average AUM for Invesco Great Wall was $87.2 billion in 2023 (2022: $93.5 billion, 2021: $84.0 billion). Additionally, t he U.S. GAAP gross revenue yield is not a good measure because the numerator of the U.S.
As of December 31, 2022, we were in compliance with our financial covenants.
As of December 31, 2023, we were in compliance with our financial covenants.
The table below summarizes the year ended December 31 returns based on price appreciation/(depreciation) of several major market indices for 2022 and 2021: Year ended December 31, Equity Index Index expressed in currency 2022 2021 S&P 500 U.S. Dollar (19.4)% 26.9% FTSE 100 British Pound 0.9% 14.3% FTSE 100 U.S.
The table below summarizes the year ended December 31 returns based on price appreciation/(depreciation) of several major market indices for 2023 and 2022: Year ended December 31, Equity Index Index expressed in currency 2023 2022 S&P 500 U.S. Dollar 24.2% (19.4)% FTSE 100 British Pound 3.8% 0.9% FTSE 100 U.S.
The company is primarily exposed to credit risk through its cash and cash equivalent deposits, which are held by external firms. The company invests its cash balances in its own institutional money market products, as well as with external high credit-quality financial institutions. These arrangements create exposure to concentrations of credit risk.
The company is primarily exposed to credit risk through its cash and cash equivalent deposits, which are held by external firms. The company invests its cash balances in its own institutional money market products, as well as with external high credit-quality financial institutions.
(2) Numbers in parenthesis reflect AUM for each investment product (see Note 1 above for exclusions) as a percentage of the total AUM for the 5 year peer group ($651.3 billion). Assets Under Management The following presentation and discussion of AUM includes Passive and Active AUM. Passive AUM include index-based ETFs, UITs, non-management fee earning AUM and other passive mandates.
(2) Numbers in parentheses reflect AUM for each investment product (see Note 1 above for exclusions) as a percentage of the total AUM for the five year peer group ($661.9 billion). Assets Under Management The following presentation and discussion of AUM includes Passive and Active AUM. Passive AUM include index-based ETFs, UITs, non-management fee earning AUM and other passive mandates.
Such events include, but are not limited to, strategic decisions made in response to economic and competitive conditions, the impact of the economic environment on the company's AUM or any other material negative change in AUM and related fee rates.
Such events include, but are not limited to, strategic decisions made in response to economic and competitive conditions, the impact of the economic environment on the company's AUM or any other material negative change in AUM and related fee rates, or a significant and sustained decline in the company's stock price.
(4) Transaction, integration and restructuring related adjustments: The company believes it is useful to investors and other users of our Consolidated Financial Statements to adjust for the transaction, integration and restructuring charges in arriving at adjusted operating income, adjusted operating margin and adjusted diluted EPS, as this will aid comparability of our results period to period, and aid comparability with peer companies that may not have similar acquisition and restructuring related charges.
(4) Transaction, integration and restructuring: The company believes it is useful to adjust for the Transaction, integration and restructuring charges in arriving at Adjusted operating income, Adjusted operating margin, Adjusted net income, and Adjusted diluted EPS, as this will aid comparability of our results period to period, and aid comparability with peer companies that may not have similar acquisition and restructuring related charges.
Dollar (9.8)% 13.3% S&P/TSX 60 Index Canadian Dollar (9.2)% 24.4% S&P/TSX 60 Index U.S. Dollar (15.1)% 25.5% MSCI Emerging Markets U.S. Dollar (22.4)% (4.6)% Bond Index Barclays U.S. Aggregate Bond U.S. Dollar (13.0)% (1.5)% The company’s financial results are impacted by the fluctuations in exchange rates against the U.S. Dollar, as discussed in the “Results of Operations” section below.
Dollar 9.5% (9.8)% S&P/TSX 60 Index Canadian Dollar 8.2% (9.2)% S&P/TSX 60 Index U.S. Dollar 10.9% (15.1)% MSCI Emerging Markets U.S. Dollar 7.0% (22.4)% Bond Index Barclays U.S. Aggregate Bond U.S. Dollar 5.5% (13.0)% The company’s financial results are impacted by the fluctuations in exchange rates against the U.S. Dollar, as discussed in the “Results of Operations” section as applicable.
GAAP gross revenue yield 44.5 48.7 53.7 Net revenue yield ex performance fees ex QQQ (2) 35.5 39.1 40.7 Active net revenue yield ex performance fees 40.7 44.0 45.2 Passive net revenue yield ex QQQ (2) 18.1 20.1 19.2 ____________ (1) U.S. GAAP g ross revenue yield is not considered a meaningful effective fee rate measure.
GAAP gross revenue yield 40.4 44.5 48.7 Net revenue yield ex performance fees ex QQQ (2) 32.4 35.5 39.1 Active net revenue yield ex performance fees 37.7 40.7 44.0 Passive net revenue yield ex QQQ (2) 16.0 18.1 20.1 ____________ (1) U.S. GAAP g ross revenue yield is not considered a meaningful effective fee rate measure.
The table in the “Executive Overview” section of this Management's Discussion and Analysis of Financial Condition and Results of Operations summarizes returns based on price appreciation/(depreciation) of several major market indices for the years ended December 31, 2022 and December 31, 2021.
The table in the “Executive Overview” section of this Management's Discussion and Analysis summarizes returns based on price appreciation/(depreciation) of several major market indices for the years ended December 31, 2023 and December 31, 2022.
Performance Fees For the year ended December 31, 2022, performance fees were $68.2 million, as compared to $56.1 million for the year ended December 31, 2021. Performance fees in 2022 were primarily generated from real estate, institutional, bank loans and private equity products.
Performance Fees For the year ended December 31, 2023, Performance fees were $46.7 million as compared to $68.2 million for the year ended December 31, 2022. Performance fees in 2023 were primarily generated from institutional and real estate products. Performance fees in 2022 were primarily generated from real estate, institutional, bank loans and private equity products.
Employee staff benefit plan costs and payroll taxes are also included in employee compensation. Employee compensation was $1,725.1 million in the year ended December 31, 2022, as compared to $1,911.3 million for the year ended December 31, 2021.
Employee staff benefit plan costs and payroll taxes are also included in Employee compensation. Employee compensation was $1,885.8 million for the year ended December 31, 2023 as compared to $1,725.1 million for the year ended December 31, 2022.
Our revenues are directly influenced by the level and composition of our AUM. Therefore, movements in global capital market levels, net business inflows (or outflows), changes in the mix of investment products between asset classes and geographies may materially affect our revenues from period to period.
Therefore, movements in global capital market levels, net business inflows (or outflows), and changes in the mix of investment products between asset classes and geographies may materially affect our revenues from period to period.
Accordingly, management believes that it is appropriate to adjust operating revenues and operating income for the impact of CIP in calculating the respective net revenues and adjusted operating income.
Accordingly, the company believes that it is appropriate to adjust Operating revenues and Operating income for the impact of CIP in calculating the respective Net revenues and Adjusted operating income (and by calculation, Adjusted operating margin).
Debt The carrying value of our debt at December 31, 2022 was $1,487.6 million (December 31, 2021: $2,085.1 million), See Item 8, Financial Statements and Supplementary Data, Note 8, “Debt,” for additional disclosures. For the year ended December 31, 2022, the company's weighted average cost of debt was 4.15% (year ended December 31, 2021: 3.95%).
Debt The carrying value of our debt at December 31, 2023 was $1,489.5 million (December 31, 2022: $1,487.6 million), See Item 8, Financial Statements and Supplementary Data, Note 8, “Debt,” for additional disclosures. For the year ended December 31, 2023, the company's weighted average cost of debt was 4.28% (year ended December 31, 2022: 4.15%).
For additional income tax information, refer to Note 15, "Taxation," in Item 8. Financial Statements and Supplementary Data. Schedule of Non-GAAP Information We utilize the following non-GAAP performance measures: net revenue (and by calculation, net revenue yield on AUM), adjusted operating income, adjusted operating margin, adjusted net income attributable to Invesco and adjusted diluted EPS.
For additional income tax information, please refer to Note 15, “Taxation,” in Part II, Item 8, Financial Statements and Supplementary Data. 46 Ta ble of Contents Schedule of Non-GAAP Information We utilize the following non-GAAP performance measures: Net revenue (and by calculation, Net revenue yield on AUM), Adjusted operating income, Adjusted operating margin, Adjusted net income attributable to Invesco and Adjusted diluted EPS.
Flanagan will retire as President and CEO of the company and as a member of the Board of Directors effective June 30, 2023. Andrew R. Schlossberg will succeed Mr. Flanagan as President and CEO and as a member of the Board of Directors effective June 30, 2023. Mr.
Flanagan retired as President and CEO of the company and as a member of the Board of Directors effective June 30, 2023. Andrew R. Schlossberg succeeded Mr. Flanagan as President and CEO and as a member of the Board of Directors effective June 30, 2023.
Presentation of Management's Discussion and Analysis of Financial Condition and Results of Operations - Impact of Consolidated Investment Products The company provides investment management services to, and has transactions with, various retail mutual funds and similar entities, private equity, real estate, fund-of-funds, CLOs and other investment entities sponsored by the company for the investment of client assets in the normal course of business.
Presentation of Management's Discussion and Analysis of Financial Condition and Results of Operations - Impact of Consolidated Investment Products (CIP) The company provides investment management services to, and has transactions with, retail mutual funds and other investment products sponsored by the company for the investment of client assets in the normal course of business.
Service and distribution fees are primarily adjusted by distribution fees passed through to broker dealers for certain share classes and pass through fund-related costs.
Service and distributions fees are primarily adjusted by distribution fees passed through to broker dealers for certain share classes and pass through fund-related costs. Other revenues are primarily adjusted by transaction fees passed through to third parties.
(1) Benchmark Comparison Peer Group Comparison % of AUM In Top Half of Benchmark % of AUM In Top Half of Peer Group 1yr 3yr 5yr 10yr 1yr 3yr 5yr 10yr Equities (2) U.S. Core (4%) 43 % 42 % 31 % 16 % 22 % 27 % 27 % — % U.S.
(1) Benchmark Comparison Peer Group Comparison % of AUM In Top Half of Benchmark % of AUM In Top Half of Peer Group 1yr 3yr 5yr 10yr 1yr 3yr 5yr 10yr Equities (2) U.S. Core (4%) 22 % 43 % 31 % 17 % 18 % 11 % 22 % 12 % U.S.
For the year ended December 31, 2022, other gains and losses of CIP were a net loss of $126.9 million, as compared to a net gain of $390.0 million for the year ended December 31, 2021. The net loss during 2022 was attributable to market-driven losses on investments held by consolidated funds.
For the year ended December 31, 2023, other gains and losses of CIP were a net loss of $176.3 million as compared to a net loss of $126.9 million for the year ended December 31, 2022. The net losses in 2023 and 2022 were attributable to market-driven losses on investments held by consolidated funds.
On January 24, 2023 the company declared a fourth quarter 2022 dividend of $0.1875 per common share to the holders of common shares, payable on March 2, 2023, to shareholders of record at the close of business on February 16, 2023 with an ex-dividend date of February 15, 2023.
On January 23, 2024, the company declared a fourth quarter 2023 cash dividend of $0.20 per common share to the holders of common shares. The dividend is payable on March 4, 2024, to common shareholders of record at the close of business on February 16, 2024, with an ex-dividend date of February 15, 2024.
At December 31, 2022, our leverage ratio was 0.78:1.00 (December 31, 2021: 0.79:1.00), and our interest coverage ratio was 19.51:1.00 (December 31, 2021: 25.21:1.00). 55 Ta ble of Contents The December 31, 2022 and 2021 coverage ratio calculations are as follows: Last four quarters ended $ millions December 31, 2022 December 31, 2021 Net income attributable to Invesco Ltd. 683.9 1,393.0 Dividends on preferred shares 236.8 236.8 Tax expense 322.2 531.1 Amortization/depreciation 195.3 205.3 Interest expense 85.2 94.7 Common share-based compensation expense 106.2 140.1 Unrealized (gains)/losses from investments, net (1) 87.7 17.9 OppenheimerFunds acquisition-related matter recoveries (2) (55.0) (231.1) EBITDA (3) 1,662.3 2,387.8 Adjusted debt (3) $1,290.3 $1,888.1 Leverage ratio (Adjusted debt/EBITDA - maximum 3.25:1.00) 0.78 0.79 Interest coverage (EBITDA/Interest Expense - minimum 4.00:1.00) 19.51 25.21 ____________ (1) Adjustments for unrealized gains and losses from investments, as defined in our credit facility, may also include non-cash gains and losses on investments to the extent that they do not represent anticipated future cash receipts or expenditures.
At December 31, 2023, our leverage ratio was 0.69:1.00 (December 31, 2022: 0.78:1.00), and our interest coverage ratio was 20.40:1.00 (December 31, 2022: 19.51:1.00). 53 Ta ble of Contents The December 31, 2023 and 2022 coverage ratio calculations are as follows: Last four quarters ended (in millions) December 31, 2023 December 31, 2022 Net income/(loss) attributable to Invesco Ltd. $ (333.7) $ 683.9 Dividends on preferred shares 236.8 236.8 Tax expense/(benefit) (69.7) 322.2 Amortization/depreciation/impairment 1,431.7 195.3 Interest expense 70.5 85.2 Common share-based compensation expense 114.6 106.2 Unrealized (gains)/losses from investments, net (1) (11.9) 87.7 OppenheimerFunds acquisition-related matter recoveries (2) — (55.0) Covenant Adjusted EBITDA (3) $ 1,438.3 $ 1,662.3 Adjusted debt (3) $ 992.4 $ 1,290.3 Leverage ratio (Adjusted debt/Covenant Adjusted EBITDA - maximum 3.25:1.00) 0.69 0.78 Interest coverage (Covenant Adjusted EBITDA/Interest expense - minimum 4.00:1.00) 20.40 19.51 ____________ (1) Adjustments for unrealized gains and losses from investments, as defined in our credit agreement, may also include non-cash gains and losses on investments to the extent that they do not represent anticipated future cash receipts or expenditures.
GAAP. See “Schedule of Non-GAAP Information” for a reconciliation of the most directly comparable U.S. GAAP measures to the non-GAAP measures. 29 Ta ble of Contents Investment Capabilities Performance Overview Invesco's first strategic objective is to achieve strong investment performance over the long-term for our clients .
GAAP. See “Schedule of Non-GAAP Information” for a reconciliation of the most directly comparable U.S. GAAP measures to the non-GAAP measures. 31 Ta ble of Contents Investment Capabilities Performance Overview Invesco's first strategic objective reflects a commitment to deliver the excellence our clients expect, which includes strong investment performance over the long-term for our clients .
GAAP basis 1,317.7 1,788.2 920.4 Invesco Great Wall (1) 262.7 276.6 143.7 CIP (3) 65.7 67.7 62.0 Transaction, integration and restructuring (4) 21.2 (65.9) 330.8 Amortization of intangible assets (5) 63.8 62.9 62.5 Compensation expense related to market valuation changes in deferred compensation plans (6) (46.3) 53.1 39.8 General and administrative (7) (70.0) — 105.3 Adjusted operating income 1,614.8 2,182.6 1,664.5 Operating margin* 21.8 % 25.9 % 15.0 % Adjusted operating margin** 34.8 % 41.5 % 37.0 % Reconciliation of Net income attributable to Invesco to Adjusted net income attributable to Invesco: $ in millions, except per common share data 2022 2021 2020 Net income attributable to Invesco Ltd., U.S.
GAAP basis $ (434.8) $ 1,317.7 $ 1,788.2 Invesco Great Wall (2) 201.9 262.7 276.6 CIP (3) 84.8 65.7 67.7 Transaction, integration and restructuring (4) 41.6 21.2 (65.9) Amortization and impairment of intangible assets (5) 1,298.8 63.8 62.9 Compensation expense related to market valuation changes in deferred compensation plans (6) 41.2 (46.3) 53.1 General and administrative (7) (20.0) (70.0) — Adjusted operating income $ 1,213.5 $ 1,614.8 $ 2,182.6 Operating margin (8) (7.6) % 21.8 % 25.9 % Adjusted operating margin (9) 28.2 % 34.8 % 41.5 % 47 Ta ble of Contents Reconciliation of Net income/(loss) attributable to Invesco to Adjusted net income attributable to Invesco: (in millions, except per common share data) 2023 2022 2021 Net income/(loss) attributable to Invesco Ltd., U.S.
The decrease is primarily driven by decreases in private equity investments and our joint venture investment in IGW due to lower revenue as discussed above, which were partially offset by an increase in the earnings of the real estate investments.
The decrease was primarily driven by decreases of $33.8 million in our income from our real estate investments and $20.3 million from our joint venture investment in IGW due to lower revenue as discussed above, which were partially offset by an increase of $20.1 million in the earnings from private equity and other investments.
GAAP Financial Measures Summary 2022 2021 2020 Operating revenues 6,048.9 6,894.5 6,145.6 Operating income 1,317.7 1,788.2 920.4 Operating margin 21.8 % 25.9 % 15.0 % Net income attributable to Invesco Ltd. 683.9 1,393.0 524.8 Diluted earnings per share (EPS) 1.49 2.99 1.13 Non-GAAP Financial Measures Summary (1) Net revenues 4,645.0 5,261.1 4,501.0 Adjusted operating income 1,614.8 2,182.6 1,664.5 Adjusted operating margin 34.8 % 41.5 % 37.0 % Adjusted net income attributable to Invesco Ltd. 773.2 1,439.6 892.9 Adjusted diluted earnings per share (EPS ) 1.68 3.09 1.93 Assets Under Management Ending AUM (billions) 1,409.2 1,610.9 1,349.9 Average AUM (billions) 1,452.5 1,499.9 1,194.9 _________ (1) Net revenues, Adjusted Operating Income (and by calculation, adjusted operating margin), and Adjusted Net Income (and by calculation, adjusted diluted EPS) are non-GAAP financial measures, based on methodologies other than U.S.
GAAP Financial Measures Summary 2023 2022 2021 Operating revenues $ 5,716.4 $ 6,048.9 $ 6,894.5 Operating income/(loss) $ (434.8) $ 1,317.7 $ 1,788.2 Operating margin (7.6) % 21.8 % 25.9 % Net income/(loss) attributable to Invesco Ltd. $ (333.7) $ 683.9 $ 1,393.0 Diluted earnings per share (EPS) $ (0.73) $ 1.49 $ 2.99 Non-GAAP Financial Measures Summary (1) Net revenues $ 4,310.7 $ 4,645.0 $ 5,261.1 Adjusted operating income $ 1,213.5 $ 1,614.8 $ 2,182.6 Adjusted operating margin 28.2 % 34.8 % 41.5 % Adjusted net income attributable to Invesco Ltd. $ 689.7 $ 773.2 $ 1,439.6 Adjusted diluted earnings per share (EPS) $ 1.51 $ 1.68 $ 3.09 Assets Under Management Ending AUM (billions) $ 1,585.3 $ 1,409.2 $ 1,610.9 Average AUM (billions) $ 1,500.6 $ 1,452.5 $ 1,499.9 _________ (1) Net revenues, Adjusted Operating Income (and by calculation, adjusted operating margin), and Adjusted Net Income (and by calculation, adjusted diluted EPS) are non-GAAP financial measures, based on methodologies other than U.S.
Flows There are numerous drivers of AUM inflows and outflows, including individual investor decisions to change investment preferences, fiduciaries and other gatekeepers making broad asset allocation decisions on behalf of their clients and reallocation of investments within portfolios.
Passive net revenue yield is calculated excluding QQQ AUM. 33 Ta ble of Contents Flows There are numerous drivers of AUM inflows and outflows, including individual investor decisions to change investment preferences, fiduciaries and other gatekeepers making broad asset allocation decisions on behalf of their clients, and reallocation of investments within portfolios.
Also, the net income or loss of CIP are taxed at the investor level, not at the product level; therefore, a tax provision is not reflected in the net impact of CIP. Additionally, CIP represent less than 1% of the company's AUM.
Also, the net income or loss of CIP is taxed at the investor level, not at the product level; therefore, a tax provision is not reflected in the net impact of CIP.
The upfront distribution commissions are amortized over the redemption period. Also included in third-party distribution, service and advisory expenses are sub-transfer agency fees that are paid to third parties for processing client common share purchases and redemptions, call center support and client reporting. These costs are reimbursed by the related funds.
Both the revenues and the costs are dependent on the underlying AUM of the brokers' clients. The upfront distribution commissions are amortized over the redemption period. Also included in Third-party distribution, service and advisory expenses are sub-transfer agency fees that are paid to third parties for processing client common share purchases and redemptions, call center support and client reporting.
The quantitative test includes assumptions updated for current market conditions, including the company's updated forecasts for changes in AUM due to market gains or losses, net long-term flows and the corresponding changes in revenue and expenses.
Management used an income approach to value the reporting unit. An income approach includes assumptions for current market conditions, including the company's updated forecasts for changes in AUM due to market gains or losses, net long-term flows and the corresponding changes in revenue and expenses.
The impact of foreign exchange rate movements decreased net revenues from IGW by $16.7 million for the year ended December 31, 2022, as compared to the year ended December 31, 2021. After allowing for foreign exchange movements, net revenues from IGW were $449.4 million.
The impact of foreign exchange rate movements decreased Net revenues from IGW by $20.4 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
As of December 31, 2022, the company had $909.2 million in seed capital and co-investments (December 31, 2021: $856.7 million ), including direct investments in CIP. Total seed capital and co-investments is presented as a helpful measure for investors and represents our net investment including our net investment in CIP, net of deferred compensation investments, joint ventures and other investments.
As of December 31, 2023 and December 31, 2022, the company had $956.0 million and $909.2 million in seed capital and co-investments, respectively, including direct investments in CIP. Total seed capital and co-investments is presented as a helpful measure for investors and represents our net investment including our net investment in CIP.
Financial covenants under the credit facility agreement include: (i) the quarterly maintenance of an Adjusted debt/Earnings before income tax, depreciation and amortization (EBITDA) leverage ratio, as defined in the credit facility agreement, of not greater than 3.25:1.00, (ii) an interest coverage ratio (EBITDA, as defined in the credit facility agreement/interest payable for the four consecutive fiscal quarters ended before the date of determination) of not less than 4.00:1.00.
Financial covenants under the credit agreement include: (i) the quarterly maintenance of an Adjusted debt/Earnings before income tax, depreciation, amortization, interest expense, common share-based compensation expense, unrealized (gains)/losses from investments, net, and unusual or otherwise non-recurring gains and losses (Covenant Adjusted EBITDA) leverage ratio, as defined in the credit agreement, of not greater than 3.25:1.00, (ii) an interest coverage ratio (Covenant Adjusted EBITDA/interest expense for the four consecutive fiscal quarters ended before the date of determination) of not less than 4.00:1.00.
Average AUM were $1,452.5 billion in the year ended December 31, 2022, as compared to $1,499.9 billion in the year ended December 31, 2021. In addition to the impact of lower AUM, investors continued to shift AUM toward lower yield passive products, such as ETFs, during 2022.
Average AUM were $1,500.6 billion for the year ended December 31, 2023 as compared to $1,452.5 billion for the year ended December 31, 2022. During 2023, investors continued to shift AUM toward lower yield passive products, such as ETFs.
Net revenues from IGW were $432.7 million and average AUM was $93.5 billion for the year ended December 31, 2022 (net revenues were $473.5 million and average AUM was $84.0 billion, for the year ended December 31, 2021).
Net revenues from IGW were $368.3 million and average AUM was $87.2 billion for the year ended December 31, 2023 (Net revenues were $432.7 million and average AUM was $93.5 billion, for the year ended December 31, 2022).
Changes in AUM were as follows: 2022 2021 2020 $ in billions Total AUM Active Passive Total AUM Active Passive Total AUM Active Passive January 1 1,610.9 1,082.5 528.4 1,349.9 979.3 370.6 1,226.2 929.2 297.0 Long-term inflows 330.3 197.9 132.4 426.8 260.2 166.6 310.9 204.3 106.6 Long-term outflows (330.8) (226.2) (104.6) (345.4) (242.0) (103.4) (326.6) (236.1) (90.5) Net long-term flows (0.5) (28.3) 27.8 81.4 18.2 63.2 (15.7) (31.8) 16.1 Net flows in non-management fee earning AUM (3.2) — (3.2) 20.6 (0.1) 20.7 (5.1) — (5.1) Net flows in money market funds 56.4 56.4 — 39.7 39.7 — 14.3 14.3 — Total net flows 52.7 28.1 24.6 141.7 57.8 83.9 (6.5) (17.5) 11.0 Reinvested distributions 15.2 15.2 — 31.6 31.6 — 16.9 16.9 — Market gains and losses (243.5) (125.6) (117.9) 94.0 18.3 75.7 103.0 40.8 62.2 Foreign currency translation (26.1) (24.0) (2.1) (6.3) (4.5) (1.8) 10.3 9.9 0.4 December 31 1,409.2 976.2 433.0 1,610.9 1,082.5 528.4 1,349.9 979.3 370.6 Average AUM Average long-term AUM 1,104.8 820.8 284.0 1,177.1 919.1 258.0 952.0 784.6 167.4 Average AUM 1,452.5 988.2 464.3 1,499.9 1,050.2 449.7 1,194.9 893.0 301.9 Average QQQ AUM 169.1 — 169.1 176.0 — 176.0 115.2 — 115.2 2022 2021 2020 Revenue yield (bps) (1) U.S.
Changes in AUM by Investment approach were as follows: 2023 2022 2021 (in billions) Total AUM Active Passive Total AUM Active Passive Total AUM Active Passive Beginning Assets (January 1) $ 1,409.2 $ 976.2 $ 433.0 $ 1,610.9 $ 1,082.5 $ 528.4 $ 1,349.9 $ 979.3 $ 370.6 Long-term inflows 299.1 164.3 134.8 330.3 197.9 132.4 426.8 260.2 166.6 Long-term outflows (288.9) (193.3) (95.6) (330.8) (226.2) (104.6) (345.4) (242.0) (103.4) Net long-term flows 10.2 (29.0) 39.2 (0.5) (28.3) 27.8 81.4 18.2 63.2 Net flows in non-management fee earning AUM 6.2 — 6.2 (3.2) — (3.2) 20.6 (0.1) 20.7 Net flows in money market funds (11.1) (11.1) — 56.4 56.4 — 39.7 39.7 — Total net flows 5.3 (40.1) 45.4 52.7 28.1 24.6 141.7 57.8 83.9 Reinvested distributions 11.5 11.5 — 15.2 15.2 — 31.6 31.6 — Market gains and losses 161.1 40.0 121.1 (243.5) (125.6) (117.9) 94.0 18.3 75.7 Dispositions (1.4) (1.4) — — — — — — — Foreign currency translation (0.4) (0.9) 0.5 (26.1) (24.0) (2.1) (6.3) (4.5) (1.8) Ending Assets (December 31) $ 1,585.3 $ 985.3 $ 600.0 $ 1,409.2 $ 976.2 $ 433.0 $ 1,610.9 $ 1,082.5 $ 528.4 Average AUM Average long-term AUM $ 1,091.3 $ 780.4 $ 310.9 $ 1,104.8 $ 820.8 $ 284.0 $ 1,177.1 $ 919.1 $ 258.0 Average AUM $ 1,500.6 $ 992.3 $ 508.3 $ 1,452.5 $ 988.2 $ 464.3 $ 1,499.9 $ 1,050.2 $ 449.7 Average QQQ AUM $ 187.5 $ — $ 187.5 $ 169.1 $ — $ 169.1 $ 176.0 $ — $ 176.0 2023 2022 2021 Revenue yield (bps) (1) U.S.
(1) Invesco Great Wall: The company reflects 100% of Invesco Great Wall in its net revenues and adjusted operating expenses. The company’s non-GAAP operating results reflect the economics of these holdings on a basis consistent with the underlying AUM and flows. Adjusted net income is reduced by the amount of earnings attributable to noncontrolling interests.
(2) Invesco Great Wall: The company reflects 100% of IGW in its Net revenues and Adjusted operating income (and by calculation, Adjusted operating margin ) . The company’s non-GAAP operating results reflect the economics of these holdings on a basis consistent with the underlying AUM and flows.
As of $ in millions December 31, 2022 December 31, 2021 Investments 996.6 926.3 Net investment in CIP 376.8 454.8 Less: Investments related to deferred compensation plans, joint ventures, and other investments (464.2) (524.4) Total seed capital and co-investments (1) 909.2 856.7 ____________ (1) Included in the total seed and co-investment balance as of December 31, 2022 is $305.4 million of seed capital and $603.8 million of co-investments (December 31, 2021: $304.7 million of seed capital and $552.0 million of co-investments).
As of (in millions) December 31, 2023 December 31, 2022 Investments $ 919.1 $ 996.6 Net investment in CIP 527.4 376.8 Less: Investments related to deferred compensation plans, joint ventures, and other investments (490.5) (464.2) Total seed capital and co-investments (1) $ 956.0 $ 909.2 ____________ (1) Included in the total seed and co-investment balance as of December 31, 2023 is $314.1 million of seed capital and $641.9 million of co-investments (December 31, 2022: $305.4 million of seed capital and $603.8 million of co-investments).
GAAP basis 6,048.9 6,894.5 6,145.6 Revenue Adjustments: (2) Investment management fees (764.7) (844.1) (779.8) Service and distribution fees (961.1) (1,087.5) (986.1) Other (160.4) (217.7) (181.7) Total Revenue Adjustments (1,886.2) (2,149.3) (1,947.6) Invesco Great Wall (1) 432.7 473.5 263.2 CIP (3) 49.6 42.4 39.8 Net revenues 4,645.0 5,261.1 4,501.0 48 Ta ble of Contents Reconciliation of Operating income to Adjusted operating income: $ in millions 2022 2021 2020 Operating income, U.S.
GAAP basis $ 5,716.4 $ 6,048.9 $ 6,894.5 Revenue Adjustments: (1) Investment management fees (766.4) (764.7) (844.1) Service and distribution fees (911.7) (961.1) (1,087.5) Other (147.1) (160.4) (217.7) Total Revenue Adjustments (1,825.2) (1,886.2) (2,149.3) Invesco Great Wall (2) 368.3 432.7 473.5 CIP (3) 51.2 49.6 42.4 Net revenues $ 4,310.7 $ 4,645.0 $ 5,261.1 Reconciliation of Operating income/(loss) to Adjusted operating income: (in millions) 2023 2022 2021 Operating income/(loss), U.S.
Purchase obligations are recorded as liabilities in the company's Consolidated Financial Statements when services are provided. 52 Ta ble of Contents Capital Management Our capital management priorities have evolved with the growth and success of our business and include, in no particular order of priority: reinvestment in the business, maintaining a strong balance sheet and returning capital to shareholders longer term through a combination of modestly increasing dividends and share repurchases.
Capital Management Our capital management priorities have evolved with the growth and success of our business and include, in no particular order of priority: reinvestment in the business, maintaining a strong balance sheet and returning capital to shareholders longer term through a combination of modestly increasing dividends and share repurchases.
(5) Amortization of intangible assets: The company believes it is useful to investors and other users of our financial statements to remove amortization expense related to acquired assets net of the tax benefits realized on the tax amortization of goodwill and intangible assets in arriving at adjusted operating income, adjusted operating margin and adjusted diluted EPS, as this will aid comparability of our results period to period, and aid comparability with peer companies that may not have similar acquisition-related charges.
(5) Amortization and impairment of intangible assets: The company removes amortization and non-cash impairment expense related to acquired assets in arriving at Adjusted operating income, Adjusted operating margin, Adjusted net income and Adjusted diluted EPS, as this will aid comparability of our results period to period, and aid comparability with peer companies that may not have similar acquisition-related charges.
GAAP Impact of CIP Excluding CIP Cash, cash equivalents and restricted cash, beginning of the period (2) 2,147.1 250.7 1,896.4 1,839.3 301.7 1,537.6 1,701.2 652.2 1,049.0 Cash flows from operating activities (1) 703.2 (414.1) 1,117.3 1,078.1 (436.1) 1,514.2 1,230.3 (72.7) 1,303.0 Cash flows from investing activities (375.6) (81.5) (294.1) (847.9) (755.4) (92.5) (859.6) (729.9) (129.7) Cash flows from financing activities (966.9) 449.4 (1,416.3) 117.3 1,148.0 (1,030.7) (285.9) 426.3 (712.2) Increase/(decrease) in cash and cash equivalents (639.3) (46.2) (593.1) 347.5 (43.5) 391.0 84.8 (376.3) 461.1 Foreign exchange movement on cash and cash equivalents (73.7) (5.1) (68.6) (39.7) (7.5) (32.2) 53.3 25.8 27.5 Cash, cash equivalents and restricted cash, end of the period 1,434.1 199.4 1,234.7 2,147.1 250.7 1,896.4 1,839.3 301.7 1,537.6 Cash and cash equivalents 1,234.7 — 1,234.7 1,896.4 — 1,896.4 1,408.4 — 1,408.4 Restricted cash (2) — — — — — — 129.2 — 129.2 Cash and cash equivalents of CIP 199.4 199.4 — 250.7 250.7 — 301.7 301.7 — Total cash, cash equivalents and restricted cash per consolidated statement of cash flows 1,434.1 199.4 1,234.7 2,147.1 250.7 1,896.4 1,839.3 301.7 1,537.6 ____________ (1) These tables include non-GAAP presentations.
GAAP Impact of CIP As Adjusted Cash and cash equivalents beginning of the period $ 1,434.1 $ (199.4) $ 1,234.7 $ 2,147.1 $ (250.7) $ 1,896.4 $ 1,839.3 $ (301.7) $ 1,537.6 Cash flows from operating activities (1) 1,300.8 (136.6) 1,164.2 703.2 414.1 1,117.3 1,078.1 436.1 1,514.2 Cash flows from investing activities (244.3) 72.8 (171.5) (375.6) 81.5 (294.1) (847.9) 755.4 (92.5) Cash flows from financing activities (585.4) (196.8) (782.2) (966.9) (449.4) (1,416.3) 117.3 (1,148.0) (1,030.7) Increase/(decrease) in cash and cash equivalents 471.1 (260.6) 210.5 (639.3) 46.2 (593.1) 347.5 43.5 391.0 Foreign exchange movement on cash and cash equivalents 26.4 (2.4) 24.0 (73.7) 5.1 (68.6) (39.7) 7.5 (32.2) Cash and cash equivalents, end of the period $ 1,931.6 $ (462.4) $ 1,469.2 $ 1,434.1 $ (199.4) $ 1,234.7 $ 2,147.1 $ (250.7) $ 1,896.4 Cash and cash equivalents $ 1,469.2 $ — $ 1,469.2 $ 1,234.7 $ — $ 1,234.7 $ 1,896.4 $ — $ 1,896.4 Cash and cash equivalents of CIP 462.4 (462.4) — 199.4 (199.4) — 250.7 (250.7) — Total cash and cash equivalents per consolidated statement of cash flows $ 1,931.6 $ (462.4) $ 1,469.2 $ 1,434.1 $ (199.4) $ 1,234.7 $ 2,147.1 $ (250.7) $ 1,896.4 ____________ (1) These tables include non-GAAP presentations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+0 added−1 removed12 unchanged
Biggest changeAs such, the impact on operating margin or net income of a decline in the market values of AUM may be greater or less than the percentage decline in the market value of AUM. 59 Ta ble of Contents Securities Market Risk The company's exposure to market risk from financial instruments measured at fair value arises primarily from its investments.
Biggest changeSecurities Market Risk The company's exposure to market risk from financial instruments measured at fair value arises primarily from its investments.
Increases or decreases in the fair value of these investments will therefore have no impact to our pre-tax earnings. 60 Ta ble of Contents Interest Rate Risk Interest rate risk relates to the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
Increases or decreases in the fair value of these investments will therefore have no impact to our pre-tax earnings. Interest Rate Risk Interest rate risk relates to the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The interest rate profile of the financial liabilities of the company on December 31 was: $ in millions December 31, 2022 December 31, 2021 Debt Fixed rate 1,487.6 2,085.1 Floating rate — — Total 1,487.6 2,085.1 Weighted average interest rate percentage 4.2 % 4.0 % Weighted average period for which rate is fixed in years 7.0 5.9 See Item 8, Financial Statements and Supplementary Data, Note 8, “Debt,” for additional disclosures relating to the U.S.
The interest rate profile of the financial liabilities of the company on December 31 was: (in millions) December 31, 2023 December 31, 2022 Debt Fixed rate $ 1,489.5 $ 1,487.6 Floating rate — — Total $ 1,489.5 $ 1,487.6 Weighted average interest rate percentage 4.3 % 4.2 % Weighted average period for which rate is fixed in years 6.0 7.0 See Item 8, Financial Statements and Supplementary Data, Note 8, “Debt,” for additional disclosures relating to the U.S.
These are valued under the market approach at the NAV of the underlying funds, which is maintained at $1. Assets held for policyholders of $668.7 million have also been excluded from the table above.
These are valued under the market approach at the NAV of the underlying funds, which is maintained at $1. Assets held for policyholders of $393.9 million have also been excluded from the table above.
The company is exposed to interest rate risk primarily through its external debt and cash and cash equivalent investments. On December 31, 2022, the interest rates on 100.0% of the company's borrowings were fixed for a weighted average period of 7.0 years, and the company had a balance of zero on its floating rate credit facility.
The company is exposed to interest rate risk primarily through its external debt and cash and cash equivalent investments. On December 31, 2023, the interest rates on 100.0% of the company's borrowings were fixed for a weighted average period of 6.0 years, and the company had a balance of zero on its floating rate credit agreement.
If a 10% increase or decrease in the fair values of Invesco’s net investments in CIP were to occur, it would result in a corresponding increase or decrease in our net income attributable to Invesco. Cash balances invested in money market funds of $760.8 million have been excluded from the table above.
If a 10% increase or decrease in the fair values of Invesco’s net investments in CIP were to occur, it would result in a corresponding increase or decrease in our Net income attributable to Invesco Ltd. 58 Ta ble of Contents Cash balances invested in money market funds of $927.8 million have been excluded from the table above.
Net foreign exchange revaluation gains were $2.4 million in 2022 (2021: $1.1 million of losses) and are included in general and administrative expenses and other gains and losses, net on the Consolidated Statements of Income. 61 Ta ble of Contents
Net foreign exchange revaluation losses were $0.9 million in 2023 (2022: $2.4 million of gains) and are included in General and administrative expenses and Other gains and losses, net on the Consolidated Statements of Income. 59 Ta ble of Contents
The following table summarizes the impact of a 10% increase or decrease in the fair values of these financial instruments: December 31, 2022 $ in millions Fair Value Fair Value assuming 10% increase Fair Value assuming 10% decrease Equity investments (1) 325.0 357.5 292.5 Total assets measured at fair value exposed to market risk 325.0 357.5 292.5 Net investments in CIP (2) 376.8 454.8 339.1 ____________ (1) If such a 10% increase or decrease in fair values were to occur, the change attributable to $325.0 million of these equity investments would result in a corresponding increase or decrease in our pre-tax earnings.
The following table summarizes the impact of a 10% increase or decrease in the fair values of these financial instruments: December 31, 2023 (in millions) Fair Value Fair Value assuming 10% increase Fair Value assuming 10% decrease Equity investments (1) $ 272.4 $ 299.6 $ 245.2 Total assets measured at fair value exposed to market risk $ 272.4 $ 299.6 $ 245.2 Net investments in CIP (2) $ 527.4 $ 580.1 $ 474.7 ____________ (1) If such a 10% increase or decrease in fair values were to occur, the change attributable to $272.4 million of these equity investments would result in a corresponding increase or decrease in our pre-tax earnings.
At December 31, 2022, $146.1 million of these equity investments are held to hedge economically certain deferred compensation plans in which the company's employees participate. In addition to holding equity investments, in 2017, the company purchased a total return swap to economically hedge certain deferred compensation plans.
At December 31, 2023, $196.7 million of these equity investments are held to hedge economically certain deferred compensation plans in which the company's employees participate. In addition to holding equity investments, the company has a total return swap (TRS) to economically hedge certain deferred compensation plans. The notional value of the TRS at December 31, 2023 was $393.0 million.
The company immediately recognizes the appreciation or depreciation of these investments, which is included in other gains and losses.
The company recognizes as compensation expense the appreciation or depreciation of the compensation liability over the award's vesting period in proportion to the vested amount of the award. The company immediately recognizes the appreciation or depreciation of these investments, which is included in other gains and losses.
Certain expenses, including distribution and compensation expenses, may not vary in proportion with the changes in the market value of AUM.
Certain expenses, including distribution and compensation expenses, may not vary in proportion with the changes in the market value of AUM. As such, the impact on Operating margin or net income of a decline in the market values of AUM may be greater or less than the percentage decline in the market value of AUM.
Removed
The notional value of the total return swap at December 31, 2022 was $326.6 million. The company recognizes as compensation expense the appreciation or depreciation of the compensation liability over the award's vesting period in proportion to the vested amount of the award.

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