President Marty Flanagan tells WP that volatility helps his firm display its broad range of capabilities
Marty Flanagan, president and CEO of Invesco, has just overseen the purchase of OppenheimerFunds in a deal worth more than $5 billion, making it the 13th largest investment manager in the world and the sixth biggest in the US.
WP got in touch with Flanagan to discuss why the acquisition of OppenheimerFunds – acquired in 1990 by MassMutual for about $150 million - made sense for Invesco and how clients will benefit from the deal.
He also revealed the firm’s approach to late-cycle challenges, volatility and portfolio mix.
WP: What was the attraction of Oppenheimer?
MF: When we first looked at Oppenheimer, the element that stood out the most was the highly complementary investment capabilities. Our objective has always been to deliver a comprehensive range of active, passive and alternative capabilities that helps clients achieve their investment objectives. The combination with OppenheimerFunds and the strategic partnership with MassMutual will meaningfully enhance our ability to meet client needs, accelerate growth and strengthen our business over the long term. The addition of Oppenheimer will create a $1.2 trillion investment management firm that will help us achieve a number of goals: enhance our leadership in global markets, deliver the outcomes clients seek, broaden our relevance among top clients, deliver strong financial results and continue attracting the best talent in the industry.
What benefits does this deal bring to investors? How does it enhance ability to give them to returns they want?
The highly complementary investment and distribution capabilities of Invesco and OppenheimerFunds will strengthen the combined organization's ability to provide more relevant investment outcomes to an expanded number of retail and institutional clients around the globe. Both Invesco's and OppenheimerFunds' clients will benefit from the resulting combination, which will incorporate OppenheimerFunds' high-performing investment capabilities, including a strong international and emerging markets equity franchise, and its powerful US third-party distribution platform, with Invesco's strong and diversified product line-up and global presence, supported by solutions-driven and technology-enabled client outreach.
What does this increase in AUM mean for the company’s vision and ambition?
Our purpose at Invesco is to provide an investment experience that helps people get more out of life. The addition of OppenheimerFunds will create the sixth-largest US investment manager and the 13th largest investment manager globally with more than $1.2 trillion in AUM. The expansion of our business will meaningfully enhance client relevance (more than 5 relationships in the US with $30 billion in AUM each), while creating significant scale for the benefit of our clients. The combination will allow us to make further progress against our purpose by enabling us to provide an even better investment experience and higher level of value to clients.
What are the current challenges for you in the current investment landscape? What’s keeping you up at night?
Given the recent market volatility, flows in the industry globally are among the lowest they’ve been since the financial crisis of 2008. This puts pressure on smaller firms that aren’t adequately resourced. With nearly $1 trillion in AUM (as of Sept. 30, 2018), Invesco is well positioned to help our clients weather the current markets. The volatility actually helps a firm like Invesco, which offers a broad range of capabilities that have strong track records across market cycles.
What’s your approach to late cycle – how are you positioning for the likely shifts this will present?
Over the past ten years, global monetary policies have led many investors to mistakenly believe that a portfolio comprising mostly passive investments will always continue to increase in value. The current market volatility is showing that this is simply not true. We believe strongly that investors are best served over the long term by portfolios that include an appropriate mix of active, passive and alternative capabilities. Our comprehensive range of capabilities is designed to help investors and their financial advisors create portfolios that can achieve investment objectives across market cycles – this is particularly important in the latter part of a long market cycle.
Where do you stand on the traditional 60-40 model? Is it outdated? Does it still work?
We believe clients are best served by leveraging the expertise of a financial advisor, who can review their current assets, their retirement plans and their lifestyle to provide the best counsel regarding allocation. We recognize that each client has a unique set of investment objectives, and a financial advisor is best-positioned to meet each client’s specific needs. Invesco supports financial advisors by providing a comprehensive range of active, passive and alternative capabilities that help them create appropriate portfolios aligned to their client’s investment objectives.
How is Invesco set-up for future success?
I believe the macro trends in our industry will create winners and losers at an accelerated pace over the next few years. With our comprehensive range of capabilities, our talented professionals, our global presence and our well-resourced business, Invesco is well-positioned to help our clients succeed, which will help our firm be successful over the long term.
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