Thriving in the new w orld order Martin L. Flanagan President and - - PowerPoint PPT Presentation
Thriving in the new w orld order Martin L. Flanagan President and CEO Invesco Ltd. All inform ation as of Sept. 3 0 , 2 0 1 2 , unless otherw ise noted. Please refer to the Appendix for im portant inform ation. Our discussion today The w orld
Thriving in the new w orld order
Martin L. Flanagan President and CEO Invesco Ltd.
All inform ation as of Sept. 3 0 , 2 0 1 2 , unless otherw ise noted. Please refer to the Appendix for im portant inform ation.
Our discussion today
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The w orld is changing around us Staying ahead of trends in the US Thriving in the new w orld order
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Source: US Labor Departm ent “Job openings and labor turnover survey,” 2 0 1 1 ; US New s & W orld Report, Oct. 5 , 2 0 1 1
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Source: RBC Capital Markets Research, Capital I Q. Data as of Decem ber 3 1 , 2 0 1 1 . As referenced in businessinsider.com article entitled, “A Breakdow n of W here S&P 5 0 0 Com panies Get Overseas Business”.
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Source: Apple earnings reports 2 0 0 7 – 2 0 1 2 ; as of Sept. 3 0 , 2 0 1 2 .
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MMM-PPT-1 10/ 12 1 0 Source: U.S. Census Bureau, International Program (International Database) http: / / www.census.gov/ population/ international/ data/ idb/ region.php (Oct. 11, 2012)
MMM-PPT-1 10/ 12 1 1 Source: U.S. Census Bureau, International Program (International Database) http: / / www.census.gov/ population/ international/ data/ idb/ region.php (Oct. 11, 2012)
MMM-PPT-1 10/ 12 1 2 Source: U.S. Census Bureau, International Program (International Database) http: / / www.census.gov/ population/ international/ data/ idb/ region.php (Oct. 11, 2012)
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Global population has grow n to 7 billion people w orldw ide
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314 1,343 1,205 127 81 206 63 66 61
US China India Japan Germany Brazil UK France Italy
Sources: Invesco; USA Today; US Census Bureau, Population Division, International Programs Center — data estimate as of July 2012; CIA World Fact Book, Eurostat
People, in m illions ( in order of GDP)
China’s 2 0 2 0 GDP projection is equal to the com bined GDPs of several countries
MMM-PPT-1 10/ 12 1 5 Sources: HSBC, CEIC, IMF, CIA as of December 2011. Actual results may differ from current projections.
Zambia Israel Kenya Switzerland Kazakhstan
$500bn–$1,000bn $100bn–$500bn Below $100bn
Egypt Thailand Malaysia Netherlands South Africa Nigeria Denmark Saudi Arabia Korea Argentina Colombia Turkey Canada Russia Belgium Venezuela Singapore Greece Iran Spain Indonesia Poland Argentina Australia Sudan Sri Lanka
Above $1,000bn
Disposable incom e is expected to grow exponentially in developing countries
MMM-PPT-1 10/ 12 1 6 Sources: Bloomberg L.P., Invesco as of December 2011. Actual results may differ from current expectations.
(Millions) 50 100 150 200 250 300 1991 1996 2001 2006 2011e 2016e 2020e China India Russia Brazil Japan US
Household disposable incom e m ore than US$ 1 0 ,0 0 0
China US India Brazil Japan Russia
Established m arkets currently have the lion’s share of $ 5 2 trillion global AUM …
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4,390 23,207 15,374 1,446 379 4,372 345 1,428 1,380
5,000 10,000 15,000 20,000 25,000 Asia Pacific ex Japan United States Western Europe Latin America Eastern Europe Japan Africa Middle East Canada
Green color in chart denotes developed economies as defined by the IMF’s World Economic Outlook Report, April 2012. Source: McKinsey & Company Global Banking Pools; Empirical Research Partners, as of August 2012. Note: Includes all institutional and retail AUM.
Total AUM 2011 Estimates US$Billions
… How ever, China and other em erging m arkets are experiencing the greatest grow th
MMM-PPT-1 10/ 12 1 8 Green color in chart denotes developed economies as defined by the IMF’s World Economic Outlook Report, April 2012 Source: McKinsey & Company Global Banking Pools; Empirical Research Partners, as of August 2012. Note: Includes all institutional and retail AUM.
12.3 5.8 6.3 7.3 11.9 2.9 7.2 11.8 4.3
2 4 6 8 10 12 14 Asia Pacific ex Japan United States Western Europe Latin America Eastern Europe Japan Africa Middle East Canada
Total AUM Grow th 2011-2014 Estimated CAGR %
Sum m ary of significant global trends
developed markets
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Our discussion today
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The w orld is changing around us Staying ahead of trends in the US Thriving in the new w orld order
Key US m arket realities
2 1
Post-crisis uncertainty and broad structural reform creating instability
Risk mitigation driving evolution of asset allocation
Aging US population driving need for income solutions
Increased market complexity accelerating need for advice
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Post-crisis uncertainty and broad structural reform creating instability Advisors and investors are concerned
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driving financial reform
drive employment
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The Great Depression
driving financial reform
drive employment
The Great Recession Then and now
driving financial reform
drive employment
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The Great Depression
driving financial reform
drive employment
The Great Recession Then and now
Lack of confidence in peripheral Eurozone countries continues
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Greece to leave Euro Zone on June 18 (CNBC) Did Europe miss its chance? September 11 (CNN Money) Soros tells Germany “lead
September 9 (Investment Week) Eurozone set for deeper recession September 6 (fundweb) Why adopting the euro is a trap for some nations September 10 (NBC) Merkel tries to calm uproar over Eurozone crisis plans August 26 (Economic Times) Euro crisis down to confidence, not currency, says German Foreign Minister August 31 (CNN) The Collapse of Europe’s Welfare State Exposes its False Hopes — Is America Next August 29 (Forbes)
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20 40 60 80 100 120 140 1940 1960 1980 2000
Projected Actual
Sources: US Office of Management and Budget data through Dec. 31, 2011, Congressional Budget Office’s (CBO) January 2011 baseline budget projections
Percent of GDP
Total US governm ent debt is approaching 1 0 0 %
2017
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Other Federal Spending Social Security Medicare and Medicaid Interest
5 10 15 20 25 30 1962 1987 2012 2037 2062 2087
Source: Congressional Budget Office (CBO), The Long-Term Budget Outlook, July 2012; extended-baseline scenario
Percent of GDP
The im portance of restoring confidence
2 8 Source: Bloomberg L.P. , Invesco. Data as of September 30, 2012. VIX is based on real-time option prices, which reflect investors' consensus view of future expected stock market volatility. During periods of financial stress, which are often accompanied by steep market declines, option prices - and VIX - tend to rise. The greater the fear, the higher the VIX level. As investor fear subsides, option prices tend to decline, which in turn causes VIX to decline. It is important to note, however, that past performance does not necessarily indicate future results.
10 20 30 40 50 60 70 Dec-99 May-01 Oct-02 Mar-04 Aug-05 Jan-07 Jun-08 Nov-09 Apr-11 Sep-12
Uncertainty driving m arket volatility and investor anxiety
VI X - CBOE Market Volatility I ndex
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Post-crisis uncertainty and broad structural reform creating instability How to stay ahead of the trend
various outcomes
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Risk m itigation driving evolution of asset allocation
portfolios
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MMM-PPT-1 10/ 12 3 1 Source: Invesco RIA Survey conducted by Cogent Research, 2012. Results based on web survey of 189 registered investment advisors with $50M+ in AUM.
Delivering absolute return 1 1 % Other 1 2 % Exceeding a benchmark 1 2 % Wealth preservation 2 5 %
I nvesco research indicates advisors are focused on m anaging risk post-crisis
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100 200 300 400 2006 2007 2008 2009 2010 2011 YTD 7/ 12
Alternative Fixed Income US Equities International/ Global Equities
Source: Strategic Insight 7/ 31/ 12 (LT-OE Mutual Funds & ETFs; Includes fund of funds). Values represent sum of annual net flows for each category.
US$ Billions
Flow s into fixed incom e underscore challenges of risk m itigation
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2 0 0 1 : $ 2 7 B
Source: Simfund. Data as of July 31, 2012. Includes fund of funds.
2 0 1 2 : $ 3 7 4 B
Real Estate Bank Loan Nontraditional Bond Commodities Broad Basket Global Real Estate Long/ Short Equity Equity Precious Metals Market Neutral Multi-alternative Currency Managed Futures Bear Market Trading-Based
Alternative m utual fund assets have experienced significant grow th and diversification
MMM-PPT-1 10/ 12 3 4 Source: Simfund. Data as of July 31, 2012. Includes fund of funds.
2 0 0 1 : $ 2 0 8 B 2 0 1 2 : $ 1 ,2 8 7 B
Balanced and Target Risk Target Date World Allocation Retirement Income
Major shift from traditional balanced funds to target date and w orld allocation funds
Source: I nvesco RI A Survey conducted by Cogent Research, 2 0 1 2 . Results based
5,236 7,005 8,109 8,031 9,200 10,100 11,100 12,200 536 786 1,005 1,061 1,300 1,400 1,500 1,700 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 2008 2009 2010 2011 2012E 2013E 2014E 2015E
Mutual Funds ETFs
MMM-PPT-1 10/ 12 3 6 Source: Strategic Insight and Cerulli. 2012-2015 estimated projections, not actual figures.
Projected Mutual Fund and ETF Assets ( US$ Billions)
ETF grow th continues
Risk m itigation driving evolution of asset allocation How to stay ahead of the trend
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Aging US population driving need for incom e solutions
retiring soon
to DC plans
retirement income products
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W hat the industry has been expecting…
retirement age NOW
is from DC plans to IRAs
their own retirement income portfolios
W hat’s actually happening today…
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3.1 4.0 4.9 6.6 9.0 12.3 16.6 20.0 25.6 31.7 35.3 40.1 52.2 69.4
10 20 30 40 50 60 70 80 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030
Source: U.S. Bureau of the Census (middle series projections)
Estim ated Num ber of I ndividuals in US Age 6 5 + ( m illions)
Baby boom ers have started to turn 6 5
E E
Source: “Annual Perform ance Plan for FY 2 0 1 2 ,” Social Security Adm inistration
Sources: Social Security Online Actuarial Publications, “Status of the Social Security and Medicare Programs, A Summary of the 2012 Annual Reports,” Social Security and Medicare Boards of Trustees
20 25 30 35 40 45 50 2000 2002 2004 2006 2008 2010 2012E 2014E 2016E
DB DC IRA
MMM-PPT-1 10/ 12 4 2 Sources: Department of Labor, ICI, U.S. Census Bureau, Federal Reserve, PBGC, EBRI, Cerulli Associates
Retirem ent Market Assets by Segm ent ( % )
I RA assets grow ing at the fastest rate
MMM-PPT-1 10/ 12 4 3 Source: Cerulli Associates. Advisor Portfolio Construction Dynamics. 2011.
Annuitization 1 2 %
Retirement Income Funds 6 %
Dividend-paying equity mutual funds 3 1 %
W hat Advisors “Alw ays Use” for Retirem ent I ncom e
Advisors prefer to build retirem ent incom e portfolios
Aging US population driving need for incom e solutions How to stay ahead of the trend
tomorrow’s outcomes
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I ncreased m arket com plexity accelerating need for advice Key Trends
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Sources: U.S. Departm ent of Labor Em ploym ent & Training Adm inistration, U.S. Departm ent of Com m erce, Survey of the Use of Biotechnology in U.S. I ndustry and U.S. Bureau of Labor Statistics
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Then
Now I ncreasing com plexity for investors
Sources: Phoenix Marketing I nternational, Cerulli Associates. Reasons I nvestors Do Not I ntend to W ork w ith an Advisor Regarding Retirem ent Planning by Retirem ent Stage, 2 0 1 1 .
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Then
colors — even weather protection”
Now Custom ization is expected
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500 1000 1500 2000 2500 3000 2008 2009 2010 2011 1Q 2012
UMA Program Rep As Portfolio Manager Rep As Advisor Mutual Fund Advisory SMA Advisory*
1268.8 1683.9
* SMA Advisory accounts and assets for 2009, 2010 and 2011 are different from the last issue of Central due to firms restating and receiving actual data. Sources: Money Management Institute, Dover Financial Research
Managed Solutions AUM (US$Billions)
Managed solutions business continues to grow
2136.2 2269.2 2480.7
I ncreased m arket com plexity accelerating need for advice How to stay ahead of the trend
actionable information
investor needs
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Our discussion today
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The w orld is changing around us Staying ahead of trends in the US Thriving in the new w orld order
Thriving in the new w orld order
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Thriving in the new w orld order
Martin L. Flanagan President and CEO Invesco Ltd.
All inform ation as of Sept. 3 0 , 2 0 1 2 , unless otherw ise noted. Please refer to the Appendix for im portant inform ation.
Appendix
I m portant I nform ation
The opinions expressed are those of Mr. Flanagan, are based upon current market conditions and are subject to change without notice. This presentation is for informational purposes only. This is not to be construed as an off to buy
investment making decision. As with all investments, there are associated inherent risks. Please
This presentation does no form part of any prospectus. While great care has been taken to ensure that the information contained herein is accurate, no responsibility can be accepted for any errors, mistakes, or omissions or for any action taken in reliance thereon. Asset management services are provided by Invesco in accordance with appropriate local legislation and regulations. Forw ard-looking statem ents This presentation, and comments made in the presentation today, may include “forward-looking statements.” Forward-looking statements include information concerning future results of our
conditions, AUM, acquisitions, debt and our ability to obtain additional financing or make payments, regulatory developments, demand for and pricing of our products and other aspects
“anticipates,” “intends,” “plans,” “estimates,” “projects,” “forecasts,” and future or conditional verbs such as “will,” “may,” “could,” “should,” and “would” as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements. Forward-looking statements are not guarantees, and they involve risks, uncertainties and
urge you to carefully consider the risks described in our most recent Form 10-K and subsequent Forms 10-Q, filed with the Securities and Exchange Commission. You may obtain these reports from the SEC’s website at www.sec.gov. We expressly disclaim any obligation to update the information in any public disclosure if any forward-looking statement later turns out to be inaccurate. For additional information, contact the Invesco representative in your local jurisdiction.
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