Invesco beats fourth-quarter profit estimates on higher fee income

Adds shares in paragraph 1, analyst comment in paragraphs 9-10, context in paragraphs 6-7

By Ateev Bhandari

Jan 28 (Reuters) - Asset manager Invesco IVZ.N on Tuesday beat Wall Street estimates for fourth-quarter profit, as rising investor allocations to equities boosted inflows and fee income on managed assets, sending its shares up 9%.

WHY IT'S IMPORTANT

Equity markets have rallied as anticipation of a corporate-friendly fiscal and regulatory policy under the Trump administration has fueled investor optimism.

The Federal Reserve's 100-basis-point rate cuts in the later half of 2024 further revived investor interest in passively managed mutual- and exchange-traded funds – Invesco's core offerings – as safe havens like cash and treasury bonds see dwindling yields.

CONTEXT

Investor concerns about the inflationary impact of tariffs and mass deportations by President Donald Trump have in recent weeks sent long-term bond yields up, as investors demand more compensation for risk.

As yields go up, managed and passive equity funds can see outflows, leading to lower fees for asset managers like Invesco

KEY QUOTE

"If Trump goes ahead full tilt with both of those policies and inflation picks up, that is not going to be good for equity markets," said Cathy Seifert, SVP at CFRA Research.

"One hopes that cooler heads prevail."

BY THE NUMBERS

Invesco ended the quarter with $1.85 trillion in assets under management as of Dec. 31, up 16.4% from a year ago, also boosting the corresponding investment management fees.

Invesco's investment management fees rose 12.4% to $1.13 billion during the reported quarter.

The Atlanta, Georgia-based asset manager reported an adjusted profit of $237.3 million, or 52 cents per share, for the October-December quarter, compared with analysts' average estimate of 47 cents per share, according to data compiled by LSEG.

Total net flows stood at $60.9 billion, compared with total net outflows of $8.3 billion a year ago.

Invesco's performance fees, earned when returns meet agreed-upon expectations, rose 75% in the quarter.