We are purely focused on investment management for the benefit of clients Investor Day

Transcription

1 We are purely focused on investment management for the benefit of clients Investor Day March 31, 2016

2 Forward-looking statements This presentation, and comments made in the associated Web cast today, may include forward-looking statements. Forward-looking statements include information concerning future results of our operations, expenses, earnings, liquidity, cash flow and capital expenditures, industry or market conditions, AUM, acquisitions and divestitures, debt and our ability to obtain additional financing or make payments, regulatory developments, demand for and pricing of our products and other aspects of our business or general economic conditions. In addition, words such as believes, expects, anticipates, intends, plans, estimates, projects, forecasts, and future or conditional verbs such as will, may, could, should, and would as well as any other statement that necessarily depends on future events, are intended to identify forwardlooking statements. Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. There can be no assurance that actual results will not differ materially from our expectations. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our most recent Form 10-K and subsequent Forms 10-Q, filed with the Securities and Exchange Commission. You may obtain these reports from the SEC s website at We expressly disclaim any obligation to update the information in any public disclosure if any forward-looking statement later turns out to be inaccurate. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This presentation is provided for informational purposes only and is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in an investment making decision. As with all investments there are associated inherent risks. Please obtain and review all financial material carefully before investing. This does not constitute a recommendation of the suitability of any investment strategy for a particular investor. The opinions expressed are based on current market conditions and are subject to change without notice. Past performance is not a guarantee of future results. Invesco s Institutional Separate Accounts and Separately Managed Accounts are offered by affiliated investment advisers, which provide investment advisory services and do not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco s retail products and collective trust funds. 1

3 Discussion topics Uniquely positioned to meet client needs Factor investing Fixed income Alternatives and multi-asset Real estate Global Targeted Returns Financial overview Well positioned as a global leader Marty Flanagan Bernhard Langer Dan Draper Greg McGreevey Colin Meadows Scott Dennis David Millar Loren Starr Marty Flanagan Questions 2

4 We ve built Invesco with a single focus: to help clients achieve their investment objectives Every client has a unique set of investment objectives, which can be achieved in a variety of ways. Invesco s comprehensive range of high-conviction investment capabilities has been constructed over many years to help clients achieve their investment objectives. Our fundamental and factor-based methodologies aim to deliver positive client outcomes that go beyond the limitations of traditional passive investing and benchmark-centric active management. This high-conviction approach provides better tools to build portfolios in a more precise and impactful way. 3

5 We are uniquely positioned to meet client needs Success driver Deep understanding of client needs Pure focus on investment management Experienced, stable and accountable investment leadership Organizational strength 4 Invesco position Deep knowledge of clients and their evolving needs Comprehensive, all-weather, high-conviction fundamental and factor investing product line Demonstrated ability to combine a broad range of capabilities to construct portfolios aligned with client investment objectives by channel and by region No competing lines of business to support Strong investment reputation Independence Infrastructure and client support platforms that enable our investors to spend more time focused on investing Specialized, stable investment teams with discrete investment perspectives and experience across diverse market cycles Disciplined, repeatable investment philosophy and processes Strong risk management and oversight Compensation aligned with performance and client interests Broad and deep global presence in key markets Solid margins, financial strength and resources to ensure long-term investment in the business 6,000+ highly engaged and motivated employees focused on client needs Proven management team with a solid track record

6 Our continued investment in the business is fully aligned with client demand trends Client demand themes Search for yield Barbelling and the shift to passive, beta and ETF products Invesco s positioning In 2007, began expansion of global fixed income platform, which today supports the full range of single-sector and multi-sector capabilities Continue to expand the full range of income-related capabilities, including equities, fixed income and alternatives Continued to expand our comprehensive range of all-weather, high-conviction capabilities Began factor investing in 1983 Added Invesco PowerShares in 2006 smart beta line remains broadest, most diverse in the industry Continue to accelerate our ETF business globally Multi-asset strategies and absolute return Introduced risk parity strategy in 2008 Built new Invesco Perpetual multi-asset team beginning in 2012; expanding to new markets Invesco Quantitative Strategies added global market neutral capability in

7 Our continued investment in the business is fully aligned with client demand trends Client demand themes Growing demand for alternatives Invesco s positioning Entered direct real estate business in 1991; completed the globalization of our real estate capabilities by adding the Asia team in 2010 Expanded into private equity through WL Ross & Co. in 2006 Continued to broaden our range of alternative strategies with the launch of more than 40 liquid alternatives offerings globally beginning in 2011; today the range represents one of the most comprehensive lineups in the industry Increasing demand for solutions and new advice models Invesco Solutions builds and manages goal-oriented, multi-asset strategies aligned to client outcomes Early entrant into the digital advice space through the addition of Jemstep in

8 A key strength of the firm is our diversification across geographies, channels and asset classes By client domicile By channel By asset class 3% 13% 66% 13% 66% 24% 10% 34% 48% 8% 9% 6% ($ billions) 1-Yr Change ($ billions) 1-Yr Change ($ billions) 1-Yr Change U.S. Canada U.K. Europe Asia $510.7 $21.7 $104.2 $75.4 $63.6 (4.0)% (15.9)% (0.9)% 6.0% 9.1% Retail Institutional $514.8 $260.8 (3.3)% 0.3% Equity Balanced Money Market Fixed Income Alternatives $370.9 $48.1 $64.6 $187.9 $104.1 (3.5)% (4.9)% (15.6)% 3.5% 4.8% Total $775.6 (2.1)% Total $775.6 (2.1)% Total $775.6 (2.1)% As of December 31,

9 Our goal is to deliver strong, long-term investment performance for clients through our capabilities % 21% 15% 60% 79% 85% 1-Year 3-Year 5-Year % 47% 53% 62% 37% 63% 1-Year 3-Year 5-Year * Excludes passive products, closed-end funds, private equity limited partnerships, non-discretionary funds, unit investment trusts, fund of funds with component funds managed by Invesco, stable value building block funds and CDOs. Certain funds and products were excluded from the analysis because of limited benchmark or peer group data. Had these been available, results may have been different. These results are preliminary and subject to revision. Data as of 12/31/15. Includes AUM of $463.6 billion (60% of total IVZ) for one year, $449.5 billion (58% of total IVZ) for three year, and $444.6 billion (57% of total IVZ) for 5 year. Peer group rankings are sourced from a widely-used third party ranking agency in each fund s market (Lipper, Morningstar, IMA, Russell, Mercer, evestment Alliance, SITCA, Value Research) and asset-weighted in USD. Rankings are as of prior quarter-end for most institutional products and prior month-end for Australian retail funds due to their late release by third parties. Rankings for the most representative fund in each GIPS composite are applied to all products within each GIPS composite. Performance assumes the reinvestment of dividends. Past performance is not indicative of future results and may not reflect an investor s experience. 8 Assets in top half of peer group Assets in bottom half of peer group

10 Our comprehensive range of investment capabilities are offered in key markets across the globe Americas Asia Pacific EMEA Americas Asia Pacific EMEA Equity Allocation Global/ Multi-Region Traditional Global Global Balanced Global ex Domestic Domestic Balanced Emerging Markets Non-Traditional Regional/ Single Country Risk Parity Asian/ Asia ex Japan Target Maturity Australian Target Risk Greater China Custom Solutions Japanese European/ UK Alternatives US Directional Strategies Canadian Long/Short Equity Sector-Based Private Equity Bank Loans Fixed Income Inflation-Protection Multi-Sector Commodities Global Agg/ Core Plus Public Real Estate Securities Multi-Sector Credit Private Real Estate Strategic Income Macro Strategies Single Sector Global Macro Investment Grade Relative Value/ Absolute Return High Yield Market Neutral Equity Structured Securities Unconstrained Bond Convertibles Financial Structures Municipal Bonds Credit Arbitrage Specialty Opportunistic EM Debt Stable Value Global Liquidity 9

11 And delivered through diverse vehicles to enable key outcomes for clients Our fundamental and factor investment capabilities Equity $371B AUM Fixed Income and Money Market $253B AUM Asset Allocation $48B AUM Alternative $104B AUM are delivered through diverse investment vehicles Institutional separate accounts Collective trusts Mutual funds (open/closed-end, on/offshore) Exchange-traded funds (ETFs) Unit investment trusts (UITs) Private placements Sub-advised portfolios Separately managed accounts/ Unified managed accounts Variable insurance funds Customized solutions to enable key outcomes that help our clients around the world achieve their investment objectives Income Capital preservation Growth As of Dec. 31,

12 Our investment capabilities are delivered to meet client needs across the globe Chinese equities Managed from Hong Kong and Shenzhen March 2006 Added to US retail fund market June 2005 Added QFII A-share offshore fund October 2001 Added to UK onshore fund market July 1992 Added to offshore fund market June 2009 Added to Japan onshore fund market Introduced to the marketplace in 1992 Invesco Great Wall JV formed in 2003; Approved as QFII manager in Originally introduced to Asia Pacific market 11

13 Our investment capabilities are delivered to meet client needs across the globe Canada: Feeder fund Jan 2015 Retail fund May 2016 US: 40 Act Fund Jan 2014 AUM $183m 2015 Net Sales $126m 2 Institutional Trust products (Q1 2016) UK: ICVC Fund Sept 2013 Pension Fund Apr 2014 Feeder Fund Nov 2014 AUM $8.5bn 2015 Net Sales $6.0bn Continental Europe: SICAV Fund Jan 2014 SICAV Select Fund Oct 2015 AUM $3.9bn 2015 Net Sales $2.1bn Middle East: (SICAV Fund) 2016 Sales: $670m Japan: (SICAV Select Fund) 2015 Net sales: $95m Australia: Unit Trust 2015 AUM $250m Global Targeted Returns Managed from Henley, part of the Invesco Perpetual investment team Introduced to the UK marketplace in Sept 2013 Expanded to Continental Europe and US in 2014 Sourced sales from Asia Pacific started in 2015 AUM reached $11 billion in 2015, up $8 billion over the prior year 12

14 Our investment capabilities are delivered to meet client needs across the globe November 2008 Launched the first actively managed RE ETF in the US November 2007 Added to Canadian mutual fund market September 2005 Added to offshore fund market September 2004 Subadvise openend fund in Japan onshore market Real Estate Securities/ REITs Managed from Dallas by Invesco Real Estate; sold globally Team has been managing REITs for over 20 years 1988 Originally introduced to US institutional and retail markets Offers US, global, global ex-us, and regional variations October 2009 Added to Australian onshore fund market 13

15 Today, we will focus on five key areas of opportunity for Invesco in 2016 and beyond Invesco is ahead of demand trends and well-positioned to meet client needs Barbelling and the shift to passive, beta and ETF products Search for yield Factor investing Fixed income Growing demand for alternatives Alternatives and multi-asset strategies Real estate Global Targeted Returns 14

16 Discussion topics Uniquely positioned to meet client needs Factor investing Fixed income Alternatives and multi-asset Real estate Global Targeted Returns Financial overview Well positioned as a global leader Marty Flanagan Bernhard Langer Dan Draper Greg McGreevey Colin Meadows Scott Dennis David Millar Loren Starr Marty Flanagan Questions 15

17 Reframing the active/passive debate Which is better active or passive? Invesco believes this is the wrong question to ask At Invesco, we believe in striving for a superior client experience through high-conviction investing going beyond the limitations of traditional passive investing and benchmark-centric active management High conviction means our fundamental-based active managers trust their research, have confidence in their discipline and build portfolios that are a reflection of their beliefs not benchmarks It also means that our factor-based active and smart beta strategies go beyond the traditional, market-cap-weighted passive benchmark approach A more important question: Are you willing to settle for average? 16

18 Factor investing moving beyond active v. passive Moving the industry from mass production to mass customization Invesco believes this is occurring largely due to Investors behavioral biases Harvesting of Factor Risk Premium Stronger expression of investment views More efficient risk-adjusted performance Evolution away from cap-weighted benchmarks Factor investing supports a better diversified portfolio Diversification does not guarantee a profit or eliminate the risk of loss. 17

19 An introduction to factor investing What is a Factor? A factor is a quantifiable characteristic of an asset Can be directly observable characteristics such as size, momentum or value Can refer to statistical relationships such as the part of price moves that can be explained by a variable such as inflation, consumption, etc. They explain the return and risk characteristic of portfolios They are often associated with a risk premium that investors receive for either bearing an undesirable return profile (i.e. low returns in bad times) or for behavioral reasons that prevent arbitrage of such factors What is Factor Investing? Factor investing is to look at the investable world through a particular lens Tradable securities (e.g., stocks) are used as the instruments to achieve the factor exposures A factor portfolio may target exposure to a single factor or a combination of factors Similar to other investments, factors possess observable risk and return profiles Achieving Improved Diversification and Factor Allocation involves the choice of allocation across factors in a way that trades off these risk and return profiles to achieve particular investment goals 18

20 An introduction to factor investing The origins of Factor Investing Separation of beta and alpha 1964 Building on Markowitz s mean variance analysis Sharpe develops the Capital Asset Pricing Model (CAPM) Size 1981 Banz finds that small cap stocks outperformed large cap stocks Value Basu finds low PE stocks generate higher returns relative to high PE stocks Practitioners begin to launch investment products based on the academic evidence of anomalies Research Affiliates and Dimensional FA pioneer equity strategies focused on size and value factors 1960s 1970s 1980s 1990s Low vol 1972 Haugen and Heins showed that low volatility stocks realized extra risk-adjusted returns Size and value 1993 Fama and French develop 3-factor model by adding size and value to CAPM Momentum 1993 Jagadeesh and Titman found buying past winners and selling past losers was highly profitable 1997 Carhart develops 4-factor model Source: Cass Business School Smart Beta Academic research November

21 An introduction to factor investing Well-known systematic factors from the academic literature Source: MSCI Research December 2013, Invesco. Past performance is not a guarantee of future results. 20

22 An introduction to factor investing Factor strategies should have a robust investment case Evidence empirical evidence must support the Factor Belief understand the economic and/or behavioral rational Sustainability consider the factor is likely to be competed away in the future be implemented using well-designed products Systematic a repeatable process that does not require significant discretionary management Broad large opportunity set to minimize risk coming from individual securities Simple transparent and only as complicated as needed to achieve investment goals Cost effective fees and costs should be considered in all stage of the process Source: Invesco 21

23 An introduction to factor investing (CONTINUED) What has triggered the demand? Global financial crisis triggered demand for smarter equity strategies Extreme market uncertainty Record-high volatility Sharp portfolio drawdowns Norway s Ministry of Finance commissions an academic review to examine Norges Bank Investment Management s use of active managers. Paper Evaluation of Active Management of the Norwegian Pension Fund Global (2009) found that the majority of outperformance in active management is driven primarily by exposure to systemic factors Recommends risk factor investing using passive-like strategies Solutions, Alternatives, Passive and Specialties will win a disproportionate share of Future Net Flows Boston Consultancy Group (BCG) continue to believe that the structural shift from active core products to solutions, alternatives, passive products, and specialties will continue. In particular, solutions and passives are likely to get a disproportionate share of the net flows, relative to their current size. They therefore will remain the fastest-growing categories. 22 Source: Boston Consultancy Group - Global Asset Management 2015: Sparking Growth with Go-to-Market Excellence

24 What do we stand for in factor investing? Invesco is an innovative leader in factor investing with $138B in AUM and 40 years experience Factor Based Investment Strategies Invesco Quantitative Strategies $34.4bn in AUM Global presence with teams across four continents Factor-based active since investment professionals Globally delivered through mutual funds, collective trusts and separate accounts* Invesco PowerShares $96.2bn in AUM 4 th largest ETF provider* Factor-based smart beta pioneer since investment professionals 130+ETFs Invesco Unit Trust $19bn in AUM 2 nd largest unit trust provider Factor-based smart beta packaged in unit trusts since investment professionals 74 unit trusts Differentiating Attributes Diverse, time-tested investment strategies All vehicles available to meet investor needs Product specialists and field wholesaler depth Education and thought leadership support * Source: US advisor-sold fund family is determined by the majority of a firm s long-term assets classified in the sales force and ETF distribution channels by ICI. Offered through affiliates of Invesco Ltd. All data as of 4Q

25 Invesco Quantitative Strategies A proven philosophy of relevant factors and many applications We believe we can add value for our clients through the systematic application of fundamental and behavioral insights. Salient Points The best ideas from a team that values independent thinking An engineered discipline that balances the rigor of quantitative modeling with the insight of fundamental and behavioral analysis A commitment to renewal and purposeful evolution so that our process continues to capture the right opportunities 24

26 Invesco Quantitative Strategy Pioneers in Factor Investing Managing more than USD 32 billion over four decades Experienced team of over 40 investment professionals An actively managed, multi-factor approach that evolves over time Achieving a balanced factor portfolio may require a more customized approach for clients with plan constraints The team has a history of tailoring solutions to client needs 1983 U.S. Quantitative Core Equity 1991 Financial Futures 1992 U.S. Small Cap Core; U.S. Mkt Neutral 1995 Equitized U.S. Market Neutral 1996 U.S. Enhanced Index 1999 European 2000 Eurobloc 2001 Global Quantitative Quantitative Quantitative Core Core Core 2002 Absolute Return (multi-strategy hedge fund approach) 2003 Global Balanced Solutions 2005 European/ Global Low Volatility 2006 European Market Neutral 2007 Directional Long-Short (130/30) 2008 Global Market Neutral 2009 U.S. Low Volatility 2010 Emerging Markets 2012 European Growth 2013 Dividend Strategies; Liquid Alternatives 2014 Global Small Caps 2015 Eurobloc Low Volatility 25

27 Invesco Quantitative Strategy Performance our results from factor based investing Money weighted cumulative excess return across product range Past performance is not a guide to future returns. Source: IQS as of December 31, The excess returns are gross of fees in the strategy currency. The chart represents the money-weighted average excess returns of our representative strategies such as, Global ex UK Enhanced, US Enhanced Index, US Enhanced Index Value, Eurobloc Enhanced, Global Quantitative Core, US Quantitative Core, US Quantitative Small Value, 2% Risk US Enhanced Index 1000, European Quant Core, Eurobloc Quant Core, Emerging Markets Quant Core, Global Low Volatility, European Low Volatility, US Market Neutral, GARF and Capital Shield, over time. Supplementary to the GIPS-compliant presentation available upon request. For periods before 1992 money weights are not available. The chart shows 35% outperformance since 1992, which translates into an annualized outperformance of 1.3%. 26

28 ETFs have expanded access and application of factor investing Invesco PowerShares (IPS) brings factor investing to a wide audience via the ETF wrapper that can be accessed by individuals, advisors and institutions from leading index providers IPS offers passive factor-based strategies providing access to well-established investment factors including low volatility, value, dividend, growth, momentum and quality The Smart Beta segment is growing faster than the overall industry with a 3-yr growth rate of 23% versus 13%. Some of the largest and fastest growing segments within smart beta are factor-based strategies including low volatility, momentum, quality and dividends. Low Vol, momentum and quality based ETFs have grown over 50% per year over the past 3 years* Through systematic, transparent and simple methodologies investors can access key investment factors in a tradable, tax efficient and low cost vehicle * Source: Invesco PowerShares Research and Bloomberg, as of February 29, Invesco PowerShares does not provide tax advice. Please consult with your tax advisor for information regarding your own tax situation. While it is not Invesco PowerShares intention, there is no guarantee that the funds will not distribute capital gains to it s shareholders. Smart Beta is an alternative and selection index based methodology that may outperform a benchmark or reduce portfolio risk, or both. 27

29 Invesco PowerShares factor investing Seek a high-conviction smart beta management firm A track record of meeting client needs through innovative product offerings Invesco PowerShares has the largest and broadest set of Smart Beta ETFs with the longest track record Smart Beta Assets Number of ETFs Number with 5-Year Record 86% 14% $37 billion in smart beta franchise assets 80% 92 smart beta ETFs 20% 66% 63 smart beta ETFs with at least a 5-year track record 34% PowerShares Industry Remainder # > 5 Years PowerShares: 63 Provider with 2 nd Largest Offerings: 33 Source: Invesco PowerShares as of December 31, The smart beta category includes ETFs that have an alternative and selection index based methodology that seeks to outperform a benchmark or reduce portfolio risk, or both. Industry remainder represents all ETF products that meet this criteria, excluding PowerShares smart beta products. Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk. Beta is a measure of risk representing how a security is expected to respond to general market movements. 28

30 Invesco PowerShares factor investing (CONTINUED) Smart Beta pioneers since 2003 PowerShares industry leadership in first-to-market ETF innovation: Year Index Methodology Introduced PowerShares ETF Example (Ticker) Total Funds in PowerShares Family* 2003 Quantitative Constructed Dynamic Large Cap Value (PWV) International Dividend International Dividend Achievers TM (PID) 1 Fundamentals Weighted Equity FTSE RAFI US 1000 (PRF) Share Buybacks Buyback Achievers TM (PKW) 2 Emerging Sovereign Debt Emerging Markets Sovereign Debt (PCY) Momentum DWA Momentum (PDP) 15 Options S&P 500 BuyWrite Portfolio (PBP) 1 High Quality Weighted S&P 500 High Quality (SPHQ) Fundamentals Weighted/Fixed-Income Fundamental High Yield TM Corporate Bond (PHB) 3 Yield Weighted REIT KBW Premium Yield Equity REIT Portfolio (KBWY) Volatility-Weighted S&P 500 Low Volatility (SPLV) 10 Beta-Weighted S&P 500 High Beta (SPHB) 3 Multi-Strategy Alternative Multi-Strategy Alternative Portfolio (LALT 1 Laddered Corporate Bond LadderRite 0 5 Year Corporate Bond (LDRI) 1 * Represents the number of funds in the PowerShares ETF Family that utilize the corresponding methodology introduced 29

31 Invesco PowerShares factor investing Competitive advantages Experienced ETF team with nearly half its employees averaging over 8 years with the firm ETF brand strength and marketplace recognition Experienced smart beta ETF team and scalable platform Leading ETF product and capital markets specialists to support clients and distribution teams Innovative product development team raising 2 nd most AUM ($13.5B) from new products launched in the last 5 years among the top 10 ETF providers* * Source: Invesco PowerShares product and research team, February

32 Invesco combines scaled, global capabilities to deliver factor investing strategies for clients A strong foundation in factor research Invesco has been leading the way in rigorous, bottom-up factor research for 40 years A systematic investment approach to meet client needs We have developed a broad platform of active and rulesbased investment strategies backed by a strong track record of performance* We have the capability to build custom investment solutions where needed Ability to deliver a full range of investment products globally Long-term experience in mutual funds, unit trusts, and separate accounts A pioneering leader in Exchange Traded Funds with an emphasis on Smart Beta Product development capabilities spanning all major regulatory regimes Source: Invesco PowerShares as of December 31, The smart beta category includes ETFs that have an alternative and selection index based methodology that seeks to outperform a benchmark or reduce portfolio risk, or both. Industry remainder represents all ETF products that meet this criteria, excluding PowerShares smart beta products. Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk. Beta is a measure of risk representing how a security is expected to respond to general market movements. * Invesco analysis, includes 16 composites from 1992 to

33 Discussion topics Uniquely positioned to meet client needs Factor investing Fixed income Alternatives and multi-asset Real estate Global Targeted Returns Financial overview Well positioned as a global leader Marty Flanagan Bernhard Langer Dan Draper Greg McGreevey Colin Meadows Scott Dennis David Millar Loren Starr Marty Flanagan Questions 32

34 Invesco Fixed Income is entirely focused on delivering investment excellence to our clients Global platform A global team of experienced professionals whose knowledge of local markets strengthens the investment process Research based investment process A structured and disciplined process that integrates macro and credit research to uncover value Performancedriven An investment approach that is focused on increasing the predictability and consistency of investment returns Collaborative team approach Inclusiveness that compounds expertise by working together effectively to drive results 33

35 Our global perspective and local market knowledge help us uncover investment opportunities We have a well-resourced investment team with a strong global perspective London Chicago Toronto London New York Louisville Atlanta San Diego Palm Harbor Tokyo Shenzhen Mumbai Hong Kong Kong Scope of fixed income platform: US $222.3* billion AUM Depth of resources: 161 investment professionals 223 professionals Global footprint: 11 locations in key markets Rates 19 Currency 14 Credit 72 PM 77 *AUM is unadjusted and does not include $11.5bn in assets for co-managed and manual adjustments. Source: Invesco, as of December 31, Subject to change without notice. Invesco Fixed Income does not include all the fixed income entities within Invesco Ltd., and is not limited to those fixed income assets within the GIPS -compliant firm Invesco Worldwide; therefore, the assets under management reported here for Invesco Fixed Income may not match the fixed income assets reported in the Invesco earnings statement. Offices in Mumbai and Shenzhen represent joint ventures. 34

36 IFI s experienced teams provide broad market coverage and specialized expertise Fixed Income Teams Team Members Average yrs. with Invesco Average yrs. Industry Experience* Portfolio Management & Trading Global Research Total Investment Professionals Business Professionals Total Fixed Income Employees As of December 31, Subject to change without notice. * Investment specific experience for investment professionals. 35

37 We have made significant progress enhancing our capabilities for the benefit of our clients People 2011 Today Separate locations Global presence/regional hubs Independent teams Connected teams Process Independent processes Limited asset allocation Consistent research processes Integrated strategy Platform Multiple systems Underdeveloped risk mgmt Integrated systems Multi-faceted risk mgmt Products Single sector oriented Limited multi-sector capabilities Range of multi & single sector products New capabilities 36

38 We offer a comprehensive range of single and multi-sector solutions to meet client objectives Single Sector Disciplines + Risk Investment Grade Mortgages Cash High Yield Bank Loans Convertibles Emerging markets Municipals Return + Multi-Sector Disciplines Core Suite Beta Absolute Return Strategic Real Return Alpha Unconstrained Bond Strategic Income Multi-Sector Credit Stable Value Global Bond Suite We will continue to develop products to meet market demands in both single sector and multi-sector disciplines For illustrative purposes only and does not ensure future results of any product or strategy, nor does it constitute a recommendation of the suitability of any investment strategy for a particular investor. 37

39 Understanding client demands are creating opportunities Search for yield Shift to global & emerging markets Alternatives Multi- Asset Growing demand for alternatives & multi-asset products Shift to new advice models & solutions 38

40 Our global opportunity set allows us to bring a broad range of solutions to our clients Investor trends & client needs Search for yield How we address client needs Capabilities: Deep experience in income oriented strategies Shift to global & emerging markets Growing demand for alternatives & multi-asset products Shift to new advice models & solutions Fundamental analysis to anchor yield focused solutions Sophisticated risk management tools Representative Examples: Strategic Income High Yield Corporates 39

41 Our global opportunity set allows us to bring a broad range of solutions to our clients Investor trends & client needs Search for yield How we address client needs Capabilities: Interconnected team that leverages local knowledge globally Shift to global & emerging markets Experienced global macro economic & credit coverage Growing demand for alternatives & multi-asset products Representative Examples: Global Aggregate Asian Bond Strategies Shift to new advice models & solutions 40

42 Our global opportunity set allows us to bring a broad range of solutions to our clients Investor trends & client needs Search for yield How we address client needs Capabilities: Comprehensive expertise & connected team Shift to global & emerging markets Sophisticated portfolio management platform and risk tools Growing demand for alternatives & multiasset products Representative Examples: Bank Loans & CLO s Absolute Return & Uncorrelated Strategies Shift to new advice models & solutions 41

43 Our global opportunity set allows us to bring a broad range of solutions to our clients Investor trends & client needs Search for yield How we address client needs Capabilities: Flexible platform and processes to tailor strategies Shift to global & emerging markets Broad range of delivery vehicles and packaging capabilities Growing demand for alternatives & multi-asset products Representative Examples: PPIP & Mortgage Recovery Fund I* IFI/IQS Balanced Funds Shift to new advice models & solutions * Closed to new investors. 42

44 We have capabilities to address client demands globally Key industry trends North America Core/Core Plus Private Debt US Mortgages US Municipals Asia* EMEA Unconstrained Bonds Global Aggregate EM Debt Asia Fixed Income US Bank Loans US High Yield Global Credit EU High Yield EU Corporates US Corporates Global Credit Global High Yield Cash Source: evestment. Based on estimated net flows for 2015 * Includes Asia, Japan & Australia 43

45 We are seeing flows from several different asset classes across the globe Recent IFI flows North America Core/Core Plus Municipals High Yield Stable Value Cash Asia* CLOs EMEA EM Debt US Investment Grade US Corporates Global Credit US/Global Bank Loans Global Aggregate US Corporates EU Corporates Cash Source: evestment. Based on estimated net flows for 2015 * Includes Asia, Japan & Australia 44

46 Invesco Fixed Income is entirely focused on delivering investment excellence to our clients Global platform A global team of experienced professionals whose knowledge of local markets strengthens the investment process Research based investment process A structured and disciplined process that integrates macro and credit research to uncover value Performancedriven An investment approach that is focused on increasing the predictability and consistency of investment returns Collaborative team approach Inclusiveness that compounds expertise by working together effectively to drive results 45

47 Discussion topics Uniquely positioned to meet client needs Factor investing Fixed income Alternatives and multi-asset Real estate Global Targeted Returns Financial overview Well positioned as a global leader Marty Flanagan Bernhard Langer Dan Draper Greg McGreevey Colin Meadows Scott Dennis David Millar Loren Starr Marty Flanagan Questions 46

48 Invesco has a deep, long-standing set of alternatives and multi-asset capabilities Scale and impact Breadth of capability Depth of experience Strong foundation $132 billion in alternative assets under management 1 More than 350 investment professionals managing alternative strategies around the world 5 th largest manager of alternatives for institutions 2 Strength and scale in both liquid and long-term alternative strategies Scope of key capabilities includes: Bank Loans Commodities Infrastructure Long/Short Equity Macro MLPs Market Neutral Private Equity Real Estate Risk-Balanced More than 30 years experience managing alternative investments Recognized pioneers and industry leaders across multiple alternative strategies Institutionalized, repeatable investment processes Sustainable teams with deep talent bench One of the world s leading independent global investment management firms Global trading and investment execution platform Robust, independent risk management Focused operations, compliance, and investment technology tools Support from regionallybased client engagement teams around the world 1 Source: Invesco Ltd. as of December 31, Includes real estate, alternative credit, liquid inflation hedges, hedged and macro strategies, private equity, and risk parity. 2 Source: Invesco Ltd. and Pensions & Investments 2015 Money Managers Rankings; includes US tax-exempt institutional assets for the following categories: real estate equity domestic, real estate equity international, timber, hedge funds, infrastructure, venture capital buyout funds, other private equity domestic, other private equity international, privately placed debt, distressed debt, mezzanine debt, energy, commodities, and MLPs. 47

49 Our $132 billion alternatives and multi-asset platform is well diversified to meet a variety of investor needs Invesco Alternatives AUM - $132Bn Alternatives capabilities Alternative Equity and Macro Strategies $29.0B Alternative Fixed Income $27.8B Private Equity $6.4B Liquid Real Assets $32.0B Private Real Estate $37.0B Liquid real assets Commodities Infrastructure Master Limited Partnerships (MLPs) Real Estate Securities Private real estate Direct Real Estate Alternative fixed income Alternative equity and macro strategies Bank Loans Unconstrained Fixed Income Arbitrage Strategies Currency Diversified Alternatives Macro Hedged Equity Long/Short Equity Market Neutral Risk-Balanced Private equity Direct Private Equity Private Equity Funds of Funds Source: Invesco Ltd. as of December 31, Note: Includes AUM from various portfolios that are publicly reported as Balanced or Fixed Income. 48

50 We bring our clients over 30 years of experience managing alternative investments 1980s and 1990s Invesco Private Capital 1981: Began investing in Private Equity Partnerships Invesco Real Estate 1983: Began investing in Private Real Estate 1988: Began investing in Real Estate Securities Invesco Quantitative Strategies 1983: Began Equity investing Invesco Fixed Income 1989: Began investing in Bank Loans Invesco Quantitative Strategies 1992: Launched Market Neutral strategy WL Ross & Co. 1997: WLR began investing in Direct Private Equity 2000s and 2010s Invesco Global Asset Allocation 2000: Began Multi-Asset investing 2008: Launched Balanced-Risk Allocation and Balanced-Risk Commodity strategies Invesco Multi Asset 2006: Team members launched similar Global Macro strategy 2013: Team joined Invesco Invesco Quantitative Strategies 2007: Began Long/Short Equity investing 2008: Launched Global Market Neutral strategy 2013: Launched Long/Short Equity strategy Invesco Real Estate 2014: Launched MLP and Global Infrastructure strategies Invesco PowerShares 2015: Started managing 11 exchange-traded Commodity pools 1981 Private Equity Partnership Investing 1989 Bank Loans 1992 Market Neutral 2008 Risk-Balanced Commodities Global Market Neutral 2014 MLPs Infrastructure Unconstrained Fixed Income Real Estate Direct Private Equity Macro Multi Alternatives Long/Short Equity 49

51 Where appropriate, these teams collaborate to bring unique offerings to market Invesco Mortgage Recovery Fund Global Balanced Solutions WL Ross & Co. (WLR) Invesco Real Estate (IRE) Invesco Fixed Income (IFI) Invesco Fixed Income (IFI) Invesco Quantitative Strategies (IQS) Invesco Mortgage Recovery Fund I (IMRF I) was a partnership among WLR, IRE, and IFI to pursue distressed public and private commercial property IMRF I was one of 9 sponsors selected to partner with the US Treasury on the Public- Private Investment Program (PPIP) in 2009 Fund I raised $1.5bn and, to date, has returned more than 100% of capital at attractive returns That track record, the demonstrated capabilities of the combined investment committee, and the sourcing advantages of the model allowed us to launch further similar strategies. Building on over a decade of cooperation in the institutional market, IFI and IQS continue to collaborate on innovative balanced asset solutions for retail and institutional investors These combine the best of IQS factor-based equities capabilities and tactical asset allocation models with IFI s global fixed income capabilities Strong track records in the underlying asset classes are supplemented with downside risk management features to create customized client solutions More than $2.3bn jointly managed by IFI and IQS in balanced solutions New product initiatives are under way to bring these capabilities to retail markets in Europe and Asia 50

52 Our capabilities are delivered to investors through diverse investment vehicles Liquid Vehicle Offerings Long-term Vehicle Offerings Liquid Real Assets Commodities Yes Yes Listed Infrastructure Yes Yes Listed MLPs Yes Yes Real Estate Securities Yes Yes Private Real Assets Direct Real Estate Yes Alternative Fixed Income Bank Loans Yes Yes Mezzanine Debt Yes Unconstrained Bond Yes Yes Alternative Equity and Macro Strategies Currency Yes Yes Diversified Alternatives Yes Yes Global Macro Yes Yes Hedged Equity Yes Yes Long/Short Equity Yes Yes Market Neutral Yes Yes Risk-Balanced Yes Yes Private Equity Buyout/Distressed Yes Funds-of-Funds Yes Note: Not all vehicles are available to all investors or in all jurisdictions. 51

53 We developed a framework for investing in alternative strategies defining the asset classes Client objective: Inflation hedge Principal preservation Portfolio diversification Equity diversification Fixed income diversification Alternative type: Alternative Assets Relative Value Strategies Global Investing and Trading Strategies Alternative Equity Strategies Alternative Fixed Income Strategies Asset classes: Real Estate (REITS) Commodities Infrastructure MLPs Market Neutral Arbitrage Strategies Macro Risk-Balanced Multi-Alternative Currency Equity Long/Short Unconstrained Equity Private Equity Option overlay strategies Bank Loans Unconstrained Fixed Income Long/Short Credit Allocate to: Assets that historically performed well during periods of inflation Strategies that historically generated positive returns regardless of market environment Strategies that invest beyond equities and fixed income across the global markets (currencies, commodities, etc.) Strategies that invest in equities on a long and short and/or unconstrained basis Strategies that invest in fixed income and/or credit Seeks to achieve: Hedge against inflation and generate current income Preserve capital and produce positive returns Generate attractive non-correlated returns Participate in equity market upside with reduced downside risk Boost yield, protect against rising rates and/or generate returns unique to traditional fixed income investments Framework applies to liquid alternatives and non-accredited, retail investors. Past performance is not a guarantee of future results. 52

54 Our scale, experience and expertise across our alternatives platform allow us to uniquely deliver for our clients On-the-ground presence in major world markets provides local market intelligence Enhanced access to deal flow and alternative investment opportunities due to Invesco scale, reputation and access to market participants Expertise in a broad range of securities and financial instruments (e.g., equities, credit, currencies, commodities, derivatives) Fully integrated global trading platform with a dedicated alternatives desk Multi-layered enterprise risk governance framework that spans both business/operational and investment risk across the alternatives platform 53

55 Discussion topics Uniquely positioned to meet client needs Factor investing Fixed income Alternatives and multi-asset Real estate Global Targeted Returns Financial overview Well positioned as a global leader Marty Flanagan Bernhard Langer Dan Draper Greg McGreevey Colin Meadows Scott Dennis David Millar Loren Starr Marty Flanagan Questions 54

56 Table of contents The case for real estate Invesco Real Estate (IRE) IRE s investment strategies 55

57 The case for real estate Competitive total returns Diversification Income yield Exposure to global markets 56

58 Estimated size of major asset classes Real estate is a significant part of the investment universe globally Estimated size of major asset classes globally (USD trillions) Global Bond Global Equity Global Real Estate Notes: 1. Size of the global bond market is estimated based on the total market capitalization of the Barclays Global Aggregate Index as at Dec. 31, Size of the global equity market is estimated based on the total market capitalization of the MSCI World Index USD as at Dec. 31, Size of the global real estate market size is estimated based on each region s investable stock as defined by latest DTZ Money into Property as of December 31, Sources: Invesco Real Estate using data from Bloomberg and DTZ. 57

59 Historical target allocations Percent of total assets (%) Real Estate US Stocks Foreign Equities Fixed Income VC/Private Equity Cash Hedge Funds Other Non-US Respondents 8.5% 12.8% 22.0% 37.7% 7.8% 2.9% 0.8% 7.4% Source: Kingsley Associates, Institutional Real Estate, Inc Annual Investor Study 58

60 Correlations of real estate and other asset classes Direct real estate is a potential diversifier to other asset classes Risk and return profile of selected asset classes (quarterly and local currency) US UK Australia Market Sector Index NCREIF IPD IPD MSCI World Index MSCI USA Index MSCI Europe Index MSCI Far East Index MSCI Australia Index FTSE EPRA/NAREIT Developed Index FTSE NAREIT All Equity REITs Index FTSE EPRA/NAREIT Developed Europe Index FTSE EPRA/NAREIT Developed Asia FTSE EPRA/NAREIT Australia Index Barclays Global Aggregate Bond Index BofA Merrill Lynch Corporate/Government Bond Note: Correlations calculated using the longest available common time period from 1Q 1990 through 4Q 2015, except for IPD-UK from Q to Q4 2015, and Barclays Global Aggregate Total Return from Q to Q Sources: NCREIF (National Council of Real Estate Investment Fiduciaries), IPD (Investment Property Databank), Barclays, Lipper Inc, Bloomberg and FTSE EPRA/NAREIT Index as of Q and in local currencies. 59

61 Risk/return profile of selected asset classes The characteristics of listed and unlisted real estate are different Risk and return profile of selected asset classes (annual and local currency) average annual total return (% per annum) Canada Canada Bonds Private Real Estate US US Australia UK Australia UK Equities US UK Canada US Australia Australia Canada Risk (average annual standard deviation) Countries Government bonds Barclays Aggregate Equities S&P/ASX 200, FTSE100, S&P 500 Private real estate NCREIF, IPD Public real estate FTSE/EPRA NAREIT Australia Canada United Kingdom United States Sources: Invesco Real Estate using data from NCREIF, IPD, NAREIT, Barclays, and Macrobond. Past performance is not indicative of future results. An investment cannot be made in an index. UK Public Real Estate

62 Return expectations Expected nominal total rate of return (%) Non-US Respondents Real Estate US Stocks Foreign Equities Fixed Income VC/Private Equity Cash 1.1 Hedge Funds 9.7% 6.6% 7.1% 3.3% 12.3% 1.7% 8.8% Source: Kingsley Associates, Institutional Real Estate, Inc Annual Investor Study 61

63 Global real estate investable universe Total investable universe 1 (US$ billions) = $24,759 billion 5,935 24% United States 11,349 46% Asia Pacific Europe 7,476 30% 1 Total Investable Universe market size is estimated based on each region s investable stock as defined by latest DTZ Money into Property as of year-end

64 Real estate investment styles Each has a different risk and return profile Return High Return/Opportunistic Value-Added/Enhanced Real Estate Debt Global Securities US Income Core/Stabilized Risk For illustrative purposes only. Source: Invesco Real Estate. 63

65 Strategies targeted by private real estate investors There continues to be sustained interest across the risk spectrum Strategies targeted by private real estate investors in the next 12 months as of Q3 2015(%) 70% Increasing Risk Proportion of Fund Searches 60% 50% 40% 30% 20% 10% 60% 25% 56% 46% 13% 0% Core Core-Plus Value-Added Opportunistic Debt Distressed 6% Source: Invesco Real Estate using data from Preqin as of October

66 The 2016 outlook for global real estate rents More varied economic prospects are leading to divergence in fundamentals Rental growth slowing Office sector Industrial sector Residential sector Retail sector Hong Kong, Stockholm Rents falling London, Tokyo Beijing, Seattle, Shanghai, Singapore London City, Beijing, Shanghai Hong, Kong, Riverside Hong Kong, Seattle Singapore Beijing, New York, San Francisco, Shanghai Oakland Denver Hong Kong, Stockholm Los Angeles Beijing, Los Angeles, Seattle, Seoul, Shanghai Los Angeles, Tokyo San Francisco Frankfurt, New York, Tokyo, Seoul Singapore Stockholm, Frankfurt, Melbourne, Munich Melbourne, Sydney London, Madrid, New York, Washington DC Sydney, Washington DC Houston Los Angeles Houston New York Washington DC Madrid, Sydney Singapore Houston Houston Melbourne Rents rising Paris (CBD) Washington DC Paris (IdF) Rental decline slowing Note: Market positions are not relative and comparable. Duration of market cycles also varies. This does not constitute investment advice. There is no guarantee that the results will be realized. Source: Invesco Real Estate as of September

67 Invesco Real Estate As of Dec. 31, 2015 $64.4 Billion Under Management 434 Employees Worldwide; 21 Offices; 16 Countries San Francisco Newport Beach New York Atlanta Dallas Luxembourg London Warsaw Paris Prague Madrid Munich Milan Beijing Seoul Tokyo Shanghai Hong Kong Hyderabad Singapore Sydney 195 N. America 132 Europe 107 Asia Americas Direct Real Estate Investments $25.9 BN Under Management Since 1983 Global Securities Management $25.8 BN Under Management Since 1988 EMEA Direct Real Estate Investments $7.4 BN Under Management Since 1996 Asian Direct Real Estate Investments $5.3 BN Under Management Since 2006 Source: Invesco Real Estate (IRE) Total employees and assets under management as of December 31,

68 Invesco Real Estate vision Global real estate investment management business One corporate culture Global perspective Local expertise/execution Best practices Performance driven 67

69 Invesco Real Estate ranked in the top 10% of Investment Managers by AUM included in the latest IREI Investment Guide Report Source: Institutional Real Estate, Inc. Information for this special report was compiled through industry surveys of participating firms and, in some cases, from public information sources. 68

70 Invesco Real Estate ranked in the top 10% of REIT Managers included in the latest IREI Investment Guide Report Source: Institutional Real Estate, Inc. Information for this special report was compiled through industry surveys of participating firms and, in some cases, from public information sources. 69

71 Invesco Real Estate investment strategies North American Direct Real Estate Strategies Separate Accounts Core Income Value Added/Opportunistic Structured Investments European Direct Real Estate Strategies Core Value Added Commingled & Institutional Funds Mutual Funds Public Markets Asian Direct Real Estate Strategies Core Value Added/Opportunistic J-REIT Global Securities Strategies US Real Estate * Global Real Estate ** Global Real Estate Income Global (Ex-US) Real Estate Global Infrastructure MLPs * US: Institutional separate accounts and the Institutional Collective Trust closed to new investors ** Global: Institutional separate accounts closed to new investors As of December 31, Not all funds/strategies mentioned are registered in all jurisdictions, or available to all investors. Some funds are currently under development. 70

72 Three things that distinguish Invesco Stability of People Senior management team has been together an average of 28 years 1 Stability of Firm Investment Management only focus Stability of Investment Process Developed and fine tuned since Senior management is comprised of 5 founding members of the Invesco Real Estate business platform Photographs shown above represent recently acquired core real estate assets. For illustrative purpose only. 71

73 Discussion topics Uniquely positioned to meet client needs Factor investing Fixed income Alternatives and multi-asset Real estate Global Targeted Returns Financial overview Well positioned as a global leader Marty Flanagan Bernhard Langer Dan Draper Greg McGreevey Colin Meadows Scott Dennis David Millar Loren Starr Marty Flanagan Questions 72

74 Invesco Global Targeted Returns Strategy Agenda The Invesco Multi Asset team who we are and why we are here What we do and how we do it our philosophy and process Why it matters the opportunity and our performance 4 Conclusion 73

75 Who we are and why we are here Invesco Perpetual, a highly regarded investment team cross asset-class expertise, with a long-term, highconviction culture Nick Mustoe Chief Investment Officer 66 investment personnel with an average of 16 years experience US$127.5bn1 invested across over 40 countries UK Equities European Equities Global Equities Emerging Equities US Equities Asian Equities Japan Equities Fixed Interest Multi Asset Investment professionals Average years at Invesco Perpetual Average years industry experience Global Targeted Returns Strategy Managed by the Invesco Perpetual Multi Asset team Launched on 9 September 2013 Performance: % from inception to 29 February Volatility: 4.00% from inception to 29 February 2016 Assets under management: US$11,093,506 across 3 domiciles at 29 February 2016 Source: Invesco as at 31 December The Global Equities team is composed of 6 dedicated investment professionals and 14 Portfolio Managers/Analysts drawn from the Invesco Perpetual UK, European, Emerging, US, Asian and Japan equities teams. 2 Henley investment centre AUM. 3 Global Targeted Returns UK Composite. 74

76 Who we are and why we are here Clear focus on high quality conviction investing a proven track record Invesco Perpetual ICVCs 1 and Invesco SICAVs 2 managed by the Henley investment team Asset weighted performance to 29 February % % 49% 65% % 40 18% % 24% 21% % 9% 10% 1 year 3 years 5 years 4th Quartile 3rd Quartile 2nd Quartile 1st Quartile Past performance is not a guide to future returns. Source: Invesco, Lipper and Morningstar 2015 as at 29 February This makes use of the Investment Association (IA) peer ranking for each ICVCs primary share class. 2 This makes use of the Morningstar peer ranking of the primary share class of Luxembourg and Ireland domiciled funds. Excludes fund-of-funds and passively managed products. May not sum due to rounding. 75

77 Who we are and why we are here An experienced Multi Asset team core investment team with broad multi discipline support A team of macro specialists solely focused on the Invesco Global Targeted Returns strategy >7 years working together Years of experience David Millar, FIA: Head of Multi Asset 27 Dave Jubb, FIA: Fund Manager 33 Richard Batty, PhD: Fund Manager 21 Gwilym Satchell, PRM: Risk Manager 7 Georgina Taylor: Product Director 15 Clive Emery: Product Director 18 Danielle Singer, CFA: US-based Product Director 14 Saul Shaul: Fund Analyst 9 Steve Hawes: Research Analyst 5 Mike Marshall, CFA: Risk Analyst 9 Invesco: broad multi discipline support Investment expertise Invesco Ltd. s Chief Economist Monthly economic update 66 Henley-based investment professionals Monthly global equity meetings More than 750 Invesco investment professionals worldwide Global investor forum Invesco infrastructure Governance Dealing Operations Marketing support Source: Invesco Perpetual as at 31 December Years of experience subject to rounding. 76

78 Who we are and why we are here Invesco a global platform committed to investment excellence Invesco believes the best investment insights come from specialised investment teams with discrete investment perspectives, operating under a disciplined philosophy & process framework with strong risk oversight. Invesco Asia-Pacific Invesco Canada Invesco Fixed Income Invesco Fundamental Equity Invesco Global Asset Allocation Invesco Global Core Equity Invesco Perpetual Invesco PowerShares Invesco Private Capital Invesco Quantitative Strategies Invesco Real Estate Invesco Unit Investment Trusts WL Ross & Co. Corporate access Global product distribution Independent risk management Global operating platform Source: Invesco as at 31 December Not all of the capabilities listed are available in all countries, nor are they available on all platforms. Please consult your Invesco representative for more information on any of the capabilities mentioned. 77

79 What we do and how we do it Our philosophy and process Investing in ideas Total independent risk Diversification benefit Target return: 3-month LIBOR plus 5% on a rolling, three-year annualised basis* Target volatility: Less than half global equity 2 volatility over a rolling, three-year period* Portfolio: Typically individual investment ideas across asset classes 1 with a time horizon of two to three years Portfolio risk Investment philosophy: Unconstrained research combined with a robust risk based management process For illustrative purposes only ideas as at 29 February MSCI World. * Gross of fees. There is no guarantee this performance target or volatility target will be achieved. 78

80 What we do and how we do it Investing in ideas a repeatable three-step process 1 Research 2 Fund management 3 Implementation Thematic T Economic E Approving ideas Combining ideas Analytic A Implementing ideas Managers M Risk Scenarios Structure Liquidity Order Comply Execute Review Portfolio review and oversight For illustrative purposes only. 79

81 What we do and how we do it Approving ideas targeted ideas across asset classes 1 Research Idea 1: The strength of the corporate sector European equities Alpha Strategies Idea 3: Diverging economic outlook Idea 2: Interest rates lower for longer US consumer staples vs discretionary Idea 4: Market Liquidity Equities Chilean peso vs Australian dollar Currencies UK & US 30-year swap spreads Government Bonds Equities Government Bonds Corporate Bonds Real Estate Alpha Strategies Volatility Instruments Inflation Products Currencies Commodities Source: Invesco as at 29 February For illustrative purposes only. 80

82 What we do and how we do it Approving ideas our central economic thesis 1 Research Low, but positive, global economic growth Uncertain market impacts from changing liquidity Low inflation continues globally Select opportunities in risk assets Higher levels of market volatility to persist Source: Invesco as of 31 December For illustrative purposes only. 81

83 What we do and how we do it Combining ideas achieving diversification 2 Fund management A portfolio designed to target equity-like returns for less than half the risk of global equities over a rolling, three-year period 1 Volatility - UK Equity vs Rates Total independent risk 15.12% 3 Independent risk Diversification benefit 50% of global equity risk 4 Total portfolio risk 4.02% 2 Portfolio risk Volatility - Japanese Yen vs US Dollar Volatility - Australian Dollar vs US Dollar Volatility - Asian Equities vs US Equities Interest Rates - UK Interest Rates - Sweden vs Europe Interest Rates - Swap Spreads Interest Rates - Selective EM Debt Interest Rates - European Curve Steepener Interest Rates - Australia vs Europe Equity - US Staples vs Discretionary Equity - US Large Cap vs Small Cap Equity - Japan Equity - Germany Currency - US Dollar vs Euro Currency - US Dollar vs Canadian Dollar Currency - Norwegian Krone vs UK Pound Currency - Japanese Yen vs Korean Won Currency - Indian Rupee vs Chinese Renminbi Currency - Chilean Peso vs Australian Dollar Credit - European Curve Flattener Commodity - Commodity Carry Credit - Selective Credit Equity - UK Equity - Selective Asia Exposure Equity - Global Equity - European Divergence Source: Invesco Perpetual as at 29 February There is no guarantee this target will be achieved. For illustrative purposes only. 2 Portfolio risk the expected volatility of the fund as measured by the standard deviation of the current portfolio of ideas over the last three and a half years. 3 Independent risk the expected volatility of an individual idea as measured by its standard deviation over the last three and a half years. 4 Global equity risk is the expected volatility of the MSCI World index as measured by its standard deviation over the last three and a half years, 12.23% 29 February

84 What we do and how we do it Combining ideas stress testing and scenario analysis 2 Fund management Scenario 1. Regulatory stress testing of historic events by Invesco s independent risk function 2. Analysis by the Multi Asset team of possible scenarios going forward Characteristics UK Macro Meltdown GBP trade-weighted index -15%, UK 10yr yield -75bps, UK 2 year yield +50bps Emerging Markets Dead Stop EM currency index falls 13%, South African 10yr bond yields rise to 15% US Policy Positive S&P 500 to 2300, US dollar index up (+25%) Oil Spill Brent to $100, Oil stocks outperform (+20%), LatAm FX strengthens (+20%) Recession 2016 Euro Exit S&P 500 falls (-50%), US 2yr yield +200bps, US 10yr yield -100bps, Investment grade bond spreads widen (+150bps) Spanish 10 yr yields +500bps, European bank volatility doubles, EUR weakens (-15%) Cash is King S&P 500 falls to 1000, yield on US 10yr Treasuries to 5% Japan s Third Arrow JPY weakens (-20%), Nikkei rises (+30%) For illustrative purposes only. $ = US. 83

85 What we do and how we do it Implementing ideas the operational and trading platform 3 Implementation A global manager with global derivatives dealing capability Global Performance Measurement and Risk and Compliance Integrated global operating platform TRADE EXECUTION Review and Oversight Source: Invesco as at 31 December For illustrative purposes only. 84

86 Why this matters The opportunity and our performance Global Targeted Returns UK Composite Gross performance (%) Returns 3 months 6 months 1 year Since inception 1 Calendar Year (Cum) (Ann) Portfolio gross 3-month sterling LIBOR Out/under performance Realised volatility 2 Realised volatility of global equities Realised volatility as a percentage of equity volatility 27.13% 32.00% 31.86% 28.78% Past performance is not a guide to future returns. Source: Invesco Perpetual as at 29 February Inception date 30 September Standard deviation of weekly returns. An Invesco Perpetual Global Targeted Return Representative Account is shown using weekly data versus the composite data which is provided monthly. Global equities represented by MSCI World Index. Performance figures are shown in sterling on a mid-to-mid basis, inclusive of reinvested income and gross of the Ongoing Charge and portfolio transaction costs. The figures do not reflect the entry charge paid by individual investors. Benchmark and other index information source: Datastream, total return, in sterling. Periods of less than one year are cumulative. This slide is supplemental information to the GIPS-compliant information included in slides Performance figures are shown in GBP and are gross of fees. 85

87 Why this matters Global Targeted Returns Strategy* gross performance versus global equities and target since inception /9/ /9/2013 3/9/2014 6/9/2014 9/9/ /9/2014 3/9/2015 6/9/2015 9/9/ /9/2015 Invesco Perpetual Global Targeted Returns Strategy MSCI World Libor 3M + 500bps Past performance is not a guide to future returns. *This is a representative account of the Global Targeted Returns Strategy Source: Invesco Perpetual and Bloomberg as at 31 January Inception date 9 September Global equities represented by MSCI World Index (total return, in sterling). Fund performance figures are shown in sterling on a mid-to-mid basis, inclusive of reinvested income and gross of the Ongoing Charge and portfolio transaction costs. The figures do not reflect the entry charge paid by individual investors. An Invesco Perpetual Global Targeted Return Representative Account is shown using weekly data versus the composite data which is provided monthly. 86

88 Why this matters Financial performance Total strategy AUM US$11.1bn 2% 9% UK-domiciled fund 26% Lux-domiciled fund (RoW) US-domiciled fund 63% Segregated accounts Historical AUM (US$M) US Canada UK Cross-Border Asia-Pacific Net Flows (US$M) US Retail Canada UK Cross-Border Asia-Pacific Source: Strategy AUM - Invesco Perpetual as at 29 February

89 Why this matters Global pension assets December 2015 Country Total assets 2015 (USD billion) Assets/GDP ratio (%) 6 Australia 1, Brazil Canada 1, Chile France Germany Hong Kong India Ireland Japan 3 2, Malaysia Mexico Netherlands 1, South Africa South Korea Spain Switzerland UK 3, US 5 21, Total 35, Source: Willis Towers Watson, Global Pensions Asset Study Only include pension assets from closed entities. 2 Only include pension assets for company pension schemes. 3 Does not include the unfunded benefit obligation of corporate pension plans (account receivables). 4 Only includes autonomous pension funds. Does not consider insurance companies assets. 5 Includes IRAs. 6 Assets/GDP ratio for individual markets are calculated in local currency terms, and total Assets/GDP ratio is calculated in USD. 88

90 What is a Diversified Growth Fund (DGF)? Taking a cue from across the pond DGFs started as solutions for UK pension plans to de-risk significantly out of equities in 2006 following a significant equity market decline, pension regulation changes and new accounting rules. Today: Gaining traction: DGFs continue to attract assets in the UK, growing to roughly US$200bn in AUM with expectation to grow beyond US$300bn in AUM by Extending reach: DGFs are spreading across the globe into Continental Europe, Asia, Australia and the United States. In the US today, strategies like ours are currently considered as liquid alternatives. 2 But with a pensions market in the US >US$20trn vs >US$3trn in the UK there is a significant growth opportunity. Source: Diversified Growth Funds, Market Intelligence. Spence Johnson Ltd. 2015, Invesco. 1 AUM represented by funds defined by Spencer Johnson Ltd., under the DGF brand. 2 As compared to less liquid vehicles such as hedge funds and private equity. 89

91 Global Targeted Returns Strategy Idea generation: Risk management: Implementation: Cross fertilization of ideas with Invesco Perpetual and Invesco asset class specialists An experienced Multi Asset team running a highly diversified portfolio Leveraging Invesco s infrastructure to attain the best expression of investment ideas across asset classes A market with significant growth opportunity Investing in ideas 90

92 Discussion topics Uniquely positioned to meet client needs Factor investing Fixed income Alternatives and multi-asset Real estate Global Targeted Returns Financial overview Well positioned as a global leader Marty Flanagan Bernhard Langer Dan Draper Greg McGreevey Colin Meadows Scott Dennis David Millar Loren Starr Marty Flanagan Questions 91

93 Invesco outlook discussion topics Benefits of diversification Capital management policy 92

94 We are diversified as a firm Delivering a diverse set of solutions to meet client needs By client domicile By channel By asset class 3% 13% 66% 13% 66% 24% 10% 34% 48% 8% 9% 6% ($ billions) 1-Yr Change ($ billions) 1-Yr Change ($ billions) 1-Yr Change U.S. Canada U.K. Europe Asia $510.7 $21.7 $104.2 $75.4 $63.6 (4.0)% (15.9)% (0.9)% 6.0% 9.1% Retail Institutional $514.8 $260.8 (3.3)% 0.3% Equity Balanced Money Market Fixed Income Alternatives $370.9 $48.1 $64.6 $187.9 $104.1 (3.5)% (4.9)% (15.6)% 3.5% 4.8% Total $775.6 (2.1)% Total $775.6 (2.1)% Total $775.6 (2.1)% As of December 31, Source: Invesco Ltd. 93

95 Our strategic focus generated strong financial results Adjusted operating income $ Millions 5 YR CAGR +11.2% (2010 to 2015) -0.1% Adjusted operating margin Percent 5 YR CAGR +2.7% (2010 to 2015) -1.0% (-0.4 ppts) 1,495 1, ,046 1,012 1, Ending AUM $ Billions -2.0% Share Price Dollars -15.3% 5 YR CAGR +5.3% (2010 to 2015) YR CAGR +6.8% (2010 to 2015) Avg. AUM * EPS** P/E *Adjusted share price as of July 29, 2005 **Adjusted diluted EPS Non-GAAP financial measures, please see appendix page for reconciliation to most relevant GAAP measure. Source: Invesco Ltd.

96 Long-term net flows are diversified across region, asset class & channel Annual Long-Term Net flows, by region (US $ billions) Americas EMEA -2.5 Asia Pacific Organic Growth(%) Total Annual Long-Term Net flows, by asset class (US $ billions) Equity Fixed Income Balanced Alternatives Organic Growth(%) Total Annual Long-Term Net flows, by channel (US $ billions) Retail Institutional Total Organic Growth(%) Note: Organic Growth is defined as long-term net sales divided by Beginning-of-period AUM. Source: Invesco Ltd

97 Benefits of diversification Invesco s global diversification has lead to consistent growth and lower volatility compared to industry average Average Organic growth 6.0% Average Standard Deviation = 3.2% H 4.0% E F IVZ Targeted Organic Growth Rate of 3-5% 2.0% IVZ A B D J L Average Organic Growth = 0.4% 0.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% -2.0% C G Standard Deviation K -4.0% -6.0% I -8.0% Note: Organic growth is based on average annual net long term flows dividend by beginning period AUM from Averages exclude IVZ. Companies represented include: Affiliated Managers, AB Global, Ameriprise, BlackRock, Bank of New York Mellon, Eaton Vance, Federated, Franklin Resources, Janus, Legg Mason, T. Rowe Price, and Waddell & Reed. Source: Invesco Ltd. 96

98 Benefits of diversification Despite more consistent positive organic growth, Invesco trades at a discount to peers Forward P/E Multiple B 16.0 D J 15.0 I 14.0 F 13.0 H 12.0 A K G IVZ E C 11.0 L Organic growth % -10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% Note: 97 Organic growth is based on FY 2015 net long term flows divided by beginning of period AUM. Averages exclude IVZ. Forward P/E multiple is as of 12/31/2015 on FY 2016 earnings estimates from Factset Companies represented include: Affiliated Managers, AB Global, Ameriprise, BlackRock, Bank of New York Mellon, Eaton Vance, Federated, Franklin Resources, Janus, Legg Mason. T. Rowe Price., and Waddell & Reed.

99 Capital management philosophy Our capital management priorities support growth of the business while maintaining financial strength Our capital management priorities have evolved with the growth and success of our business Our capital management policy is executed in a manner consistent with our desire to maintain a strong, investment-grade credit rating Reinvestment in the business This is primarily in the form of seed capital for new products and co-investments Steady annual growth of dividends Share repurchase Strength of the balance sheet including ~$1 billion cash buffer in excess of European regulatory and liquidity requirements 98

100 Capital management philosophy M&A is not an explicit capital priority for Invesco and any potential transaction will have to meet stringent corporate requirements Enhances our ability to meet client needs Aligns with Invesco s long-term strategy Further leverages Invesco s global operating platform Compelling strategic rationale and cultural alignment Meets financial criteria: Internal Rate of Return (IRR) in excess of 20% Cash payback within 7 years Accretive to earnings in year one 99

101 Capital management philosophy Invesco s seed capital composition has changed with the company s evolution over time $ of new products seeded (in millions) Growth rate (%) of new product seeding 77.1% 10% 23% 20% 64% 57% 82% 57% 60% 23% 27% 1% 13% 16% 17% 9% 20% % 12.4% 3.9% -0.5% Equity Fixed Income Alternatives Balanced Source: Invesco Ltd. 100

102 Capital management philosophy A long-term commitment to executing our strategy and delivering consistent results for shareholders Cumulative return of capital (millions) $7,000 $6,000 $5,000 $4,000 Market capitalization comparison (millions) $14,000 $12,000 $10,000 Market Cap $12.3B $3,000 $2,000 New Management Team and Strategy $8,000 $6,000 $1,000 $ $4,000 $2,000 Market Cap $5.3B Capital Returned to Shareholders Since 2005 $6.0B Cumulative return of capital since 2005: $6.0 billion Dividends Buyback $ *Market Capitalization data as of March 16, 2016 Source: Invesco Ltd. 101

103 Capital management philosophy Total outstanding shares have declined 8% since peaking in 2011 post the Van Kampen acquisition m shares issued as consideration to Morgan Stanley Annual weighted average shares outstanding (millions) # of shares (in millions) issued # of shares (in millions) repurchased Source: Invesco Ltd. 102

104 Capital management philosophy The $1 billion in dividends and buybacks paid out in 2015 represents an increase of 32% over % 70% 82% 78% 65% 62% $436 $265 $192 $198 $221 $289 $549 $470 $270 $380 $424 $454 For dividend information reported values represent fiscal year Non-GAAP financial measures, please see appendix page 117 for reconciliation to most relevant GAAP measure. Sources: Invesco Ltd Total payout ratio (dividends + buyback / cash flow) $ amount of dividends paid $ amount of shares repurchased

105 Discussion topics Uniquely positioned to meet client needs Factor investing Fixed income Alternatives and multi-asset Real estate Global Targeted Returns Financial overview Well positioned as a global leader Marty Flanagan Bernhard Langer Dan Draper Greg McGreevey Colin Meadows Scott Dennis David Millar Loren Starr Marty Flanagan Questions 104

106 Our continued investment in the business is fully aligned with client demand trends Client demand themes Search for yield Barbelling and the shift to passive, beta and ETF products Invesco s positioning In 2007, began expansion of global fixed income platform, which today supports the full range of single-sector and multi-sector capabilities Continue to expand the full range of income-related capabilities, including equities, fixed income and alternatives Continued to expand our comprehensive range of all-weather, high-conviction capabilities Began factor investing in 1983 Added Invesco PowerShares in 2006 smart beta line remains broadest, most diverse in the industry Continue to accelerate our ETF business globally Multi-asset strategies and absolute return Introduced risk parity strategy in 2008 Built new Invesco Perpetual multi-asset team beginning in 2012; expanding to new markets Invesco Quantitative Strategies added global market neutral capability in

107 Our continued investment in the business is fully aligned with client demand trends Client demand themes Growing demand for alternatives Invesco s positioning Entered direct real estate business in 1991; completed the globalization of our real estate capabilities by adding the Asia team in 2010 Expanded into private equity through WL Ross & Co. in 2006 Continued to broaden our range of alternative strategies with the launch of more than 40 liquid alternatives offerings globally beginning in 2011; today the range represents one of the most comprehensive lineups in the industry Increasing demand for solutions and new advice models Invesco Solutions builds and manages goal-oriented, multi-asset strategies aligned to client outcomes Early entrant into the digital advice space through the addition of Jemstep in

108 Invesco Solutions builds and manages goal-oriented, multi-asset strategies Expertise in evaluating investment strategies and constructing portfolios designed to meet specific client goals Independent group within Invesco s broader Investments group Not affiliated with any one investment team; flexibility to tap into Invesco s broad range of investment capabilities Substantial experience working across investment teams globally Combines rigorous research, quantitative analysis and qualitative capabilities review with a pragmatic assessment of current market dynamics 107

109 Invesco Solutions has access to a comprehensive array of resources and capabilities around the world Invesco Solutions Substantial resources to support investment selection and ongoing monitoring 1 Product & Market Research (11) Product Management (26) US Product Development (9) Global Performance Measurement & Risk (94) Breadth of investment management expertise Invesco Fixed Income Global liquidity Stable value Global and US broad fixed Global alternatives and bank loans Invesco Quantitative Strategies Quantitative equity Enhanced Long/short strategies Invesco Global Core Equity Emerging markets International and global equity US equity WL Ross & Co. Distressed and restructuring private equity Energy private equity Invesco Perpetual Global and regional equity: UK, European, Asian, Japanese and emerging markets Multi-asset Fixed Income Invesco Asia Pacific Asia Ex-Japan Greater China Japan Australia Invesco Real Estate Global direct real estate Global public real estate Invesco Fundamental Equity US growth equity US value equity International and global growth Sector equity Balanced portfolios Invesco Private Capital Private equity funds of funds Customized portfolios Invesco Canada Canadian regional, sector and global equity Canadian and Global fixed Balanced Portfolios Invesco Global Asset Allocation Global macro Risk parity Commodities Active balanced solutions Invesco PowerShares Index-based and actively managed ETFs Domestic and international Fixed income Commodities Data as of June 30, Data subject to change. 1 Number in parentheses represents total number of team members. 108

110 A strong and growing presence in key markets across the globe A strong and growing presence in the Americas US Top 10 brand equity in US retail and institutional 1 #4 Best Places to Work in Money Management for 2015 from Pensions & Investments 5th largest advisor-sold fund family 2 Over 85% of Invesco US open-end mutual funds AUM in top half of Morningstar and Lipper peer groups for ten-year time period Canada Top 5 brand equity Canada retail Top 10 overall Advisor Perception 5th largest ETF provider 11th largest advisor-sold fund family Rank #2 of AUM in Top Half of peers for 3-year and 5-year periods among competitors A strong and growing presence in EMEA UK Largest retail asset manager in the UK with $64B in AUM; #1 brand with UK advisors 99% of funds rank in the top half of their peer group over 3-years 3 65% of funds assets are in funds with 4 or 5- star Morningstar rating 3 A strong and growing presence in Asia Pacific Cross Border retail Top 10 manager in European Cross Border Retail, with $49B in assets; ranked #9 by gross sales, #52 by net sales (Broadridge SalesWatch) 4 70% of funds rank in the top half of their peer group over 3-years Best European Asset Management Companies (European Funds Trophy) in 2016 Top 10 manager in Morningstar s Offshore Chinese/Greater China Equities Universe of 135 funds Top 7 Japanese equity manager among foreign asset managers 5 In Hong Kong, won Best Institutional House and the Regional Best Client Servicing awards (Asia Asset Management Best of the Best Awards 2015) 71% and 75% of assets rank in the top half of peer group over the respective 3- and 5-years in Asia Pacific Japan Advantage strategy ranks 1st in 5-year performance in the Mercer Universe of 50 funds China JV awarded Best China A-share Manager for three-year performance and its CIO was named CIO of the Year in China by Asia Asset Management (Best of the Best Awards 2015) Any reference to a rating, ranking or an award is not a guarantee of performance and is not consistent over time. For additional information, please see slide