Invesco

Invesco exited August 2026 with a record $2.6 trillion in managed assets, up 24.2% year to date on $204.3 billion of market gains and $103.1 billion worth of net inflows for the firm's long-term assets under management.

Why it matters: Invesco's managed assets (and estimated long-term AUM) of $2.6 trillion ($1.8 trillion) at the end of August 2026 were better than our expectations of $2.4 trillion in AUM ($1.7 trillion in long-term AUM), with the firm putting up both better market performance and flows than we were anticipating for the period. Invesco noted in its preliminary AUM release for August 2026 that the increase in its managed assets during the past month reflected long-term net inflows of $27.6 billion, money market inflows of $35.8 billion, $49.0 billion in market gains, and favorable currency exchange of $2.7 billion. Given the strong flows and returns generated by the company's equity platform, which increased in value by 4.9% during the month to $1.6 trillion overall, we were a little surprised by the large spike in money market fund flows (which were also high in July at $22.8 billion) in August, but with the market expecting a Fed rate increase in September (which just happened), it should not have been that much of a surprise.

The bottom line: Expecting the equity and credit markets to close out the September quarter on a weaker note, and the December quarter likely being mixed, we see Invesco closing out the year with $2.4 trillion in managed assets (and $1.7 trillion in long-term AUM), up 16.3% year over year. This helps inform our current $30 per share fair value estimate for no-moat-rated Invesco. Our forecast includes total AUM rising to $3.2 trillion by the end of 2030, with revenue expanding at a 7.6% CAGR during fiscal 2026-30 and adjusted operating margins in a 35%-39% range. We view the shares as fairly valued right now.

For more insight into the trends and other issues affecting traditional asset managers, which influence our long-term forecasts for firms like Invesco, please see our latest Industry Pulse, "US Traditional Asset Managers: 2026 Q2." We also have a broader industry primer available for the US-based asset managers in our annually updated Industry Landscape, last published in December 2025.

Our fair value estimate for Invesco is $30 per share, which implies a price/earnings multiple of 10.7 and 9.3 times our 2026 and 2027 adjusted earnings estimates, respectively. For some perspective, during the past five (10) years the shares have traded at an average of 10.2 (10.1) times trailing earnings on an adjusted basis, with the highest (lowest) multiple during the past decade being 14.9 (3.6) times. We use a 21% US statutory corporate tax rate and an 11.2% (8.0%) cost of equity (weighted average cost of capital) in our valuation.

Invesco exited the second quarter with $2.470 trillion in AUM, up 23.4% year over year. Long-term AUM (which excludes money market funds and non-management-fee-earning AUM) was $2.213 trillion. Net inflows for long-term AUM were $45.1 billion ($66.9 billion) during the second quarter (first half), reflective of a 9.4% (6.9%) annualized rate of organic AUM growth. This continued the firm's trend of solidly positive organic AUM growth for its long-term AUM that started in the back half of 2023, and was well above the 4.0% average annual rate of organic AUM growth seen for these types of assets during 2021-25. Invesco closed August 2026 with $2.562 trillion in AUM and reported quarter-to-date net flows for its long-term AUM of $36.2 billion.

We continue to expect the firm to produce average annual organic long-term AUM growth of 0%-5% during 2026-30, which should contribute to mid- to high-single-digit average annual growth in both total and average AUM. While Invesco is not immune from the fee compression affecting US-based traditional asset managers, it did see a bump in its fee rate this year following the conversion of Invesco QQQ Trust to an open-end ETF in December 2025, leaving it with a slightly higher starting point for a future that will continue to be affected by fee reductions.

With that in mind, we see the company generating a 7.6% CAGR for revenue during 2026-30. Profit margin expansion will continue to be pressured, though, as asset managers like Invesco spend more to maintain investment performance and enhance distribution. We forecast adjusted operating margins in a 35%-39% range during 2026-30, compared with 33.8% on average annually during 2021-25 and 33.4% during fiscal 2025.

We project a bull-case fair value estimate of $46 per share and a bear-case valuation of $18 per share. The key factors affecting our scenario analysis include the ability to keep gathering and retaining assets, as well as expectations about the overall realization rate as a result of ongoing product growth and changes in product mix driven by market conditions, investor sentiment, and overall fund performance.

Our upside case implies a P/E multiple of 13.1 and 11.4 times our 2026 and 2027 adjusted earnings estimates, respectively. In this scenario, we assume Invesco posts stronger organic growth and market gains than in our base case, which allows it to generate mid- to high-single-digit top-line growth during most years of our projection period. The net result is an 8.0% CAGR for revenue during 2026-30. This scenario also assumes adjusted operating margins approach 40% of revenue over the course of our projection period.

Our downside scenario implies a P/E multiple of 8.5 and 7.4 times our 2026 and 2027 adjusted earnings estimates, respectively. This scenario assumes revenue growth is muted, with Invesco struggling to maintain AUM levels in the face of increased market volatility, poorer market returns, unfavorable currency exchange, and weaker fund flows. The net result is a 7.2% CAGR for revenue during 2026-30. Our downside scenario also assumes adjusted operating margins drop below 34% for an extended period.

We believe the asset management business can be conducive to establishing economic moats, with switching costs and intangible assets being the most durable sources of competitive advantage. Although the switching costs might not be explicitly high, inertia, the uncertainty of achieving better results by moving from one manager to another, and the potential tax consequences of selling a fund with significant gains tend to keep investors in place.

For the industry overall, the average narrow retention rate, which does not include exchange redemptions, has been 75% or higher annually during much of the past three decades. Including exchange redemptions, the rate has been just over 70%. Firms offering niche products with significantly higher switching costs—like retirement accounts, funds with lockup periods, and tax-managed strategies—have tended to hold on to assets longer. Invesco's average annual retention rate has been 71% over the past five and 10 calendar years, slightly worse than the industry average.

During 2021-25 (2016-25), Invesco's organic AUM growth rate when including flows for non-management fee-generating products averaged 3.4% (1.0%) annually with a standard deviation of 2.8% (3.8%). When looking at just long-term AUM (which excludes flows for non-fee-generating products), the organic AUM growth rate was 4.0% (1.2%) with a standard deviation of 3.4% (4.3%). What this tells us is that Invesco has been able to overcome its slightly worse-than-average retention rate to generate positive flows. Our current five- (10-) year forecast for the firm has Invesco generating organic long-term AUM growth at a 2.7% (2.7%) CAGR with a standard deviation of 1.9% (2.1%).

We believe that the traditional asset managers can improve on the switching cost advantage inherent in their business with organizational attributes (such as product mix, distribution channel, and geographic reach) and intangible assets (such as strong and respected brands and manager reputations from a record of generating above-average investment performance relative to peers).

While the barriers to entry are not significant for the industry, the barriers to success are extremely high, as it takes time and skill to put together a long enough record of investment performance to start gathering assets and build the scale necessary to be competitive. This has meant the larger, more established asset managers in the industry have tended to have an advantage over smaller players, especially when it comes to gaining cost-effective access to distribution platforms.

That said, we do not think the cost advantage moat source applies to the traditional asset managers—except in the case of index fund and ETF providers—as scale does not always confer better-than-average operating profitability, and the industry tends to behave as an oligopoly when it comes to pricing.

Competition for investor capital can be stiff and has traditionally centered on investment performance. Although institutional investors and retail gatekeepers are exerting pressure on pricing, competition based on price has been rare, aside from what we've seen in the US market for exchange-traded funds. While compensation remains the single-largest expense for most traditional asset managers, supplier power has been manageable as many firms have reduced their reliance on star managers and have tied manager and analyst pay to both portfolio and overall firm performance.

Asset managers that have demonstrated an ability to gather and retain investor assets during different market cycles have tended to produce more stable levels of profitability, with returns exceeding their cost of capital for longer periods. While the more broadly diversified asset managers are structurally set up to hold on to assets regardless of market conditions, firms with solid product sets across asset classes (built on repeatable investment processes), reasonable fees, and singular corporate cultures dedicated to a common purpose have done a better job of gathering and retaining assets.

Invesco, in our view, does not have an economic moat. While the firm has some moatworthy characteristics—like well-known brands, well-forged distribution ties, repeatable investment strategies, and an ability to generate organic AUM growth—these attributes and other intangible assets have diminished over the past decade. Invesco's five main asset classes are skewed more heavily toward equities (62% of managed assets), with fixed-income (19%), balanced (3%), money market (11%), and alternatives/other strategies (5%) accounting for the remainder.

While Invesco gets some credit for having a meaningful amount of passive exposure, accounting for close to half of its managed assets of $2.562 trillion at the end of August 2026, its distribution is more heavily weighted toward the retail channel (72% of total AUM). This leaves it more exposed to fee compression at the hands of the gatekeepers of the broker/dealer and retail-advised networks.

While Invesco's ETF operations, with $1.206 trillion in AUM globally at the end of August 2026, are smaller than the operations run by industry giants like BlackRock/iShares (with $6.463 trillion in ETF AUM globally) and Vanguard ($5.082 trillion), its business accounted for 6% of both the US and global markets, with the firm having traditionally been focused on niche products, which have been less susceptible to the intense pricing pressure seen in the core/index-based ETF market.

That said, we don't really see enough differentiated products or services at Invesco that would allow the firm to improve retention rates and/or organic AUM growth, let alone get better pricing than peers, blunt ongoing industry price compression, or improve adjusted operating margins. We also believe the firm will struggle to consistently outearn our estimate of its cost of capital over the next decade—one of the key considerations for a Narrow Morningstar Economic Moat Rating.

With $2.562 trillion in AUM at the end of August 2026, Invesco is in the second-largest tier of US-based asset managers, which includes firms like Pimco, Capital Group, J.P. Morgan Asset Management, and Franklin Resources.

Invesco's multi-asset fund operations had 82% and 83% of its managed assets outperforming peers on a three- and five-year basis, respectively, at the end of June.

The firm's fixed-income funds have also held up relatively well, with 64% and 58% of AUM outperforming peers on a three- and five-year basis, respectively, at the end of the second quarter.

Invesco's overall investment performance is still not quite in the top quartile, with just 69% of AUM outperforming peers on a three- and five-year basis at the end of June 2026.

The firm's active equity platform continues to be its Achilles' heel, with just 43% and 50% of AUM outperforming peers on a three- and five-year basis, respectively, at the end of the second quarter.

Poor investment performance tends to lead to outflows, with Invesco posting negative organic AUM growth in its active equity operations, offsetting the other positive flows it is generating.