Thank you for standing by and welcome to Invesco's Fourth Quarter Earnings Conference Call. All participants will be in a listen-only mode until the question-and-answer session. This call will last one hour. To allow more participants to ask questions, one question and a follow-up can be submitted per participant. As a reminder, today's call is being recorded. Now I'd like to turn the call over to Greg Ketron, Invesco's Head of Investor Relations. Sir, you may begin.

Thanks, Cedric, and to everyone joining the call today. In addition to today's press release, we have provided a presentation that covers the topics we plan to address. The press release and presentation are available on our website at invesco.com. This information can be found by going to the Investor Relations section of the website. Our presentation today will include forward-looking statements and certain non-GAAP financial measures. Please review the disclosures on Slide 2 of the presentation regarding these statements and measures as well as the appendix for the appropriate reconciliations to GAAP. Finally, Invesco is not responsible for and does not edit nor guarantee the accuracy of our earnings teleconference transcripts provided by third parties. The only authorized webcasts are located on our website. Andrew Schlossberg, President and CEO; and Allison Dukes, Chief Financial Officer, will present our results this morning, and then, we'll open up the call for questions. I'll now turn the call over to Andrew.

Thanks a lot, Greg, and good morning to everyone. I'm pleased to be speaking with you today. During the fourth quarter and throughout 2024, we continued to make meaningful progress in executing our strategic priorities and leveraging our competitive advantages to improve on several key performance drivers. Amid a backdrop of volatile markets across the world, mixed economic signals and geopolitical risks, our focus remains steadfast. This enabled us to deliver for clients and shareholders and meaningfully improve our operating results. I want to thank my colleagues around the world for their focus and teamwork throughout the year. But before we get into the specifics of the fourth quarter, we thought it would be helpful to look at the whole of 2024 and the progress made against the eight key financial measures that are noted on Slide 4 of our presentation. The combination of strong long-term net inflows of $65 billion or a 5% organic growth rate, higher revenues and disciplined expense management, while reinvesting into the business, drove an increase in operating income to $1.4 billion. We generated positive operating leverage of over 100 basis points and improved our operating margins to over 31% for the year and 34% for the fourth quarter marking good sequential momentum throughout 2024. While client demand and net flows remained more narrowly focused, in the aggregate, we continued to gain market share and revenue growth in key high demand strategic capabilities including our global ETF, fixed income and SMA product ranges, all of which are highly scalable. We saw momentum build throughout the year for private and alternative credit strategies, but for institutional and wealth management clients. Geographically, our net long-term flows remained positive across all three of our regions with a notable pickup through the second half of the year in both our Asia-Pacific and EMEA markets. Specifically, in Asia-Pacific, we generated 10% organic growth, marking its best year since 2021. Throughout 2024, we remained highly focused on retaining and selectively growing our fundamental equity investment strategies against the backdrop of outflows in the industry and for Invesco. This remains a key focus for the firm. As we stressed throughout 2024, strengthening our balance sheet continues to be a priority. Through disciplined execution, we made strong progress and improved the financial flexibility of the firm. During the year, we reduced our debt, we improved our operating leverage and ended the year with a net cash position of nearly $100 million. Additionally, after commencing a more consistent share buyback program in the second half of the year, we returned 54% of earnings to common shareholders through buybacks and dividends in 2024, which was an increase from the previous year. Our success in 2024 gives us conviction in our focused strategic priorities, our execution mindset, and our ability to continue to deliver enhanced and consistent operating performance and returns for our shareholders. Turning now to Slide 5 and focusing on the fourth quarter, growth continues to be led by our highly innovative ETF and Index platforms, which has near or historic organic long-term flows of $30 billion, which is a 25% annualized organic growth rate. Importantly, we continue to see our flow through ETFs broadened by asset classes and factors across our clients in all three regions. Growth in the US market continues to be led by our S&P 500 Equal Weight strategy, our Equity Momentum strategies, which accounted for nearly $5 billion of the net flows and our Innovation Suite which is headlined by QQQM, which garnered $3 million of net inflows. This bond, which was launched just over four years ago, had one of its best quarters on record and has grown to nearly €40 billion in assets today. We also saw strong ETF growth from the EMEA region with nearly $11 billion of net inflows on a sort basis with our locally listed S&P 500 topping the list. We also continued to innovate at scale. In the fourth quarter, we launched a new ETF that we customized in partnership with a Finnish pension insurer to meet its claimants-focused investment objectives. This ETF began trading with nearly $2.5 billion in assets and set a new milestone as the largest ETF launched on record. Our ETF platform finished the quarter with record AUM and revenues. Revenue growth remains strong, up 7% from the third quarter and 31% from the fourth quarter last year. We remain very well positioned to continue to gain market share and use this scaled platform for profitable growth. Shifting to Fundamental Fixed Income. After a strong third quarter, we saw modest net long-term outflows in the fourth quarter, primarily driven by stable value, which continues to be out of favor in the current rate environment, as money market yields are paying a premium to stable value. Excluding this specific US defined contribution product, our fundamental fixed income strategies continued to see solid flow growth of $1.5 billion in the quarter. Within the Fundamental Fixed Income category, flow growth was led by our Municipal Bond strategies and driven by our fast-growing SMA platform which reached $28 billion in AUM or 33% organic growth rate. Additionally, revenue generated from Fundamental Fixed Income strategies grew by 9% in the fourth quarter as compared with the same quarter in ‘23. It's important to note that our large and diverse fixed income product line, which totaled over $600 billion at year-end, spans our geographic footprint and encompasses more than just our fundamental fixed income capability that's expressed on this slide. Looking at this more holistic view of our fixed income product set, which also includes fixed income ETFs, our China JV, private credit strategies and global liquidity, we generated 8% AUM growth and net long-term inflows of nearly $27 billion in 2024. Our fixed income capabilities had strong performance and are well-positioned to meet client needs across the credit and duration spectrum, geographic preferences, active and passive exposures, and public and private markets. We have plenty of reasons to be optimistic about our ability to capture flows as money increasingly rotates into these asset classes. Shifting now to private markets, which in aggregate drove long-term net inflows of nearly $1 billion in the quarter. Within the category, our private credit capabilities reported net inflows of $3.5 billion or a 31% annualized organic growth rate. Growth was driven by bank loans and CLOs across several fund structures, including our industry-leading senior loan ETFs. In direct real estate, we also continue to see flows into INCREF, which is our real estate debt strategy targeting the wealth management channel. Launched only in 2023, this fund has doubled in size over the past two quarters and now stands at nearly $2.5 billion in AUM. Also note that our real estate team is well-positioned in the institutional markets with over $5 billion of dry powder to capitalize on emerging opportunities. Moving on to Asia-Pacific. On a managed basis, in Asia, we saw a rebound this quarter with net long-term inflows of $3.5 billion, led by positive flows from India and $2.5 billion of net inflows into our China JV. Our China growth was driven by equity, particularly ETFs, which are becoming a fast-growing part of our China business and where we see strong demand continuing. These flows were augmented by net inflows from fixed income with six new products launched in our China JV this quarter, including three ETF products. At a macro level in China, we are encouraged by the government's recent focus on economic stimulus. But overall market sentiment remains relatively weak and volatility remains high. Looking more broadly at Asia-Pacific as a region, on a client source basis, net inflows were even stronger at $7.5 billion for the quarter, which is a 13% annualized organic growth rate. This broader flow strength in the region highlights our success in leveraging our global product suite and our investment capabilities to meet demand across this important growth region. We had good inflows in Southeast Asia, driven by ETFs, along with continued strong inflows in Japan through our global equity and income strategy, which had $1.5 billion in net inflows and continues to be one of the top-selling active retail equity funds in the growing Japanese market. Turning to our multi-asset related capabilities, we saw net long-term outflows of $1.5 billion, driven by global asset allocation, particularly in our balanced risk allocation strategy. Finally, the relative pressure on fundamental equity flows has continued. However, as I've pointed out previously, we’ve seen some moderation over time in the global, international and emerging market segments. Net outflows in these strategies have been in the $2 billion per quarter range. Outflows in our emerging market strategies have been partially offset by the continued strength of global equity and income that I noted earlier, as well as net inflows in small cap equities. While asset flows in our fundamental equity capabilities remained below our long-term expectations, market growth has aided revenue, resulting in a 10% increase in net revenues this quarter, compared with the fourth quarter of 2023. Our team continues to focus on driving high-quality alpha, upgrading our talent bench, and continuing to strengthen our risk management tools. Regardless of client demand, our focus remains on improving investment performance, and gaining market share in key fundamental equity categories, in which we compete. Now moving on to Slide 6, we provide an alternative aggregation of our AUM and flows to provide additional context for our business results. I've covered most of these key highlights underlying these charts, but I'll point out that the diversity of our assets and our flows across geography, channel, and investment style provide us the balance needed to weather any market condition and our ability to meet a range of client needs, which is an important part of our ongoing positive organic flow growth story. Moving on to Slide 7, which shows our overall investment performance relative to benchmarks and peers as well as our performance in key capabilities where information is readily comparable and more meaningful to drive results. Investment performance is key for winning and maintaining market share, despite overall market demand. Achieving first-quartile investment performance remains a top priority and we are making progress on this front. Overall, nearly half of our funds are performing in the top quartile of peers across the 1, 3, and 5 year time horizons. Further, two-thirds of our AUM is beating its respective benchmark over all measurement periods. We continue to have strong fixed income performance, with approximately 40% of our funds in the top quartile on a 3 and 5 year basis. We are acutely focused on improving fundamental equity performance and we are making progress here too. We have continued to improve the percentage of AUM in the top quartile of peers across each timeline shown, with a third or more now hitting that target. With that, I'm going to turn the call over to Allison to discuss our financial results for the quarter and I look forward to your questions.

Thank you, Andrew, and good morning, everyone. I’ll begin on Slide 8 with our fourth quarter financial results. We continue to see strong growth in assets under management during the fourth quarter with total AUM at the end of the quarter at $1.85 trillion, $50 billion or 3% higher than last quarter end and $261 billion or 16% higher than the end of 2023. Average long-term assets under management were over $1.3 trillion, an increase of 4% over the last quarter and 20% over the fourth quarter of last year. The increase in AUM was mainly driven by net long-term inflows, net inflows into our QQQ ETF, and net inflows in the money market funds. Unlike recent quarters, markets did not have a significant impact on AUM in the fourth quarter. Net long-term inflows drove a $26 billion increase in assets under management during the quarter, representing an organic growth rate of nearly 8%. As Andrew noted, net inflows in our ETF and index capabilities were nearly $30 billion. QQQ net inflows were $10 billion and money market fund inflows were strong at $25 billion. Net revenue, adjusted operating income, and adjusted operating margin, all improved from the third quarter and showed substantial improvement from the fourth quarter of last year. I'll cover the drivers of that shortly. Adjusted diluted earnings per share were $0.52 for the fourth quarter versus prior quarter EPS of $0.44. We continue to strengthen the balance sheet, ending the quarter in a net cash position with cash and cash equivalents exceeding debt by nearly $100 million, better than our goal of zero net debt. We also continued share buyback repurchasing $25 million during the quarter and we intend to continue buying back on a regular basis going forward. Moving to Slide 9, as we stated in prior calls, secular shifts in client demand have altered our asset mix and net revenue yields as our broad set of capabilities has allowed us to capture evolving client product preferences. Client demand has led to continued diversification of our portfolio, a trend we've seen for a number of years now. As a result, concentration risk and higher fee fundamental equities and multi-asset products has been reduced. The firm is increasingly better positioned to navigate various market cycles, events and shifting client demands. Consistent with prior quarters, current net revenue yield trends are included on this slide. The ranges by capability are representative of where the net revenue yield has ranged over the past five quarters. We note the net revenue yield drivers and where in the range the yields have trended more recently. To provide context for the net revenue yield trend during the fourth quarter, our overall net revenue yield was 24.6 basis points. The exit net revenue yield was 24.1 basis points, a half a basis point lower due to continued mix shift during the quarter. Turning to Slide 10, net revenue of $1.2 billion in the fourth quarter was $111 million higher than the fourth quarter of last year, an 11% increase, and $53 million was 5% higher than the third quarter. Investment management fees were $123 million higher than last year and $29 million higher than the third quarter. The increases were driven by higher average AUM, partially offset by the AUM mix shift previously noted. Performance fees were $14 million higher than last year and $32 million higher than the third quarter reflecting typical seasonality. Operating expenses continue to be well-managed. Total adjusted operating expenses in the fourth quarter were $767 million, a slight decrease of $4 million or less than 1% from the fourth quarter of last year. There was a slight increase of $11 million or less than 2% in adjusted operating expenses over the third quarter. Compensation was $14 million higher than the fourth quarter of last year, which included $22 million of organizational change-related expense. Higher compensation expense was driven mainly by higher revenue in 2024. Compensation expense was $15 million higher than the prior quarter and mainly driven by higher revenue, including compensation associated with seasonally higher performance fees. G&A was lower on both the year-over-year and sequential quarter basis. G&A was $28 million lower than the fourth quarter of last year, due mainly to lower professional-related fees and an insurance reimbursement of $13 million in the fourth quarter of this year. G&A was $11 million lower compared to the third quarter, mainly due to the insurance reimbursements, partially offset by slightly higher professional-related fees. Alpha platform implementation cost of $14 million were in line with our expectations in the fourth quarter and consistent with the $15 million incurred in the third quarter. We did move a small first wave of AUM on the alpha platform in the fourth quarter. Fees paid on the assets transitioned in the first wave were nominal expense-wise in the fourth quarter. As the implementation continues, we expect alpha-related, one-time, implementation cost to be in the $10 million to $15 million range per quarter in 2025. Depending on the timing of when future waves are executed, which we currently expect will continue through 2026, the implementation cost will begin to fade as we approach full implementation of alpha. Fees paid to State Street as we transition assets to alpha will increase as future waves are executed. Looking at 2025, we expect costs related to alpha, which includes both the implementation cost and fees paid to platform providers, to be $20 million to $25 million higher than 2024. We’ll continue to update our progress and related costs as we move forward with the implementation. Regarding operating expenses for 2025, we will continue our disciplined expense management. We expect a slight uptick in expenses driven by the higher revenue levels that we are currently generating. If you assume flat markets from year-end ‘24, we would expect total operating expenses to increase by approximately 1% over 2024. That includes the higher alpha-related costs in 2025 that I noted. After the fourth quarter, our quarter-over-quarter positive operating leverage was 330 basis points driving a $41 million or 12% increase in operating income and a 210 basis point improvement in our operating margins to 33.7%. The effective tax rate was 22.2% in the fourth quarter. We estimate our non-GAAP effective tax rate will be near 25%, the high end of our historic range for the first quarter of 2025, excluding any discrete tax items. The actual effective rate can vary due to the impact of non-recurring items on pre-tax income and discrete tax items. I’ll wrap up on Slide 11. As I noted earlier, we continued to make progress on building balance sheet strength during the fourth quarter. We ended the quarter in a net cash position with cash and cash equivalents exceeding debt by nearly $100 million, better than our goal of zero net debt. We ended the quarter with no draws on our credit facility. Our leverage ratios continue to improve and we're now down to a leverage ratio excluding the preferred stock of 0.25 times, a significant improvement over the past several years. We continued share buyback in the fourth quarter, repurchasing $25 million or 1.4 million shares during the quarter. We intend to continue a regular share buyback program going forward and we expect our total payout ratio, including common dividends and share buybacks, to move closer to 60% in 2025 as we continually evaluate our capital return levels. This includes the resiliency and strength of our firm's net flows performance as evident again this quarter and we continue to make progress on simplifying the organization and building a stronger balance sheet while continuing to invest in areas of growth. We remain committed to driving profitable growth, high-level financial performance and enhancing the return of capital to shareholders. With that, I'll ask the operator to open up the line to Q&A.

First question comes from Dan Fannon with Jefferies. Your line is open.

Good morning. I wanted to follow up on the outlook for expenses in 2025. Can you remind us what the increase of $20 million to $25 million compared to 2024 was? Also, considering the seasonality of collection in the first quarter, what might be the updated comparison in other areas versus the overall 1% in the UK?

Dan, you got totally jumbled for us there on the end. The one thing we heard was alpha and looking for what it was in 2024.

Yes, and then maybe some sequential - the sequential expense builds for the first quarter, given the seasonality of things like payroll.

Okay. So, let me address alpha in 2024 first. Alpha was probably just under $50 million for 2024. And so, in comparing that to 2025, as I noted, we would expect it to be in total $20 million to $25 million higher than 2024, that's inclusive of all costs related to alpha, and then the expense guidance for the full year, as I noted, would be about a 1% increase over 2024, assuming spot markets from the end of 12/31. That includes all of the alpha cost. In terms of the sequential quarter build, I would just say as I noted, the implementation cost for the quarter are going to be and that's again in that $10 million to $15 million range. In terms of other expense line items, I would say there's always the typical seasonality in the first quarter as it relates to payroll taxes, which tend to run in the $15 million kind of context, $15 million to $20 million context. Of course, you got seasonality in the fourth quarter with compensation related to performance fees. Keep in mind marketing tends to be seasonally higher in the fourth quarter. And I just don't expect a lot else to be very different. So, I point to those seasonal items and then point you back to the full year guidance of 1%.

Great. Thank you and hopefully I can make it clear here for the second one, but wanted to follow-up on capital management and just given the improved liquidity position, how your M&A and/or inorganic thought processes evolve given the stable and/or improving equity income fund?

Okay. Yep. Got it. On the capital management, I would say our priorities continue to be the same which is we remain focused primarily on investing in our own inorganic growth which I think we're demonstrating that we've got a fair amount of firepower there and investing in those capabilities is in fact demonstrating the organic growth that we're looking for. So that is first and foremost. Our focus is just given the diversified platform we have, how that relates to our inorganic focus, I would say it's very consistent with a lot of the conversations we've had in the past. Our capabilities are fairly well built out across both the capability set but also our regional diversification; the one area where we probably don't have the full set of capabilities would be on the private credit side. We continue to be very thoughtful there. It is, we have some depth of private credit capabilities, but probably not the full suite we would like to have. It's also a very crowded and expensive space, as you know right now. And so, we remain focused on growing both organically while keeping our eyes open inorganically.

Thank you.

And our next question comes from Alex Blostein with Goldman Sachs. Your line is open.

Good morning. Ask another one on expenses for you just to make sure I have that clear. So, the alpha implementation will run $10 million to $15 million per quarter. It will peak at some time at the end of ’25 maybe early ’26 at which point you will also start to have sort of the expenses that you’ll start paying State Street to ramp as well. So maybe help us understand kind of what are the run rate expenses you expect to pay State Street once all the assets have migrated over? So which I guess will be at some point in time in 2026 and then, ultimately, are there any legacy costs do you expect to fall off once alpha is sort of fully implemented? Or is that kind of baked into your $10 million to $15 million guidance?

No, so let me kind of walk that through that again. So, I'll try to keep this together and I can't tell you - I can't answer the question of what are the fees we would be paying to State Street; of course that's contractual. And so, the way to think about it is this, implementation costs will continue to be $10 million to $15 million per quarter. That's consistent with what we've been running for the last number of quarters. If I look at the total cost development this year, which is both the implementation cost, which think of those as one-time the construction cost if you will, combined with fees paid to platform providers, which there are existing and new fees that will be coming on that probably we will be keeping as we are running parallel paths on a number of platforms. The combined cost of all of that for 2025 will be $20 million to $25 million higher than the cost in ‘24. So thinking about that baked into our expense run rate for ‘25 relative to ’24. That is a piece of the overall expense guidance, which is inclusive of everything that we provided, which is an increase of 1% over last year. The cost that will start to come out that will be not to tell we are fully transitioned with all ways. So as we noted the way they're going to continue through 2026, then we can begin to decommission systems. So the benefits we might see are too far out to guide to at this point. Does that help, Alex?

I got you. Yeah, I was just kind of trying to get like one of those cost fade-out like what is the net expense benefit we should expect, which sounds like some of that $10 million to $15 million will start to leave, but the ultimate benefit of that really won’t show up until ’27 if that – if I hear you correctly.

Correct. And you are correct. Once we are fully implemented, you will not have the implementation costs of the $10 million to $15 million a quarter. That’s really construction cost, if you want to think about it that way.

Yeah, gotcha. Okay. Thank you. And then my follow-up question, I didn't want to ask you guys around China. It sounds like things have been picking up there. Andrew, you and I had a conversation about this later last quarter just in terms of the momentum you guys have seen in the ground that's showing up in flows. So talk to us maybe a bit about the pipeline that you are seeing in the products there and your expectations for flows over the next couple of quarters?

Yeah, so maybe I'll start, then Al take a pick up as well. We did - as we said, we saw, $2.5 billion or so of flows this quarter. Importantly, the launches we did and the focus in the market was on equity ETF, which we’re seeing more demand for equity markets through ETFs right now in China and we're relatively early in building that out and the markets relatively early as well. We're also seeing flows into what's called fixed income plots which is more like a balanced strategy. Its demand has been picking up there, as well. To remind everybody, our business there is pretty diverse and balanced. We are about 30% equities, 30% fixed income, 20% is fixed income plus, and 20% or so in money markets. The stimulus that's been put in place and what we expect to be future stimulus throughout the balance of this year is starting to raise confidence modestly. But I think the markets and the retail investors need to see more. But to be getting organic growth despite all of that, we feel is a pretty good accomplishment.

Great, thank you both.

Thank you.

Thank you. And our next question comes from Brennan Hawken with UBS. Your line is open.

Good morning. Thanks for taking my question. A couple just sort of clarification items on the expenses. Sorry to dwell here. But the 1% increase that’s versus the $3 billion and $30 million adjusted reported base, just want to confirm that. And then the $10 million to $15 million that we should expect in 2025 those construction costs and then that's not expected to go into ’26. I just wanted to confirm that. And Allison, I believe you noted a $22 million charge related to organizational change, could you maybe give some color around what that is and what impacts we could expect from that?

$22 million organizational change was 2023. So that was in my year-over-year comment. So that's rear view mirror. No organizational change expenses noted in the fourth quarter of 2024. The expense guidance of 1% over 2024, yes, that is relative to the fully reported $3 billion, $30 million operating expense base for 2024, and that's assuming flat markets to 12/31. And then, the implementation cost of $10 million to $15 million a quarter, that guide is through 2025. I'm not prepared to speak to 2026 yet, but if we are still in the - moving AUM over there will be some implementation costs depending on where we are on the waves and the continued build of alpha. If it is possible it could be higher, it could be lower than $10 million to $15 million as we continue to move assets and waves. So, but implementation costs will be a part of our expense base, so long as we are moving assets over to alpha until that transition is fully complete.

Great. Thank you. Does that help, Brennan? It does. Thanks for clarifying on the organizational change. I didn’t hear that correctly. One of the things you guys talked about – let me shift gears on alpha and not talk about the actual expense talking indirectly, you’ve spoken in the past that you expect that this migration is going to enhance your operational effectiveness across the organization. So - and it sounds like you're beginning to migrate cohorts over. It might be too early. But like, what has been the experience so far? What are your expectations for some of that operational – increased operational effectiveness? And how should we expect that to manifest itself as you continue to progress through this rather substantial change in the organization?

Hey, Brennan, it's Andrew. Thanks for the question. Look, I'll say the assets that we brought on board in the fourth quarter were relatively small. So it's too early to give a full answer, but the experience has been good from those equity investors that the team that’s come across or the platform that's come across. In terms of the wider simplification efforts and the advantages we'll get over time, yeah, it sort of ties it back to the corporate strategy and the execution we've been on, which is to bring the investment platform closer and closer together. And so, as we scale through that platform, as we have teams managing assets across market, as we shift into different product lines, a simple singular platform that helps with decommissioning all sorts of home-grown systems and legacy third-party systems makes this process quicker at executing and makes our investment portfolio managers and teams much more efficient at the way that they're able to execute. So I think, we're ready to get this further moved onto the platform so we continue to have it enhanced and drive the strategy and drive the operating leverage frankly that we’ve been seeing in the business.

Okay. Looking forward to hearing more as you continue progress. Thanks for taking my questions.

Thank you.

Thanks, Brennan.

Thank you. The next question comes from Bill Katz with TD Cowen. Your line is open.

Thank you very much. I'm going to spend more time in Africa and I apologize, but the guidance you given is very constructive versus what is with the street is telling today. I think the bigger question that I have I think investors have is, what does this look like in the end statement? I think Alex was trying to get you there. So, A. what percentage of your assets would you anticipate being migrated over in 2025? And then as we get into some kind of 'normalized world' where everything is migrated over and implementation costs phase out, how do we think about or how do we model to the onboarding costs on a go-forward basis? That’s my first question. Thank you.

So, I mean, I’d start with, we're not going to provide the detail of what percentage in ‘25 versus ‘26 as we continue to work with our partners on really thinking through how to build out these waves in a way that creates the least amount of disruption and really helps drive the efficiency of the business. And that's really just the preparedness there. So, I'll probably hold on how the waves are constructed and what percentage we anticipate moving in ‘25 just out, but we will update you quarter-to-quarter as we are moving that on. As I noted, we expect to continue moving assets over throughout ‘25 and into ‘26. And so, that instate on the other side, we will give you more guidance as we can continue to work through what that looks like. We do anticipate and it is the vast majority, it's not almost all of our assets, but ultimately move onto the platform. So it has a number of system implications behind it as we look to streamline from a number of systems to a single operating system there. And that instate, does have benefits. It has benefits in terms of elimination of software costs as well as benefits from an organizational perspective. And so, their implications related to teams, as well. So there are benefits on the other side. They just as we are really focused on 2025 at the moment, they're a little further out, but then we're prepared to get the full guidance given the business continues to evolve in every other aspect.

Hey Bill, the only thing I'd add is, just to add extra clarity, all - pretty much all of our public market assets will be ultimately on the alpha platform. This wave construct that we're using, it's helpful because as we learn from each wave, we apply to the next wave and get those incremental benefits hopefully in speed, but also in working through the complexity of it.

Okay, thank you. And then, maybe I'm just sticking with you for a question. I think some of the themes out in terms of the opportunity set going forward are more on the alternative side. So I was wondering if you could maybe click a layer deeper and speak to your strategy to grow private markets. You gave a little bit of a detailing retail democratization and maybe what you can grow three beyond INCREF, maybe even leveraging on the insurance side, and then interrelated to that, there's not a lot of deals to be had, how should we be thinking about the payout rate? 60% seems relatively low given that you’ve enhanced the balance sheet and you have pretty good diversification and scale? Thank you.

Yeah, let me start. So on the private markets and alternative build-outs, as we noted, we do think there's a lot of organic opportunity here. And it’s not just in taking our private real estate and alternative credit strategies and private credit strategies to the wealth management market. You will also see opportunities to enhance the institutional markets around the world. But wealth management should have the greatest growth rate and we pointed out a few places where we're starting to see that take hold. The real estate debt strategy that we launched INCREF is a flagship for us both because there's increasing demand in that space and there's less supply. And so we would see that fund doubling in size the last few quarters and now be at around $2.5 billion. You'll also start to see us build out around the alternative credit space into those wealth management channels, as well. I think one of the things that we're finding as we build out in the wealth space, is that people want diversification, as well. And so, we're going to continue to look for strategies that might be multi-asset in nature. And then on the inorganic side, in addition to what Allison shared before about our capital priorities and she can expand in a moment. Just think about our inorganic strategy as focusing on partnerships, as well. And so, there's lots of conversations out there ways that we can find partners to work with. We've been successful with joint ventures and partnerships like we've had out in Asia. And so, those conversations are continuing to be ones that we'll look at that could enhance the product line, could enhance our distribution channels, or access to capital from alternative sources.

As it relates to the payout ratio, there's a couple of things that I’d point to as we just think about what the appropriate payout ratio is. First, as I noted, our focus remains really investing in our own capabilities. And so, as we think about launching new capabilities, particularly in the private market space or along the partnership route as Andrew noted, those require cash and we invest our own capital in order to get these things off the ground. And so, we want to preserve our cash, flush capital for those organic growth opportunities that we have. The second aspect on my mind is we do have a debt maturity coming up a year from now next January, another $500 million note. I don't know yet whether or not we will pay that off or refinance it. It kind of depends on the set of opportunities we have before us from an organic growth perspective and just where the markets are in the rate environment. But we want to preserve flexibility to completely pay that down if that's the best opportunity we have. And so, as we think about the payout ratio for this year, if those are a couple of things in our mind.

I mean, the choices and flexibility that we’ve built that Alison was just pointing out was our goal at ‘24, to be back in the market buying back stock, which we did. But having that flexibility gives us a lot more choices here to deploy against our strategy.

Thank you very much.

Thank you.

Thank you. And our next question comes from Glenn Schorr with Evercore. Your line is open.

Hello, thank you. Okay, so the fourth quarter, we had the insurance reimbursement, but besides that, the margin was still up, up markets, big inflows, down fee rate, controlled expenses. So, my question is, I'm hoping for better than flat assets this year. But what's your thoughts around the margin knowing what we know - what you just said about the 1% expense growth, knowing that you still inflow nicely, but the fee rate does have some compression? How are you thinking about the margin in ‘25? Thanks.

We're hoping for better than flat market too. And obviously, we build our plan with flat markets because we think it's prudent. But this is certainly a business where we're all counting on and dependent upon growth in markets. And I think we're in a pretty diversified set of markets and in any given year, we see we've got the markets looking for us and some are working against us. But net-net we are hoping for also a positive year. Independent of that, I'm bullish on our margin and I'm bullish for a couple of reasons. The number one thing we're managing here, I mean, we noted expenses, I would say 1% expense growth year-over-year inclusive of all of these costs associated with alpha. I feel really good about and it's really a testament to some pretty disciplined expense management going on to make sure we may groom for this really important strategic focus we have and continuing to execute against alpha. But on the top-line what we're managing too is flows and flows across all of our investment capabilities and really thinking about that organic revenue growth. And I think if we can continue executing well against our focus there, we're going to see operating margin expansion in 2025. In particular, I mean, we are giving you more and more color and we hope it's helpful to really get to that organic fee rate trajectory. And I think you can see over the last couple of quarters where we had a very strong organic fee rate growth and investment capabilities like fixed income and ETFs and private markets were really at about a breakeven place for ‘24 in APAC managed and we're very optimistic that we can do a lot better than that in 2025. The biggest opportunity we have no question is narrowing the outflows in fundamental equities. That's been the headwind as it relates to that organic fee rate growth. And so, our focus and our investment performance in fundamental equities and really defending our book of business there and really focused on the pockets of growth and the sales there, that's the number one thing we can do to expand revenue independent of any market changes. And that's going to really get us to that operating margin expansion trajectory that we think we're on.

That's a perfect lead into the follow-up I had was, and may be A, how do you defend fundamental equities besides just everybody put up great performance? But my question is, is on, how are you thinking about the active ETF lineup? Your ETF business has been growing. How do you think about what to transition to have an active tag along it product if you will? And that - can that be part of the solution?

Yeah, I mean, driving success for fundamental equities in particular, the number one is delivering investment quality. So that's going to be the number one port of focus and that includes all the things that you'd expect from us on talent and risk, etc. Continuing to differentiate the product line and how we “wrap” Equity to go to market is going to be an important way that we both grow and defend. Also the way that we deliver through our sales and client service efforts. So it is continuing to be blocking and tackling. As it relates to active ETFs, just the starting point for us just for everyone as a baseline. We have about $10 billion in active ETFs, but we have another $20 billion or so of ETFs that are more passively oriented but involve our more fundamental or quantitative investments in. And I think both of those areas are places where you're going to see us continue to grow as the ETF vehicle will continue to be a vehicle of choice and we have the ETF platform. We know how to operationalize that, how to grow it at scale and we have excellent acts in investment capabilities. So, we've been launching some of those through the course of last year. We'll continue to look for opportunities this year. But number one thing is having good high-quality investment results because that's going to really drive the success, whether it's packaged in a mutual fund or an ETF. But regardless, we should be able to win with the scale that we have.

All right. Thanks, Andrew. Thanks, Al.

Thank you.

Thank you.

Thank you. And our next question comes from Ben Budish with Barclays. Your line is open.

All right. Good morning and thanks for taking the question. Just a high-level question around fee rates. It looks like the ranges for most of your categories were either kind of lowered at the midpoint or narrowed. If you could kind of comment on what's been going on there? Is it sort of ongoing mix shifts within each category? Is it sort of competitive forces? And then, I am particularly curious in China there are some headlines last quarter around some ongoing pressures to kind of lower ETF fee rates. So any color on what’s going on there would be helpful. Thank you.

Sure. I'll take that. I would say it is primarily ongoing mix shift within the various categories that you're seeing there. If you think about the ETFs in particular and that's one where you've seen that fee rate range narrow a bit and trend towards the low end, we continue to see really strong demand for capabilities like the QQQM and the S&P 500 equal weight. Those are going to be in the kind of low or sorry, mid to high-single-digit and really start to impact that fee rate down relative to perhaps the commodity strategies, which we just haven't seen a stronger demand for. So you've got mix shifts going on within those capabilities. At the same time, on APAC managed, I'd say that that rate came down over the last five quarters or six quarters because of the regulatorily mandated cuts that went into effect in 2023. Those were fully washed through in 2024 at the ETF pressure. I think our set of capabilities are well within the regulatory mandate. So we don't see that pressure really impacting our product line up there. So within that, I don't - I wouldn't say any of those trends are sort of permanent in nature. IT really is a function of the demand and yeah, the impacts we are seeing really strong demand for things like detail which will be on the higher side. And so, it’s pretty demand-driven and not any sort of secular pressure.

Understood. And maybe a follow-up sticking on the ETF side. Andrew, I was wondering if you could talk a little bit more about – I think you mentioned $2.5 billion for a Finnish pension insurer. That sounded fairly interesting. Curious what the pipeline is like for those sorts of opportunities. You are sort of custom indexing within liquid ETFs. How do you see that opportunity set evolving? Thank you.

Yeah, I mean, something like the one we had last quarter is going to be more episodic. I wouldn't say that there is a huge pipeline behind it. But there were two of them I think last year that were similar. So the custom indexes, that's something that we see continued demand for and it might not be just for an institution, it could be for a wealth platform, or it could be us customizing an index with one of the index providers to come up with a specific need that that we see in the marketplace. So I see custom indexing demand growing for over time. These big chunky institutional-type capabilities are more episodic.

Got it. Thank you very much.

Thank you.

Thank you. And our next question comes from Patrick Davitt with Autonomous Research. Your line is open.

Hey, good morning everyone. This signs the ETF adoption in Europe is really picking up steam with some even starting to call the long-anticipated 'catch-up' with the US has really started. Firstly, do the trends you are seeing suggest that catch-up is in progress? And secondly, given your legacy book of much higher fee access the fund in Europe, do you see that shift as a net positive or negative for Invesco? Thank you.

Yeah, you're right to point out the growth in EMEA and some of the demand pick-up there. We do think it's an early stage secular trend that we've been waiting for to come in Europe as we've been in that market for some time, both with our ETF ranging and with our broader institutional wealth management teams on ground. And so, we do expect that to continue to pick up. We're I think over $125 billion or so in ETF assets out in that region. With regard to where demand will come from, the private banks are quite strong in that market and it’s been a largely institutional market. We see that it could continue to pick up on the more retail side. I'd say our lineup ranges is equity heavy, but we have a strong fixed income line that we’ve built and incubated over many years and I think we’ll see both sides of that equation. And clearly bringing active portfolios into EMEA in ETF wrappers is something we expect to happen just like it's occurring in the US. So, we are cautiously optimistic about EMEA ETF growth.

And I would just say as it relates to the fee rate, I mean that would be a driver of some of the mix you're seeing in terms of the fee rate and the range is being on the low end or kind of trending to the lower side on the ETF fee rate. It can be ETF and they are slightly lower fee rates in Europe relative to the US lineup. But again, importantly I go back to our focus is on organic fee rates, organic revenue generation, and the growth we're seeing there and the demand there is extremely positive towards overall organic revenue growth. And so it's a net positive in our view.

And just ETFs in general, running an efficient platform one that uses technology, one that uses our operational powers and uses our size and scale, whether we're bringing products in the US or Europe or out in Asia, we have the platform that we can create operating leverage from.

Got it. And then as a quick follow-up. It seems like what you'd start to have that you've been working with Mass Mutual on options for the preferred. Any updates on that front as I imagine that they're now higher for longer mentality could conceivably make the paper less attractive to them?

No updates. It is a topic of ongoing conversation on both sides. It's not just the rate for them. It is again that one is - that was the financing mechanism for the acquisition of Oppenheimer which they have a tax basis in. So, there are tax capital, and rating considerations on their side, not simply sort of rates relative to market rates. So, it is a topic of ongoing conversation as we look at - are there perhaps ways to make it maybe more flexible in the future, but no updates.

Thank you.

Thank you. And our next question comes from Ken Worthington with JPMorgan. Your line is open.

Great. Good morning. Thanks for taking my question. I'd love to dig into the institutional business a bit more broadly. Where is Invesco having success in building the pipeline and winning new business? I know you called out alternatives, but other areas as well. And how does the business that you're winning compare to the business you're losing? Thank you.

Maybe I'll just start at the highest level of kind of how is the business doing? I'd say, it is pipeline, which I always caution is not the best indication because the pipeline is only as good as what we enter into a sales management system. But we do, obviously look at it as an indicator. It continues to expand actually and improving coming into 2025 in terms of both absolute size and the quality of the capabilities that we're really looking at being probable in 2025. It really spans all three regions and all investment capabilities and if you see the bar belling impact, I mean there are, it's continued growth and kind of ETF and indexing capabilities, but also continued growth on the private market side and the real estate pipeline remains strong there with a fair amount of committed capital that is yet to be deployed. So, the fee rates there were good too. They continue to be on the high end of our range, which is usually that mid-20s to mid-30s range, and we continue to see the pipeline be on the high end of that range. So, I'd say, overall attractive characteristics and maybe Andrew can add a little more color in terms of what we're seeing from just kind of a client and regional perspective.

Yeah, to add to what Allison was saying, fixed income is the other area, where institutional demand and flows have been pretty good. And the strength of our fixed income platform that I described we think will be the place in addition to the alternative and private market side where we should, we're focused on picking up momentum in fixed income. The other place I'd say is selecting the equities institutions are reallocating their portfolios and we're seeing some increased demand for Asian equities, global equities and in that space, as well but it's very, very competitive.

Great. Thank you. And then, the other side of the equation, the business you're losing. What does that look like?

I wanted to say, it's if I look at what the outputs were in the fourth quarter, a lot of it we noted, there were some outflows and our balanced risk strategy with DIA and that’s just a strategy that's been out of favor. We also saw outflows in stable value in the quarter and that's really because of just the rates and the arbitrage there in terms of where money market rates were relative to stable value. So those are maybe what I would point to from a trend perspective and I think that last point being temporary or cyclical in nature.

Okay. Great. Thanks very much.

Further leading it’s if not, one of the leading stable value providers. So when that market comes back in demand we should do just fine.

Okay. Great. Thanks so much.

Cedric, we have time for one more question. And our last question comes from Brian Bedell with Deutsche Bank. Your line is open.

Hello. Great. Thanks so much for squeezing me in there. Most of my questions have been asked and answered. But maybe two – one just back on the operating margin outlook. Maybe Allison, just your view on the comps revenue ratio that’s within your 1% guide under flat markets. And then let's say if equity markets are up 10% on a linear basis throughout the year. How would that impact your comps revenue ratio?

Yeah, I would say our comps to revenue expectations are really we think about it independent of where the markets are. We really look at it relative to revenue. Historically, we have been closer to the 40% to 42% kind of context you saw us. In this past year it was just over 43%. I don't know that in 2025 it is very revenue dependent. We had really strong revenue. Could we get back down to 42% possibly, without that we may be looking at something closer to 43%. Our longer term objective is to bring that back to that 38% to 42% range that we have historically operated. And I will point out when we think about total compensation and in the past years ago, we didn't always have things like severance expense, organizational change expense in there because we don't have TIR, it is a fully loaded P&L and that has driven it a bit higher to that 42% to 43% context. And I think that's still a reasonable expectation for ‘25.

Okay. Great. That's helpful. And then, just lastly, just come back to the active ETFs and thank you for your comments on a prior question. Maybe more specifically, for active equity ETFs, if you can talk about your view on cloning active like current active mutual fund strategies, obviously the ones that you think are successful and would have demand for either a clone or something that was very similar to those strategies who is in ETFs. And I guess is the only to spec either on fee pressure, from a cannibalization perspective or are you seeing maybe potential push back from the distribution channels that prefer that may prefer the mutual funds in terms of sales practice?

Yeah. I mean, there's many paths to where active can further end up in ETFs and you mentioned a few of them. Some of them are conversions. Some of them could be people doing cloning. The other is potential ETF share class on a mutual fund, which there's regulatory discussions going on in the marketplace. So I think all of those avenues will continue to be ones that we look at to move forward. I can't speak for every distribution of wealth platform, but my experience, our experience is the one high-quality product. And they want it in multiple vehicles and wrappers. Being able to clone things and moving it over sounds nice and elegant but it’s not always the simplest way to do it. And it’s an avenue we will look at it, but it's not the core path I think we’ll be on.

Got it. Good. Great. Thank you very much.

Yeah, thank you.

Thanks.

Okay. Mr. Schlossberg, back to you.

Yes, thank you, operator. And in closing, I just want to say we're very well positioned to help clients navigate the impact of evolving market dynamics and subsequent changes to their portfolio. As market sentiment improves, and client convictions continue to strengthen, this should translate to even greater scale, performance and improved profitability for Invesco as we discussed today. Given all the work we have done to strengthen our ability to anticipate, understand and meet evolving client needs, I am very excited for the future of Invesco. Again, I want to thank all of my colleagues at Invesco for their continued hard work in ‘24 and as we turn into 2025, I'm proud of our collaboration and our focus on our clients. I want to thank everyone for joining our call today. Please continue to reach out to our investor relations team for any additional questions and we appreciate your ongoing interest in Invesco and look forward to speaking with all of you again soon.

Thank you. And that concludes today's conference. You may all disconnect at this time.