Invesco’s (IVZ) total operating revenues consist of performance fees, investment management fees, service distribution fees, and other revenues. The company generated total operating revenues of $3.7 billion in 9M17 (the first nine months of 2017) versus $3.5 billion in 9M16, a marginal 6.9% increase that mainly came from a rise in performance fees.
Invesco’s investment management revenues consist of fees, which are affected by the value of assets under management (or AUM). The company’s revenues are impacted by market prices of the financial instruments that are in customer portfolios. For example, a fall in market prices would lead to a fall in the company’s revenues.
While Invesco has a market capitalization of $14.8 billion, peers (XLF) like Virtus Investment Partners (VRTS), PNC Financial Services Group (PNC), and Morgan Stanley (MS) have market capitalizations of $0.8 billion, $68.9 billion, and $94.9 billion, respectively.
Investment management fees
Invesco generated investment management fees of $3.0 billion in 9M17 versus $2.8 billion in 9M16, implying a 7.1% increase, primarily reflecting a rise in the average AUM. However, foreign exchange rate fluctuations have negatively impacted the company’s investment management fees.
Invesco garnered service and distribution fees of $635.3 million in 9M17 compared to $614.5 million in 9M16, which implies a 3.4% increase mainly because of favorable momentum in AUM. Moreover, foreign exchange rate fluctuations have positively impacted the company’s service and distribution fees. Invesco posted net revenues of $2.7 billion in 9M17 compared to $2.5 billion in 9M16, an 8.7% rise.
In the next article, we’ll look at other components of Invesco’s operating revenues.