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Invesco is preparing to roll out generative artificial intelligence technology to cut rising compliance costs, but it won't use it to pick stocks anytime soon, its CEO says.
In his first interview as CEO of the $1.6 trillion Atlanta-based asset manager, Andrew Schlossberg said Invesco would also look at deals to bolster its own credit offerings.
Schlossberg, who replaced veteran CEO Marty Flanagan last year, said the group had been investigating for more than a year how teams could use generative AI to work more efficiently.
“If this can help them accomplish 75 percent of that mission, they can focus more of their energy and time on those growth areas and opportunities,” including getting reports to clients more quickly, said Schlossberg, who was most recently president of Invesco. Americas.
He said the asset manager's analysts have been using some form of artificial intelligence for years, but played down the idea that the company would use the technology in investment decisions such as stock picking. He added that the group would take its time before expanding its AI tools to include investments and clients, citing Invesco's fiduciary obligations and duty of care about people's data.
“As the quant team starts to employ better AI, it will help them make better decisions, but handing portfolios over to general AI is not something I see in Invesco's near future,” Schlossberg said.
He said he wants to add alternative strategies to the mix for clients, along with new products to meet demand among wealthy investors for more personalized portfolios. The Chinese retirement market has been identified as an area for potential expansion, through Invesco's joint venture with Great Wall Securities.
The group is the fourth-largest U.S. provider of exchange-traded funds and is one of the top 10 overall asset managers in the United States. Invesco reported net long-term inflows of $10.2 billion in 2023 – largely driven by passive investments – reversing course after $500 million of net outflows in 2022.
Schlossberg said he aims for the group to “recharge” its actively managed strategies — which suffered $29 billion in outflows in 2023 and $28.3 billion in 2022, per the company's results — while expanding its $90 private real estate arm. billion and its $40 billion private credit business. . He cited the latter as a potential deal-making target, but did not provide details and added: “We're not going to try to do everything in private markets.”
In private credit, Invesco has focused on bank loans and structured collateralized loan obligations with more recent expansions into distressed credit and direct lending.
“I think those are the places where we'll continue to grow organically, and I'll probably look for some places where we'll grow inorganically,” Schlossberg said. “I think in this area, demand and opportunity are still very high in private credit.”
Within the asset management industry generally, “consolidation will happen, and we've done a number of those deals historically,” Schlossberg said. “You don't want to be big just for the sake of being big, but size matters. Having the size and ability to reinvest in the business and compete is important.”
Schlossberg stressed that the group's priority is to drive organic growth to strengthen its balance sheet and improve returns to shareholders.
He added: “But I think there will be more (deals), especially in the area of private markets, and we will pay attention to them.”
