CEO Andrew Schlossberg says the $1.6tn asset manager is also open to deals in private credit.
Invesco is preparing to roll out generative artificial intelligence technology to cut rising compliance costs, but would not employ it to pick stocks anytime soon, says its chief executive.
In his first interview as CEO of the $1.6tn Atlanta-based asset manager, Andrew Schlossberg said Invesco would also consider deals to boost its private credit offerings.
Schlossberg, who replaced veteran chief executive 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 get 75 per cent of that job done, they can focus more of their energy and time on these growth areas and opportunities,” including getting reports out to clients more quickly, said Schlossberg, who was most recently Invesco’s head of the Americas.
He said the asset manager’s analysts have been using some form of AI for years, but played down the idea that the company would use the technology in investment decisions such as stockpicking. The group would take its time before extending AI tools to investments and clients, he added, citing Invesco’s fiduciary obligations and its duty to care for people’s data.
Schlossberg said: “As the quantitative team starts to employ better generative AI, it’ll help them make better decisions, but turning over the portfolios to gen AI is not something I see in the near-term future for Invesco.”
He said he wanted to add alternative strategies to the mix for clients, along with new products to meet the demand among wealthy investors for more personalised portfolios. He identified the Chinese retirement market as an area for possible expansion, through Invesco’s joint venture with Great Wall Securities.
The group is the fourth-largest US provider of exchange traded funds and is one of the 10 largest asset managers overall in the US. Invesco reported $10.2bn in net long-term inflows in 2023 — driven largely by passive investments — reversing course after $500mn in net outflows in 2022.
Schlossberg said he aimed for the group to “recharge” its actively managed strategies — which suffered outflows of $29bn in 2023 and $28.3bn in 2022, per company results — while expanding its $90bn private real estate arm and its $40bn private credit business. He cited the latter as a potential target for dealmaking, but did not give details and added “we’re not going to try to do everything in private markets”.
On private credit, Invesco has focused on bank loans and structured collateralised loan obligations with more recent expansions into distressed credit and direct lending.
“I think those are places where we’ll continue to grow organically, and I may even look for some places to grow inorganically,” Schlossberg said. “And I think in that space, the demand and the opportunities are still quite 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 just be big to be big, but size does matter. Having scale and the ability to reinvest in the business and compete matters.”
Schlossberg reiterated the group’s priority would be driving organic growth to strengthen its balance sheet and improve returns for shareholders.
“But I think there’s going to be more (deals), especially in the private markets space,” he said, “and we’ll be paying attention.”
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