Invesco, the 16th largest manager of money market mutual funds, reported earnings and hosted a conference call yesterday, which contained several bits of information related to money funds. Invesco President & CEO `Martin Flanagan says of "cash," "And what we are seeing across the industry in the money fund business is that low yields and people seeking yield and greater returns continue to have outflows. Money fund movements still tend to be right now into fixed income products. That said, our money funds team continues to just do a very, very good job. [They're a] high quality team."
The company's earnings release Powerpoint shows (p.29) money market funds making up 17.3% of Invesco's assets. The company showed a 21.7% decline in money fund assets to $72.6 billion. Overall assets (including stock and bond fund) increased by $20.5% over the past year to $419.6 billion.
In the Q&A portion of the conference call, KBW Analyst Robert Lee asked, "I've got a ... kind of a strategic question on the money fund business. You guys weathered the storms the past couple of years very well, and I know it's a key part of your business. But when you look at your kind of institutional focus and you look at a lot of your competitors, where their asset bases are four or five times as large, some maybe even more, I mean, are you at all concerned that as that business evolves that that business is at risk of becoming sub-scale or in some way needs to be scaled up more?"
Flanagan responded, "Look, I think even with the runoff.... Currently, if you look at where it had been historically, you are still at historical levels, right? We were just a big beneficiary of big inflows during the crisis as being one of the managers that was doing a good job. And so it's a very high-quality team. I'd say one of the industry-leading teams if you just look at what they've done. It is part a part of the whole fixed income complex. So it's not sitting by itself. So that credit discipline and expertise literally goes across the spectrum."
He continues, "We think we have good scale now. I think at the end of the day, quality wins, and I think we are going to be one of the winners in that business. And again, it is just complementary to all of our fixed income capabilities and what we do. But, yes, as you look at it right now, I mean, that asset class is under pressure for all the obvious reasons -- people seeking higher yields, etc. `But that said, I think we are going to be fine."
