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Why Invesco’s Total Operating Revenues Rose in 4Q17

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Total operating revenues

Invesco’s (IVZ) total operating revenues stood at $1.37 billion in 4Q17 compared to $1.33 billion in 3Q17, a 2.8% rise mainly due to the favorable momentum in investment management fees. The operating revenues rose $2.7 million in 4Q17 compared to 3Q17 because of foreign exchange rate fluctuations.

Invesco witnessed a rise of 3.4% in investment management fees in 4Q17 compared to 3Q17 thanks to the upward momentum in the average assets under management (or AUM). However, the company witnessed a marginal decline of $0.1 million in service and distribution fees in 4Q17 compared to 3Q17.

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Performance fees and other revenues

In 4Q17, Invesco generated performance fees of $43 million compared to $42.3 million in 3Q17, a rise of 1.7%. This rise was mainly due to bank loan products as well as real estate products. The company witnessed a rise in other revenues from $15.5 million in 3Q17 to $16.4 million in 4Q17. This 5.8% rise was mainly due to a rise in real estate transaction fees.

In 2017, Invesco generated total operating revenues of $5.2 billion in 2017 compared to $4.7 billion in 2016, a rise of 9%. This rise was mainly because of an upward trend in investment management fees.

The free-cash-flow yield of Invesco stood at 2.9% on an LTM (last-12-month) basis. Peers (XLF) Lazard Limited (LAZ), Raymond James Financial (RJF), and WisdomTree Investments (WETF) have yields of 0.90%, 4.0%, and -1.1%, respectively, on an LTM basis.

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