Good morning, and thank you all for joining us. As a reminder, this conference call and the related presentation may include forward-looking statements, which reflect management’s expectations about future events and overall operating plans and performance. These forward-looking statements are made as of today and are not guaranteed. They involve risks, uncertainties and assumptions, and there can be no assurance that actual results will not differ materially from our expectations. For a discussion of these risks and uncertainties, please see the risks described in our most recent Form 10-K and subsequent filings with the SEC. Invesco makes no obligation to update any forward-looking statements. We may also discuss non-GAAP financial measures during today’s call. Reconciliations of these non-GAAP financial measures may be found at the end of our earnings presentation.

Welcome to Invesco’s First Quarter Results Conference Call. Today’s conference is being recorded. If you have any objections, please disconnect at this time. Now I would like to turn the conference call over to your speakers for today, Marty Flanagan, President and CEO of Invesco; and Allison Dukes, Chief Financial Officer. Mr. Flanagan, you may begin.

Thank you, operator, and thanks everybody for joining us. We look forward to the conversation. As we begin 2021, we remain cautiously optimistic with the vaccine rollout gaining traction as we're emerging from the global pandemic this year. I think this is only confirmed by the increased economic activity we are all seeing; that said, risks do remain. The good news is Invesco is off to a great start this year. As you can see in the results that were reported this morning, and if you’re inclined to follow along, I will be speaking to the highlight slide, which is Slide 3. Our investment key capabilities and the tremendous focus on our clients continue to produce good momentum in our business. We have now achieved nine straight months of net long-term inflows. In the first quarter, net long-term inflows were $24.5 billion. This is a record level of inflows for the firm. This follows net long-term inflows of nearly $18 billion in the second half of last year. This represents nearly a 9% annualized long-term organic growth rate led by net flows into ETFs, continued strength in fixed income, and net inflows into the balanced funds. As you can see on Slide 3, the key areas that were highlighted in January include scale, investment readiness, and competitive strength growth in the quarter. These are areas where investment performances are strong or highly competitive. We’re well positioned for growth. Retail flows significantly improved in the quarter and accounted for $21.2 billion of the $24.5 billion of the net long-term flows, with ETFs, excluding the QQQs, generating net long-term inflows of $16.8 billion. This is also a record for the firm and contributed significantly to the $10 billion of net long-term inflows generated in the Americas. Invesco’s U.S. ETFs, excluding the QQQs, captured 6.7% of the U.S. industry net ETF inflows, which is more than two times our 3% market share. Within private markets, we launched two collateralized loan obligations, which raised $800 million, and we remained focused on our alternative capabilities where we also see the benefits of our MassMutual partnership. MassMutual is committed to over $1 billion to various strategies, including providing a credit facility, which is one of our private market funds. We had net long-term inflows of $6.5 billion within active fixed income, and within active global equities, our nearly $50 billion developing markets fund saw key capability wired in the Oppenheimer transaction, resulting in $1.3 billion of inflows. However, there are still areas for improvement within active equities, where we continue to work and remain focused on those opportunities. Net long-term inflows into Asia-Pacific were $16.7 billion in the first quarter, following $17 billion of net inflows in the second half of 2020. The China joint venture launched nine new funds with $6.2 billion of net long-term inflows. Additionally, our solutions-enabled institutional pipeline has grown meaningfully, with accounts now over 60% of our pipeline at the end of the quarter. Allison will provide more information in a few minutes on the flows, the pipeline, and the results for the quarter. Notably, we generated positive operating leverage, producing an operating margin of 40.2% for the quarter. Strong cash flows have improved our cash position, resulting in no drawdown on our credit facility at quarter end. Our quarterly growth experienced seasonally higher demand for our cash flow. The board also approved a 10% increase in our quarterly dividend to $0.17 per share. Given our historical investments in the business and our recent efforts to better align our organization with our strategy, I’m confident we have the talent, capabilities, resources, and momentum to deliver for our clients and drive future growth and success. With that, I will turn it over to Allison to walk through the results in greater detail.

Thank you, Marty, and good morning, everyone. Moving to Slide 4, our investment performance improved in the first quarter, with 70% and 76% of actively managed funds in the top half of peers on a 5-year and a 10-year basis, respectively. This reflects continued strengths in fixed income, global equities, including emerging markets equities and Asian equities, all areas where we continue to see demand from clients globally. I’ll also note that our published investment performance now reflects Morningstar peer rankings for composites, where U.S. domiciled mutual funds represent the most significant AUM in the composite, whereas previously, we had relied on Lipper data. This transition more closely aligns our data to the investment performance data reviewed by our U.S. clients and is more consistent with how our peers reflect investment performance. Additionally, we’ve expanded the population of AUM included in performance disclosures by about $150 billion for each period presented through the addition of benchmark relative performance data for institutional AUM, where peer rankings do not exist. This approach is used by certain peers and we believe it more meaningfully represents the contribution of our institutional AUM to our performance metrics. Moving to Slide 5, you’ll notice we reorganized our ending AUM and net long-term flow slides to group the ending AUM and net long-term flows together for each cut of our data, by total investment approach, channel, geography, and asset class. We believe this will better illustrate our flows and the context of our overall AUM for each category. We ended the quarter with just over $1.4 trillion in AUM. Of the $54 billion in AUM growth, approximately $25 billion is due to increased market values. Our diversified platform generated net long-term inflows in the first quarter of $24.5 billion, representing 8.8% annualized organic growth. Active AUM of net long-term inflows was $7.5 billion or a 3.4% annualized organic growth rate, and passive AUM of net long-term inflows was $17 billion or a 31.3% annualized organic growth rate. The retail channel generated net long-term inflows of $21.2 billion in the quarter, an improvement from roughly flat performance in the fourth quarter, driven by the positive ETF flows. The institutional channel generated net long-term inflows of $3.3 billion in the quarter. Regarding retail net inflows, our ETFs, excluding the QQQs, generated net long-term inflows of $16.8 billion, including meaningful net inflows into our higher-fee ETF. Net ETF inflows in the U.S. were focused on equities in the first quarter, including a high level of interest in our S&P 500 equal weight ETF, which had $4 billion in net inflows in the quarter. In addition to the S&P 500 equal weight ETF, we had five other ETFs that reported net inflows of over $1 billion each. These six ETFs represented $10 billion in net inflows for the quarter. It’s also worth noting that our Invesco NASDAQ Next Gen 100 ETF, the QQQJ, surpassed the $1 billion AUM mark in the quarter following its inception in October 2020. This is on the heels of our successful QQQ marketing campaign and sponsorship of the NCAA championship in the first quarter. Looking at inflows by geography on Slide 6, you’ll note that the Americas had net long-term inflows of $10 billion in the quarter, an improvement of $7.8 billion from the fourth quarter. The improvement was driven by net inflows in ETFs, institutional net inflows, various fixed income strategies, and importantly, focused sales efforts. Asia Pacific delivered one of its strongest quarters ever with net long-term inflows of $16.7 billion. Net inflows were diversified across the region, with $9.4 billion of these net inflows coming from Greater China, including $8.5 billion in our China JV. The balances of the flows in Asia Pacific were comprised of $3 billion from Japan, $1.9 billion from Singapore, and the remaining $2.3 billion generated from several other countries in the region. Net long-term inflows for EMEA, excluding the UK, were $3.7 billion, driven by retail flows, including particularly strong net inflows of $1.2 billion into our global consumer trends fund, and a strong demand for growth equities capability, which saw demand from across the EMEA region. ETF net inflows in EMEA were $1.6 billion in the quarter, including interest in a wide variety of U.S. and EMEA-based ETFs. Notably, we saw net inflows of $0.5 billion into our blockchain ETF and $400 million into one of our newly launched ESG ETFs in the quarter—the Invesco MSCI USA ESG Universal Screened ETF. Finally, the UK experienced net long-term outflows of $5.9 billion in the quarter, driven by net outflows in multi-asset, institutional quantitative equities, and UK equities. Turning to flows across asset classes, equity net long-term inflows of $9.8 billion saw similar capabilities as I’ve mentioned, including the developing markets fund, the global consumer trends fund, and ETFs, including our S&P 500 equal weight ETF. We continue to see strength in fixed income across all channels and markets in the first quarter with net long-term inflows of $7.6 billion, following net inflows of $8.2 billion in fixed income in the fourth quarter. It’s worth noting that the net inflows in the balanced asset class were $7.3 billion, largely arising from China, and alternative net long-term inflows improved by $4.1 billion due to a combination of inflows in senior loans, commodities, and newly launched CLOs during the quarter. Moving to Slide 7, our institutional pipeline grew to $45.5 billion at March 31 from $30.5 billion at year-end. The growth of the pipeline this quarter includes a large lower-fee passive indexing mandate in Asia Pacific assisted by our custom solutions advisory team. This opportunity allows us to offer a solutions-based differentiated passive investment to meet the needs of a key strategic client, with the potential to expand the relationship over time with access to higher-fee opportunities. We are also able to leverage our in-house indexing capabilities with this mandate. Excluding this large mandate in Asia Pacific, the pipeline remains relatively consistent with prior quarter levels in terms of size, asset mix, and fee composition. While there’s always some uncertainty with large client funding, we currently estimate that between 50% and 65% of the pipeline will fund in the second quarter, including the large indexing mandate. The funding of this mandate will also have a slight downward impact on our net revenue yields next quarter. Overall, the pipeline is diversified across asset classes and geographies, and our solutions capability enabled 61% of the global institutional pipeline and created wins in customized mandates. This has contributed to meaningful growth across our institutional network warranting our continued investment and focus on this key capability. Turning to Slide 8, you’ll notice that our net revenues increased $23 million or 1.8% from the fourth quarter as higher average AUM in the first quarter was partially offset by a $71 million decrease in performance fees from the prior quarter. The net revenue yield, excluding performance fees, was 35.7 basis points, a decrease of three tenths of a basis point from the fourth quarter yield level. This decrease was driven by lower day count in the first quarter that negatively impacted the yield by eight tenths of a basis point and higher discretionary money market fee waivers that negatively impacted the yield by three tenths of a basis point. These negative impacts were partially offset by the positive impact of rising markets and net long-term inflows during the quarter. Going forward, we do expect money market fee waivers to remain in place for the foreseeable future until rates begin to recover to more normalized levels. Total adjusted operating expenses increased by 0.7% in the first quarter. The $5 million increase in operating expenses was driven by higher variable compensation as a result of higher revenue, as well as the seasonal increase in payroll taxes and certain benefits offset by the reduction in compensation related to performance fees recognized last quarter and savings realized from our strategic evaluation. Operating expenses remain lower than historic activity levels due to the pandemic's impact on discretionary spending, travel, and other business operations that have persisted throughout the quarter. Moving to Slide 9, we update you on the progress we’ve made with our strategic evaluation. As we’ve noted previously, we’re looking across four key areas of our expense base: our organizational model, our real estate footprint, management of third-party spend, and technology and operations efficiency. Through this evaluation, we will invest in key areas of growth, including ETFs, fixed income, China, solutions, alternatives, and global equities, while creating permanent net improvements of $200 million in our normalized operating expense base. A large element of the savings will be generated from compensation, which includes realigning our non-client facing workforce to support key areas of growth and repositioning to lower-cost locations. The remainder of the savings will come through property, office, technology, and G&A expenses. In the first quarter, we realized $16 million in cost savings, $15 million of which was related to compensation expense. The remaining $1 million in savings was related to facilities, which has shown in the property, office, and technology category. The $16 million in cost savings or $65 million annualized, combined with the $30 million in annualized savings realized in 2020, brings us to $95 million or 48% of our $200 million net savings expectation. As for timing, we still expect approximately $150 million or 75% of the run rate savings to be achieved by the end of this year, with the remainder realized by the end of 2022. Of the $150 million in net savings expected by the end of this year, we anticipate that roughly 65% will be realized through compensation expense, while the remaining 35% will be spread across occupancy, tech spend, and G&A. The breakdown for the remaining $50 million in net savings in 2022 will be similar. With $95 million of the expected $150 million in net savings by the end of this year already in the quarterly run rate, the degree of net savings per quarter will moderate going forward. In the first quarter, we incurred $30 million of restructuring costs. In total, we’ve recognized nearly $150 million of our estimated $250 million to $275 million in restructuring costs associated with this program. We expect the remaining transaction costs for the realization of this program to be in the range of $100 million to $125 million over the next two years, with about half of this amount occurring in the remainder of 2021. As a reminder, the costs associated with the strategic evaluation are not reflected in our non-GAAP results. Our expectations for first and second quarter operating expenses to be relatively flat compared to the first quarter, assuming no change in markets and FX levels from March 31. We entered the second quarter with $1.4 trillion in AUM driven by net inflows and market tailwinds from the first quarter. These tailwinds will have a modest impact on both revenues and associated variable expenses. The impact on expenses will be offset by lower compensation expenses related to seasonality and payroll taxes and benefits, along with incremental savings related to the strategic evaluation. We also expect a modest increase in marketing-related expenses, as the first quarter is typically the low point in marketing spend annually. One area that is still more difficult to forecast at this point is when COVID-impacted travel and entertainment expense levels will begin to normalize. Given the rollout of vaccines, we believe we might begin to see a modest resumption of travel activity later in the second quarter, and perhaps more significantly in the third quarter. Moving to Slide 10, adjusted operating income improved by $18 million to $503 million for the quarter, driven by the factors we just reviewed. Adjusted operating margin improved 70 basis points to 40.2% compared to the fourth quarter. Most importantly, our degree of positive operating leverage reflected in our non-GAAP results is 2x for the quarter, underscoring our focus on driving scale and profitability across our diversified platform. Non-operating income included $25.9 million in net gains for the quarter, compared to $31.9 million in net gains last quarter, as higher equity earnings, primarily from increased yield marks, were more than offset by lower market gains on our seed portfolio compared to the prior quarter. The effective tax rate for the first quarter was 24% compared to 21.7% in the fourth quarter. The higher effective tax rate on net income was primarily due to an increase in income generated and higher taxing jurisdictions relative to total income. We estimate our non-GAAP effective tax rate to be between 23% and 24% for the second quarter. The actual effective tax rate may vary from this estimate due to the impact of non-recurring items on pre-tax income and discrete tax items. Turning to Slide 11, our balance sheet cash position was $1.158 billion at March 31, with approximately $760 million of this cash held for regulatory requirements. Cash balances are impacted by the typical seasonal increases in cash needs in the first quarter related to our compensation cycle. We also paid $117 million on a forward share repurchase liability in January. In addition to using excess cash to reduce leverage, we seek to improve liquidity and our financial flexibility. Despite the increased cash needs in the quarter, the revolver balance was zero at the end of March, consistent with our commitment to improve our leverage profile. Additionally, the remaining forward share repurchase liability of $177 million was settled in early April. We also renegotiated our $1.5 billion credit facility, extending the maturity date to April 2026 with favorable terms. We believe we’re making solid progress in our efforts to build financial flexibility, and as such, our Board approved a 10% increase in our quarterly common dividend to $0.17 per share. The share buybacks dating back to last year, which reflects $45 million in the first quarter of this year, are related to the vesting of employee share awards. We remain committed to a sustainable dividend and returning capital to shareholders over the long term through a combination of modestly increasing dividends and share repurchases. In summary, Marty highlighted the growth we’ve seen in our key capabilities and our continued focus on executing the strategy that aligns with these areas. We’re also executing on our strategic evaluation and reallocating our resources to position us for growth. Finally, we remain prudent in our approach to capital management. Our focus on driving greater efficiency and effectiveness into our platform, combined with the work we’ve done to build a global business with a comprehensive range of capabilities, puts Invesco in a very strong position to meet client needs, run a disciplined business, and continue to invest in and grow our franchise over the long term. With that, I’ll open it up to the line for questions.

Thank you. Our first question is from Dan Fannon with Jefferies. You may go ahead.

Thanks. Good morning. Can you discuss the strengths and needs a bit more broadly? I know you gave a lot of detail around where the flows came from in balance as well being a source of the asset flows. But I’m curious about seasonality in that part of the world versus maybe what we see in the U.S., which is typically the strongest and then kind of the outlook for that region, given the strength that you just generated in the first quarter?

Dan, was it Asia? I’m sorry. Yes. Let me have a couple of comments now, and Allison can speak to it also. So look, there’s this question I think we’ve all talked about the strength of Asia, China in particular. China is real for us and very meaningful. You’ve seen recent growth over the last couple of years. I’d say the first quarter was robust, but the market that had a pullback—you have to anticipate that it’s slowed down a little bit here. When you look at the full year, it’s going to continue to be an important contributor, and we’re just looking for further growth in the years to come.

Yes. The only thing I’d add is that sentiments may have shifted just a little bit there in recent months, with very strong sentiment in the fourth quarter and the first couple of months of the first quarter. We’ve definitely seen a little bit of softening there and a pullback in March and into April. It’s going to be a place to watch. I would note, broadly speaking for Asia-Pacific, we are starting to see flows really begin to come in a balanced profile across the region, with China being significant as Marty said. In total, a little over $9.5 billion of those flows came from IGW and Greater China. But as I mentioned, we also saw $3 billion inflows from Japan and $2 billion from Singapore, with $2.3 billion from other regions. Also, as noted in the pipeline, we’re seeing very strong mandates coming in broadly from Asia-Pacific. So, I think it’s not so much seasonality as maybe a sentiment to keep an eye on.

Thanks. That’s helpful. And then just to follow up on the strategic evaluation that you’re having progress in several quarters. Just thinking about the $200 million in aggregate, would you consider that number to be conservative? Is there anything about it being deep reinvested back in the business or is there potential for some upside to those savings?

I’d say you definitely see us making good progress with $95 million of the $200 million achieved at this point. The $200 million remains our net target. We are focused on reinvesting savings and continuing to reallocate those savings into areas of growth. So at this point, I don’t think we’re suggesting that the $200 million is conservative. We are going to be consistently looking at how we continue to transform our business and ensure that we are spending in areas where we can generate the most growth, focusing on reallocating our expenses with that mindset.

Thank you. The next question is from Patrick Davitt with Autonomous Research. You may go ahead.

Good morning, everyone. Can you give us a little more color on the somewhat outsize redemption rate on the institutional side? Is there anything idiosyncratic or a common theme you could point to in that acceleration? And in that vein, any known lumpy redemption as an offset to the very strong unfunded pipeline you’ve highlighted?

Yes. I wouldn’t call it any one specific thing in the institutional redemptions, but it’s similar to when money comes in; it’s hard to predict quarter-to-quarter. So I wouldn’t point to an elevated level of redemptions going forward. We’ll continue to follow clients' desires on the timing of redeeming or giving us money.

Yes. I agree. It’s lumpy. There’s nothing significant happening there. The gross funding out of the institutional pipeline was about $21.5 billion. You’re seeing the pipeline maintain its size even excluding this significant mandate. Plus, we’re seeing many fundings come not just from the pipeline but existing client augmentation activity outside the pipeline. It’s important to note the pipeline is not the only source of our institutional flow.

Thank you. The next question is from Craig Siegenthaler with Credit Suisse. You may go ahead.

Thanks. Good morning, everyone. I wanted to follow up on Dan’s question on Asia and I heard your commentary on flows by geography, which was very helpful. But could you help us walk through what the product mix looked like inside the $17 billion of flows and any color in terms of channel mix retail versus institutional?

So I can hit some of the high levels and Allison can add to it. Within China, it’s heavy on equities. As Allison noted, balanced products have historically been a major driver. Japan continued to see fixed income during the quarter. The big flows were mainly driven by retail, though in Japan, there was institutional activity.

In terms of asset class mix, I’d highlight that half of it is coming from balanced, and the remainder is coming across equity and fixed income capabilities. Our balance products are driving significant flows. The retail and institutional mix was about $13 billion on the retail side out of the total $16.6 billion.

Great. Super helpful there. As my follow-up, I wanted your perspective on the May 24 lockup expiration for MassMutual. Is there any thought about extending that into the future? If it isn’t, could we expect some stock sales from MassMutual later this year?

So look, let me start here. The relationship continues to be very strong. Yes, we are continuing to do more together, especially around alternatives for us. There’s going to be—obviously not just with equity, but also with the preferred. I can’t speak for them, but they’ve expressed their happiness with the relationship and the investment. We anticipate this will continue.

Thank you. The next question is from Ken Worthington with JPMorgan. You may go ahead.

Good morning. Capital gains and dividend tax rates seem poised to rise materially for the wealthy. What do you think are the implications for wealthy investors in terms of their investments? Do you think this drives any meaningful reallocation as these new taxes go through? And are there opportunities for Invesco in product development to help these wealthy investors adapt to a much higher U.S. tax rate and probably higher taxes globally?

Ken, great question. If I knew the answer, I wouldn’t have a shot probably. But the reality is, we’re still very focused on this. The firm has moved our businesses to focus on a lot of high-net-worth individuals within the wealth management channels, supported by the solutions capability we’ve developed over the past years. Tax-managed strategies will continue to be a focus, especially with things like municipal bonds that remain very important. We have a strong franchise in that area, and we will continue to work on getting people access to equity for growth.

Okay, thank you. For a follow-up, dividends and capital management—so you paid down a number of obligations through April 1. The balance sheet is in much better shape than it was a year ago. So how do we think about balancing capital return with further strengthening the balance sheet as we look through to the rest of the year? And how are you thinking about a payout ratio for 2021?

Sure. Our capital priorities are consistent with what you’ve heard from us over the last several quarters. We’re making good progress against those, and you can see that progress in what we’ve announced today. We remain committed to financial flexibility that allows us to reinvest in the business and support future growth. This is our priority—to create that financial flexibility to reinvest in growth and capabilities. We also want to strengthen our balance sheet and return excess cash to shareholders. We were able to announce the common dividend increase today. We are focused on stable and modestly increasing dividends. In terms of a payout ratio, we’re thoughtfully considering how to continue improving it. The decision to cut the dividend last year was not made lightly, but it was a good decision and has allowed us to improve our financial flexibility. As we’ve made progress with our liabilities and managing our leverage, this gives us the opportunity to consider modest increases in that dividend over time. We think a 10% increase is appropriate for where we are today and the earnings profile we have, but we believe there’s room for improvement in the future.

Great. Thank you very much.

Thank you. The next question is from Brian Bedell with Deutsche Bank. You may go ahead.

Good morning, folks. Maybe Allison, just to stay with you on the topic of expenses. If you can talk a little bit about the outsourcing deal with State Street. I know that’s a longer-term endeavor, and I believe that’s over and above the $200 million; it’s really to frame the potential net savings from that. But maybe just to characterize the timing of that and whether the vast majority of the assets of Invesco that are serviceable by State Street are moving to that platform. And whether that, in a normal market environment, gives you confidence that you can save up to a 40% operating margin level.

Yes. As you know, this is definitely a longer-term installation. You did see the announcement via State Street a couple of weeks ago. The installation is going to have benefits that will be realized over a time horizon extending beyond our existing cost transformation program, which runs through 2022. Benefits from Alpha will not be fully realized until 2023, 2024, and beyond. It’s too early at this point to quantify what we expect it to generate. Broadly speaking, we absolutely expect operational efficiencies and risk mitigation to eliminate redundancies that will create real benefits as we scale over the coming years. But too early yet to point to specifics.

It's a very important undertaking for us. The front and back investment platform on it will be very beneficial for the firm.

Okay. That’s a good color. And then Marty, just on ESG, obviously a topic you spoke about quite a bit. Can you size the ESG flows to the franchise in the quarter and the level of what you consider ESG AUM? And possibly, what are you seeing in demand for those products and any updates on the integration of ESG throughout the investment process?

As you pointed out, 75% of all our investment capabilities have ESG inclusion. Our intent is to be at 100%. Currently, that’s about $40 billion, which excludes ESG inclusion. We see strong flows, especially in our ETF lineup historically. Institutional clients, particularly through our solutions group, are actively working to create outcomes that meet their ESG goals. We’re leveraging indexing to help with that as well.

The flows specifically attributed to our ESG capabilities in the quarter were around $4 billion. Notably, we are the second largest ESG ETF provider in the United States, with nine ESG ETFs that total about $9.5 billion in AUM. That $4 billion is a global inflow number for the first quarter. We’re absolutely seeing real strength, underscoring the importance of ESG capabilities.

The other area with bulk is direct real estate. The work with clients continues to show the balance and the other area is our quantitative team is the other area where you have the balance of dedicated ESG capabilities.

Thanks and good morning, everyone. Thanks for taking my questions. Maybe Marty, you talked about this in a while, but you think back over the years about the technology investments under the banner of Intelliflo in the UK. Could you update us on that strategically and where it fits in the organization? How are you starting to leverage that through relationships or flows?

We’ve had several smaller bolt-ons around technology that have all been pulled together in the past year. It’s now under the Intelliflo banner. The success lies primarily with technology that is an analytical tool we work on through our solutions team with institutional clients. We are also beginning to expand outside of the UK to direct the financial advisor channel. That focus is where we’re turning our attention this year. It took a year to pull the rest of the platform together.

Is it possible to attach any type of demand?

Right now, there’s about $900 billion of AUA within that platform. The core capability continues to grow, particularly focused on financial advisors, which will be the future of that platform.

Thank you. The next question is from Brennan Hawken with UBS. You may go ahead.

Thank you, and good morning. This is Adam Beatty in for Brennan. I wanted to follow up on the fee rate, which has trended fairly well recently. How would you characterize the exit rate from the quarter versus the blended average through the quarter? Is it trending upward, downward, or what? Also, in terms of the pipeline, does this large low-fee mandate have a fee rate higher or lower than the current plan for the firm?

Yes. It’s hard to decompose the trending of the fee rate just given the puts and takes of how the calculation is done throughout the quarter. I’d say the puts and takes made the trending relatively stable. The fee rate’s change in the first quarter net revenue yield, excluding performance fees, relative to the fourth quarter’s lower day count negatively impacted the yield, while money market fee waivers were consistent through the quarter. So overall, I’d say, while the net impact is difficult to quantify, the entry and exit rates are likely not that dissimilar due to the nature of the quarter's puts and takes. Looking at the pipeline, excluding the large Asia-Pacific index mandate, the remaining pipeline has been steady in size and fee composition.

Excellent. Makes sense. Thank you for the detail. Turning to alternatives and the flow outlook, I’m trying to grasp how fixed income flows might look set against a backdrop of rising rates and potential inflation. How are you positioned for that?

Real estate can be very strong. Bank loans have come back after being challenged last year. GTR has been a headwind for alternatives, but otherwise, we’ve continued to build out that pipeline.

Look, we’re mindful of rising rates. If the pace of the rises is slow and steady, we’re fine. Some of the areas that will experience changes in mid-year can include resets like bank loans. We haven’t seen a significant headwind from the rising rates yet, but we are paying close attention to recent increases.

Good morning. Thanks for taking the question. Just given the expectation for rising rates and potential inflation, I wanted to get your sense on how the fixed income and balanced platforms are positioned for that backdrop, both in terms of performance impacts and demand?

It’s a great question. Rising rates should help our fixed income outside of the United States. It will depend on the pace and magnitude of interest rate rises. If it’s slow and steady, it will be fine. Areas like bank loans and other resets are on our radar. Currently, we have not seen significant headwinds emerging from rising rates, but we’re keeping a watchful eye.

Great. Thanks a lot.

Thank you. The next question is from Bill Katz with Citigroup. You may go ahead.

Thanks very much for taking my questions this morning. Maybe Marty, one for you. What’s your latest thinking regarding your footprint and any possibilities for M&A?

You’re right, we haven’t discussed this since last quarter. Our costs have not changed. It was crucial for us to complete what we did with Oppenheimer last year. Presently, we feel we have most of the needed capabilities, and the focus would be on areas where we could expand, possibly in credit or infrastructure. That could be an option moving forward.

That’s helpful. And relatedly, how are you deepening your opportunity set in private markets?

We’ve been extending the real estate capability into infrastructure, but it’s early days for us. It’s a competitive space we want to be involved with. Half of our bank loan capabilities are building out private credit, and direct lending has also been developing a nice track record that’s getting closer to scale.

Thank you. The next question is from Mike Cyprys with Morgan Stanley. You may go ahead.

Good morning. Thanks for taking the question about your investment spend. I think you mentioned the investment spending tied to expenses. How much are you investing back in the business? How would you characterize that piece of investment versus what you did two to three years ago? What’s the outlook over the next few years?

We’re not quantifying what’s being reinvested yet. We maintain the $200 million net target, and that’s what we’re tracking. It can be difficult to trace and track how much is being reinvested back into the business as we are always inherently investing. The $200 million allows us to have gross savings that we can reinvest back into the business, and we are focusing on driving operating margin with this approach. There could be significant spectrum in the way we expand our projects moving forward.

On the highlight slide, we mentioned the focus on investment solutions, China, active equity, active fixed income, private markets, factors, and indices. These have been areas of laser focus and beneficiaries of our initiatives.

Great. Thanks for that. Just a quick follow-up on the improving performance trends; could you remind us how much AUM is eligible to earn performance fees, which strategies would you consider the largest contributors to that?

Our AUM eligible for performance fees is around $58 billion, largely from real estate, and a number of contracts relate back to China. Predicting performance fees can be inherently difficult. As of the last quarter, we saw over $70 million in performance fees.

Great. Thank you.

Thank you. The next question is from Chris Harris with Wells Fargo. You may go ahead.

Great. Thank you. A record quarter for flows improved in many areas. The UK was a headwind; could you discuss the drivers of the weakness in that region and your outlook?

UK equities have taken a hit. It’s an ongoing struggle; we’ve made changes to portfolio management and feel positive about the teams there, although it’s still early days.

Got it. One quick follow-up for Allison; other revenue was up quite a bit in the quarter, what drove that and how should we think about the run rate for that line item?

It was largely due to higher UIT and front-end transaction fees. Most of the other revenue is transaction-based and can vary significantly. So, while we had a large quarter, you should not expect that level consistently.

Thank you. Our last question comes from Glenn Schorr with Evercore. You may go ahead.

Thanks so much. On an industry level follow-up on the M&A backdrop, I’m curious if recent success alters the narrative about consolidation or if pressures for scale remain consistent.

The reality is this situation doesn’t change. A rising tide raises all boats, but the fundamental characteristics of our maturing industry have not changed. Every client is expecting more from money managers, wanting to work with fewer money managers. You need more scale in various aspects of the organization, whether in investment capabilities, operational scale, or technology investment—these pressures are not going away.

I appreciate that. Thanks, Marty.

Thank you. That concludes today’s conference. Thank you all for participating. You may now disconnect.