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Invesco (IVZ) Ahead of AUM Target, To Increase Staff in China
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Given that Invesco Ltd. (IVZ - Free Report) reached its assets under management (AUM) target earlier than expected, it is planning to increase its headcount in China. IVZ projected its AUM to reach $100 billion by 2023-end. Per Andrew Lo, the head of Asia Pacific at Invesco, the company’s AUM for clients in China already reached $112 billion (an increase of more than 40%) in 2021.
Lo said that the firm plans to hire “a few dozen staff across functions including investment teams” this year for its mutual fund joint venture (JV) business in China.
He added, “We want to continue to expand our investment capabilities because as we look ahead in China we see opportunities in pension, in cross-border investments, in ESG, and in continued market opening up and liberalization. We want to catch up with our growth and position for growth.”
After exceeding its $100-billion AUM target, Invesco has not set a new short-term asset target. Rather, the asset manager is now focusing on expanding its capabilities for new businesses ranging from retirement funds, fund of funds and exchange-traded funds (ETFs) to investment advisory.
Lo said, “The thing to do is really position to build out those capabilities. And the rest will take care of itself.”
Like other foreign firms, Invesco has also been seeking to expand its presence in China’s growing mutual fund market, given the removal of restrictions on foreign ownership in the nation.
As of Nov 30, 2021, China’s mutual fund market was valued at 25.3 trillion yuan ($4 trillion). Moreover, fund launches increased by 32% to a record 1,906 last year, according to China Galaxy Securities Co. data.
Notably, BlackRock (BLK - Free Report) became the first global asset manager to run a wholly-owned mutual fund business in China, following the approval from the China Securities Regulatory Commission (“CSRC”). The CSRC allowed BlackRock’s China fund management unit to begin operations in June 2021.
Like BLK, JPMorgan (JPM - Free Report) , the biggest U.S. bank (in terms of assets), rushed to capitalize on the opportunity provided by China.
In August 2021, JPMorgan received regulatory approval to obtain full ownership of its China securities JV. The CSRC granted the Wall Street banking giant the permission to own a 100% stake in J.P. Morgan Securities (China) Co.
Notably, in November 2020, JPMorgan already raised its stake in the securities venture to 71%, which came after the company completed the transaction to buy a 20% stake from one of the local partners — Shanghai Waigaoqiao FTZ — for 177.7 million yuan ($26 million).
According to Lo, China’s mutual fund industry has been drawing inflows into fixed-income and balanced products, thanks to a low penetration ratio and a shift of wealth into the capital market despite the fact that new fund launches cooled recently as local stocks fell into a bear market.
Our Take
Apart from a strong presence in the United States, Invesco maintains a solid foothold in Europe, Canada and the Asia Pacific. As of Dec 31, 2021, the company’s client AUM outside the United States constituted 29.7% of the total AUM.
Its inorganic growth efforts, along with broad diversification, will likely help IVZ generate further momentum from businesses in such regions.
Over the past year, shares of Invesco have gained 2.7% compared with 5.7% growth recorded by the industry it belongs to.
Image: Bigstock
Invesco (IVZ) Ahead of AUM Target, To Increase Staff in China
Given that Invesco Ltd. (IVZ - Free Report) reached its assets under management (AUM) target earlier than expected, it is planning to increase its headcount in China. IVZ projected its AUM to reach $100 billion by 2023-end. Per Andrew Lo, the head of Asia Pacific at Invesco, the company’s AUM for clients in China already reached $112 billion (an increase of more than 40%) in 2021.
Lo said that the firm plans to hire “a few dozen staff across functions including investment teams” this year for its mutual fund joint venture (JV) business in China.
He added, “We want to continue to expand our investment capabilities because as we look ahead in China we see opportunities in pension, in cross-border investments, in ESG, and in continued market opening up and liberalization. We want to catch up with our growth and position for growth.”
After exceeding its $100-billion AUM target, Invesco has not set a new short-term asset target. Rather, the asset manager is now focusing on expanding its capabilities for new businesses ranging from retirement funds, fund of funds and exchange-traded funds (ETFs) to investment advisory.
Lo said, “The thing to do is really position to build out those capabilities. And the rest will take care of itself.”
Like other foreign firms, Invesco has also been seeking to expand its presence in China’s growing mutual fund market, given the removal of restrictions on foreign ownership in the nation.
As of Nov 30, 2021, China’s mutual fund market was valued at 25.3 trillion yuan ($4 trillion). Moreover, fund launches increased by 32% to a record 1,906 last year, according to China Galaxy Securities Co. data.
Notably, BlackRock (BLK - Free Report) became the first global asset manager to run a wholly-owned mutual fund business in China, following the approval from the China Securities Regulatory Commission (“CSRC”). The CSRC allowed BlackRock’s China fund management unit to begin operations in June 2021.
Like BLK, JPMorgan (JPM - Free Report) , the biggest U.S. bank (in terms of assets), rushed to capitalize on the opportunity provided by China.
In August 2021, JPMorgan received regulatory approval to obtain full ownership of its China securities JV. The CSRC granted the Wall Street banking giant the permission to own a 100% stake in J.P. Morgan Securities (China) Co.
Notably, in November 2020, JPMorgan already raised its stake in the securities venture to 71%, which came after the company completed the transaction to buy a 20% stake from one of the local partners — Shanghai Waigaoqiao FTZ — for 177.7 million yuan ($26 million).
According to Lo, China’s mutual fund industry has been drawing inflows into fixed-income and balanced products, thanks to a low penetration ratio and a shift of wealth into the capital market despite the fact that new fund launches cooled recently as local stocks fell into a bear market.
Our Take
Apart from a strong presence in the United States, Invesco maintains a solid foothold in Europe, Canada and the Asia Pacific. As of Dec 31, 2021, the company’s client AUM outside the United States constituted 29.7% of the total AUM.
Its inorganic growth efforts, along with broad diversification, will likely help IVZ generate further momentum from businesses in such regions.
Over the past year, shares of Invesco have gained 2.7% compared with 5.7% growth recorded by the industry it belongs to.
Currently, Invesco carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.