Welcome to Invesco's First Quarter Earnings Conference Call. All participants will be in a listen-only mode until the question-and-answer session. [Operator Instructions] 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. Thank you, sir. You may begin.

Thanks, operator, and all of you joining us on the call today. In addition to the press release, we've provided a presentation that covers the topics we plan to address today. Press release and presentation are available on our website, 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 of the appropriate reconciliations to GAAP. Finally, Invesco's net response before and does not edit or guarantee the accuracy of our earnings call transcripts provided by third parties. The only authorized webcast are located on our website. Marty Flanagan, President and CEO; Andrew Schlossberg, Invesco's Head of Americas and who will become President and CEO upon Martin's retirement on June 30 of this year; and Allison Dukes, Chief Financial Officer will present our results this morning. After we complete the presentation, we will open up the call for questions. Now I'll turn the call over to Martin.

Thank you, Greg. And I'm going to start on Page 3, which is the highlights for the first quarter, if you want to follow along. The early part of 2023, provided investors and money managers reason for modest optimism as most major financial markets gain ground in that period partially offsetting the significant declines we saw last year. Inflationary pressures showed some sign of easing and the COVID-19 pandemic are all now [ph] behind us. That said, heightened level of volatility persists in the financial markets reacted with cash in March as we experienced several bank failures during that period. Investors once again, safety and risk-off assets and net flows across the industry were pressured again. Although organic growth remains lower across our industry, Invesco supersite platform generated $2.9 billion net inflows in the first quarter, margin return to organic growth. This progress is especially significant considering the mix feature for the industry overall during the quarter. Growth this quarter was driven by areas in which we've invested for years and have been intentional in cultivating deep client relationships. Fixed income capabilities, the institutional channel, ETFs, all experienced strong net inflows during the quarter. Each of these areas has demonstrated Invesco's ability to sustain growth throughout the full market cycle. Fixed income delivered net flows for the 17th straight quarter, while the institutional channel has now been in net flows for 14 straight quarters. As we'll discuss later, our pipeline remains strong for telling well for future growth. Our solutions business helped drive the institutional business to net long-term inflows of $6.6 billion in the quarter. Meanwhile, net long-term flows in ETF vehicles have now been positive 10 out of 11 last quarters. Growth in the ETF business is broad-based with net inflows this quarter, both equity and fixed income…

Great. Thank you, Marty, and good morning to everyone. Let me start by saying how grateful I am to Marty for his tremendous leadership as Invesco's CEO these past 18 years. Marty has truly been a visionary in the industry, and he's positioned Invesco extremely well to win in a fast-changing environment. And during my 22 years at Invesco and working closely with Marty during his tenure as CEO, I've seen it have been a part of the evolution of our firm. And during this time, we have routinely updated our strategic priorities ahead of changing client needs, evolve the leadership and develop the talent of the firm. And I'm looking forward to the opportunity to build on this strong foundation and a legacy that Marty and our team have developed over many years of hard work and dedication for our clients, our shareholders and everyone at Invesco. I know that we have the right capabilities. We have deep client relationships, strong talent and an experienced executive leadership team in place to be a force in the asset management industry for years to come. I'm also looking forward to assuming the CEO role at a time when, once again, our industry is going through a meaningful change with new technological developments, enhanced client delivery capabilities and a high bar for investment quality. As an organization, we're committed to our growth strategy and the key capabilities that we've been discussing with all of you, including ETFs, Greater China, private markets, active fixed income and active global equities and our solutions offering. Our executive leadership team is focused on further enhancing these capabilities and evolving these strategic priorities, both at pace and with conviction. And as Marty noted, we're very well positioned to capture demand and develop even deeper relationships with our clients over time. I'm also committed to driving a high level of profitable growth and financial performance, continuing to further strengthen our balance sheet and return capital to shareholders. And finally, I'm excited to engage more deeply with the investment community, and I look forward to spending time and working with all of you in the quarters and years to come. And with that, I'm going to turn it over to Allison to provide a more detailed look at our results.

Thank you, Andrew. And good morning, everyone. I'll start with Slide 4. Overall, investment performance improved in the first quarter with 64% of actively managed funds in the top half of peers or beating benchmark on both a three-year and a five-year basis, up from 61% and 63% in the fourth quarter. We have strong performance strength in fixed income and balanced strategies for their solid client demand. Performance lacked benchmark and certain U.S. equity strategies, but performance is trending positively and a number of global equity and alternative strategies. Turning to Slide 5. We ended the first quarter with $1.48 trillion in AUM, an increase of $74 billion as compared to the last quarter as most market indices posted gains despite continued volatility. Market increases, foreign exchange movement and reinvested dividends increased assets under management by $65 billion. Total net inflows were $9 billion, inclusive of $8 billion into money market products. I'm pleased to note a return to organic growth as we generated $2.9 billion in net long-term inflows in the first quarter. The improvement in net flows, given the ongoing uncertainty in financial markets, further demonstrates the diverse nature of our business mix and should once again place Invesco among the best-performing asset managers in terms of organic growth. Asset capabilities generated net inflows of $5.4 billion while net redemptions and active strategies moderated with net long-term outflows of $2.5 billion in the first quarter as compared to $10.5 million in the fourth quarter of last year. Key capability areas, including ETFs, fixed income and the institutional channel, all contributed to our growth this quarter. Invesco ETF generated $2.8 billion of net long-term inflows in the first quarter, equivalent to a 4% annualized organic growth rate. Volumes have been down across the ETF industry from the record…

Thank you. [Operator Instructions] Our first question comes from Craig Siegenthaler with Bank of America. Your line is open.

Thanks, good morning everyone.

Hey, Craig.

So my question is on China. So you're seeing bond flows improve really throughout much of the world, but not in China. And I'm guessing the comparatively low interest rate backdrop in China versus the U.S. could be one factor. But can you talk about what's driving the net redemptions in China, not just in your Great Wall JV but across the industry? And also any perspective you have on a rebound, especially given pretty strong long-term dynamics, including aging populations and retirement?

Yeah. I'll make a couple of comments and Allison, Andrew can chime in. So as I said, our view has not changed. It's the single greatest opportunity in asset management, and we have a very, very strong position there. You're right. What's really happening is really coming out of this COVID period and frankly, Andrew and I, with the leadership, we were just in China two weeks ago, and I feel they're absolutely focused on economic growth. You can actually feel it as the energy is very, very high. I anticipate the markets will start to follow that in investor behavior behind that. And for sure, by the second half of the year, if not before. And we do look at this first quarter and early December last year is really a transitional period and the redemptions that you saw in fixed income there. But again, we're starting to see behavioral change and frankly, starting to look towards some more balanced equity products to -- in China. So we continue to be bullish about the long term.

Yeah. I would just say specifically, Craig, I mean, what you saw is the yields really increased in the fourth quarter, and that obviously drove prices lower. And that caused a bit of a spook and it really set investors to redeem and drive redemptions higher industry-wide. So I think to your point around what are we seeing in the industry, and that was really an industry phenomenon that drove that behavior. It was very pronounced coming into the first quarter. We've definitely seen it begin to moderate the first quarter unfolded and feel better as we're starting the second quarter for sure as we see what's happening there. That also drove product launches lower. And as you know, product launches drive a lot of the flow activity in China. And so in the first quarter, we only launched four products, and they were relatively low in terms of the flow capture there. And again, that was consistent with a lot of the industry dynamics. We're optimistic to see more in the second quarter. We have a pretty strong pipeline of product launches, and we're optimistic that market sentiment is improving modestly and a lot of the dynamics in that phenomenon should have played itself out.

Great. Thank you, Allison. And just as a follow-up, I really appreciate those details behind the real estate business. But as you take a step back, how much of that $73 billion of AUM is in vehicles that can be redeemed versus vehicles that are more permanent or long term and can't be redeemed? And then is there any high-level data you can give us to give us some comfort around especially the office portfolio? I'm thinking loan-to-value, interest coverage, ratios like that.

Sure. Let me take a stab. I'm not sure if I could answer exactly what percentage could be redeemed. I think what I would say is, in general, through cycles we see on average about 5% to 6% of our AUM and a redemption queue. You would expect it to be a little bit higher than that in times of market stress. You'd expect it to be a little bit lower in better markets. And I'd say we're probably running a little bit higher than that 5% to 6% at the moment, but it's not in a disconcerting way. It usually takes a few quarters to fully fulfill some of those redemption requests. And then we also see that in times of equity market recovery, some of those redemption requests actually get canceled. So you manage through, and we'll see where it goes, but we don't feel any sort discomfort with where it is now nor is it unusual relative to past cycles as we think about coming into COVID. I would note, we've been managing our office exposure down since COVID began in March of 2020. So when you look at where our office exposure was coming into 2020, it made up about 45% of our total portfolio. Today, that's down to about 35%. And as we noted, that's going to be even lower in the United States, and we've been managing it down more aggressively in the U.S. It's going to trend quite a bit higher in places like APAC, where you just have not seen an impact to the office enviroment. In terms of loan-to-value, I would say, generally speaking, it's about a 30% loan to value, it's not running a whole lot higher than that. I will also say in terms of our lenders and the sources of that leverage, it's very well diversified. No concerning exposures anywhere and we feel like we have a lot of diverse good sources of funding, and those have held up really nicely.

Great. Thank you very much.

Thank you. Our next question comes from Daniel Fannon with Jefferies. Your line is open.

Thanks, good morning. Andrew, I was hoping if you could expand upon the areas of growth, ETF, active fixed income, China solutions, all the areas that have been listed in the presentation and you talked about -- Marty and team have talked about for some time. Curious about how you're thinking about on the margin changing those areas of increased focus or less given the market backdrop today is much different than probably when these were outlined initially a couple of years ago?

Yeah. Thanks, Dan. Look, like I said at the beginning, over the whole course of my career, the last 20-plus years at Invesco, we've been continuously updating our strategic priorities and adjusting and changing where client needs are going and where we anticipate them going. And I've been a part of putting together those strategic priorities that Allison and Marty have been talking to you all about over the last year or two, and I frankly don't see any of those really changing in terms of our priorities at all. But what I would say is how do we come up with them. And they're really a function of where we believe client demand will grow and where we think we have competitive strength to build on. And so the areas that I would highlight will sound similar to what you've heard before. I'd really emphasize the barbelling of client needs between also private markets, and ETFs and indexing is a huge part of the growth and where we have strong franchises. We've talked about China as a growth market for us, and we believe in that regardless of geopolitics and ebbs and flows and cycles. We have strong franchises and active fixed income and solutions and we're going to continue to scale those. And we're going to ensure we have quality and differentiation in our active equity with an emphasis on global in particular. And we're going to continue to build scale through the back and middle office transformations we've been talking about with investments in both foundational technologies and innovation for enhancements. And I guess what I'd say is we'll continue to look at those and evolve them. The team is highly focused on executing -- we're going to continue to accelerate the pace with regard to that and continue to get sharper on our strategic execution to deliver. So that's pretty much where we are right now, and we'll continue to keep you updated.

That's helpful. And then, Allison, just wanted to clarify some of the expense numbers you gave for the quarter. I think you said there was a $10 million onetime benefit. I think that was in G&A. But maybe if you could talk about what the kind of right run rate as we think about the rest of the year based upon what we got here in the first quarter in terms of expense levels?

Sure. So yes, I noted that there was a $9 million indirect tax credit that was in G&A, and that would not recur. So you shouldn't expect that. I also noted that inside of comp expense, we have an unusual $13 million of retirement expense related to our executive changes. And we expect to incur another $20 million related to the same in the second quarter of this year. And so when you think about the $9 million that won't recur plus the next $20 million of retirement expense, I would say beyond those, we would expect we can hold expenses roughly flat for the next few quarters, adjusting for variable comp, of course, and that's roughly flat as all things being equal, but we would adjust variable comp in line with market changes.

Understood. Thank you.

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

Thank you. And good morning. This is Adam Beatty in for Brennan. Just wanted to ask about the institutional pipeline and maybe the pipeline to the pipeline, if you will, how discussions are going there, products or areas of interest. And I think in the past, you've also said that the blended fee rate on the institutional pipeline is roughly the same as the firm-wide blend. Wondering if that's still true after all the 1Q fundings? Thank you.

Yeah. Let me make a couple of comments, Allison will chime in here. So let me talk about outside of the United States, as I mentioned, Andrew and I were just out in Asia. The client interactions in China are very strong. We continue to expect growth there institutionally. Japan, also, we look at that as a market fixed income market, in particular, actually the equity. There's demand for equity in Japan, which has been a while since that's been the case, global equity in particular. And Australia, the client interactions are very strong and that market, in particular, is very much along the line what Andrew just mentioned have been very barbell oriented probably the most extreme that sort we sort of run into and we're positioned very strongly against that, whether it be in private credit is an area of more recent interest where historically it has been I believe real estate and you've heard of our success on the passive side in Australia. And the same thing in the UK, it's the institutional market continues to be an area for us, fixed income, in particular, actually [indiscernible]. So it's all heading to right way institutional but --

I mean, we're well positioned with the strategies that Marty was just alluding to, where we're seeing more and more investor interest be it private markets or indexing fixed income, multi-asset, all sort of in demand. One thing I'd say is Allison can maybe share a couple of details definitely with dislocation that's going on in the market over the last several quarters, we are seeing institutions sort of rethinking their allocations. It's putting decisions in motion that we think are going to be opportunities for us to capture. At the same time though, it is delaying some of those decisions as they're looking for more clarity. So it's a bit of both ends of the spectrum story.

Yeah. Adam, I just add on the fee rate. And the fee rate does tend to run from -- it ranges from mid-20s to mid-30s basis points. It has been actually holding up very nicely. If you think about the information that we shared on Page 7, you can see a large portion of the pipeline is comprised of active equities as well as alternatives and specifically, that would be private markets primarily. So it is running on the higher side. I was pleased to see the active equity component of it, recognizing we had some meaningful active equity fundings in the first quarter, and the pipeline is replenishing nicely in a really well-balanced way. It does reflect the barbelling that Andrew noted, but it's holding up nicely in terms of fee composition.

Excellent. Thank you for all that detail. I appreciate that. And then just a quick follow-up on G&A, and you had a couple of callouts. But just in terms of the sort of third-party spend, I was wondering if that was unusually lower what the trajectory might be looking like for that in the future, just in terms of cost control, it sounds like you've got that pretty well in hand. But just curious on the outlook there? Thank you.

It was on the low side this quarter, and I would expect it to fluctuate more. I don't expect that lower third-party spend would hold necessarily. But as we noted, the technology, foundational enhancements we've been making, you're going to see that show up in G&A and property office and technology. So I think my comment earlier in response to Dan's question around excluding the indirect tax benefit and excluding the retirement expense, I would expect expenses to be roughly flat for the next few quarters, all things being equal.

Got it. That's great. Thank you, Allison.

Thank you. Our next question comes from Bill Katz with Credit Suisse. Your line is open.

Okay, thank you very much. Marty, congratulations on your next phase of your career and Andrew as well. So just coming back to the private market, private credit opportunity. Could you maybe talk a little bit, go into the next layer down in terms of where you see the opportunity on direct lending? And then incrementally, where else you might sort of need to spend? And then, Andrew, you mentioned you're seeing some reallocations by institutions. Can you talk about where they're coming from to fund some of the new opportunities? Thanks.

Let me have a couple of comments and I'll say here. So first of all, Bill, thanks for your comments. The fundamental strength is bank loan CLOs, and that is the core of the franchise. We have been building out the same direct lending. We do see that as an opportunity. We also know some crowded space. But we have good capabilities for performance. So that is a focus for us in private credit also where we are certainly see a manager institutionally led. Frankly, Australia tends to be an area that's focused on right now on our capabilities. So we'll see where that goes. But again, those are two add-ons of our core capabilities there, and we think there's opportunity.

I don't know if I'd add anything there. I'll say this, and I'll let Andrew chime in because I think you actually interacted that last part of the question there. In terms of where we expect to -- how we expect to continue to fund growth in the key capabilities, I would just say that's exactly what we've been doing for the last two years. And so as you think about the fact that we've been managing expenses lower for the last 18 months. Obviously, that's been against a very challenging market backdrop. We've been investing throughout and we have been reallocating ever since we did our strategic review a couple of years ago, consistently reallocating expenses to fund these key growth capabilities. So the growth of China, the growth of private markets, the growth of our fixed income business, our ETF franchise, we have been investing all along the way and really holding expenses very tightly managed, well maintained alongside that. So I just want to make sure it's clear that's not a new strategy. That's exactly what we've been focused on as a team.

And Bill, thanks for the question. What I would add to Allison's last point and then to pick up on Marty's is just to emphasize what Allison said that reallocation is going to continue. And it's going to continue towards private markets, both our real estate equity and debt and our private credit, which comprises the bank loan strategies that Marty was talking about as well as direct lending and distress that. We see demand over the long run continuing to grow there. In terms of your question about where we're seeing money come from, it's a little early to pinpoint it exactly. But a couple of things we're seeing. One, we're actually seeing people moving beyond their passive cap-weighted benchmarks and actually moving out to other forms of indexing, but also into active strategies, both on the equity and fixed income side, which we think is a real positive thing. We're also seeing them kind of reallocate across their private markets and alternative portfolios leaning more towards some of the things that we were emphasizing in credit. But again, that's early days as people are working through their private portfolio is taking a little bit longer. So those are some of the areas where we're seeing movement.

Okay. Thank you. And then just as a follow-up, you mentioned that to continue to build the balance sheet as you go through this year in anticipation of sort of paying down the debt in January of next year. Looking beyond that, could you talk a little bit about capital management priorities and how you think about M&A, what you might need versus capital return? Thank you.

Yeah. Let me make comments and turn it over. So -- just at a high level, our priorities don't change. It has not changed, and Andrew and Allison can talk about it, is really reinvesting in the business. And I think we've probably done the best job that we've done as a management team of reallocating into areas of growth and sort of squeezing cost out of areas that are less an opportunity as you go forward. We've always looked at M&A as fueling a strategic gap if we can do it organically, and that really has not changed. But Andrew, why don't you pick up with your thoughts there?

Yeah. I mean just to absolutely emphasize what Marty said, the commitment to our balance sheet and improving it remains a significant focus for me and the executive leadership team moving forward. We'll continue the priorities that Allison and Marty have described. With regard to M&A, just as Marty said, we feel really good about the portfolio of businesses we have, the geographies, the position to our clients, and we feel like we have scale and strength to move forward with the business we have today. We'll continue to pay attention to the M&A environment, but it's not the priority at the moment.

I think the only thing I would add to all of that is our strategy is to put our balance sheet in a position where we can be opportunistic. We feel very good about the capabilities we have, but we're very focused on improving the balance sheet. I'm very pleased that we were able to raise the $2 billion in the midst of this environment over the last six weeks. We've got a terrific, very supportive group of lenders. I think it puts us in a great position to be able to continue to manage our leverage profile down both at the upcoming '24 to be able to pay that off of a combination of cash and usage of the revolver. And beyond that, our next maturity is in 2026, it's $500 million. I think we'll be in a terrific position to continue to manage our capital structure down from there. So I think if anything, we feel like we're on our front foot, and we continue to put ourselves in a position to operate on our front foot.

Thank you.

Thanks, Bill.

Our next question comes from Ken Worthington with JPMorgan. Your line is open.

Hi, good morning. Thanks for taking the question. First, Marty, it's been a pleasure working with you all these years. First Franklin then Invesco. So best of luck on the next step in your career. On China and Asia, as mentioned a number of times, money coming out of fixed income, where is that money going to? Is it largely cash? Or is it some of it going into equities given the rally we've seen there? And is there a better opportunity to capture that money as it transitions from one asset class to another? And in terms of maybe what's going on in Asia outside of China, I think we sort of danced around this a couple of times. But to what extent are higher rates impacting the demand for some of Invesco's more popular yield-focused products like bank loans to real estate and CLOs? I think like you said you raised three CLOs that seems to be contrary to what we're seeing elsewhere. So you're having success there and then bank loan seems more standard with outflows. So how does this all sort of circle around the demand for Asia for these higher-yielding products?

Yeah. Let me make a couple of comments and thanks for your comments, and by the way, 18 years goes very fast as you all know, and that's just here. So let me -- Allison will hit on this. So what we've seen in China and say, in the retail market right now, I mean, you are definitely seeing the beginning of investor confidence strengthened, and so we are seeing moving more towards balance products and equity products there, which is not in the case for some period of time. And again, as I said, Andrew and I were just there. You just can sense the confidence growing in the marketplace. So we anticipate that to continue to grow. When you -- the institutional clients, there are like -- all of them are very, very sophisticated they don't move their portfolios that much. I understand the point, I'd say they're probably more reflective at the moment of where do they want to see the market settle out for their investments. So we don't know if there's any real great insights there. What we are seeing in Japan, for example, there is interest in active fixed income, which has really not been experience for us recently, it's been more passive, and also growth in some global equity capabilities, again, which is not what we've seen for a number of years. I talk about Australia, so I won't go there but Andrew what would you add?

Yeah. The one thing I'd say in the long run, Ken, to the question on China, the single biggest opportunity is the retirement market development in China. And so the notion of looking at more traditional asset allocations and a long-term asset allocations, we think is going to begin to find its way into that marketplace. Also, the digital sort of distribution and the way that digital is the primary way that retail investors invest, there is a higher turn. But that also means that they're able to kind of look at the trends and we're starting to see some of the equity movement even early on there. So that's all I'd add for now.

Great, thanks very much.

Thanks Ken.

Thank you. Our next question comes from Michael Cyprys with Morgan Stanley. Your line is open.

Great, thank you. Good morning. So just a question on the Greater China business. Just curious how you think about the stickiness and duration of AUM in your Greater China business versus other regions of the world. I think if we look overall, your retail business has about 3.5-year duration or so for your retail customers. Just curious how different that is in China? How do you see that evolving over time? And then how does the cost of gathering new flows in China compared to, say, the U.S. business?

Yeah. Again, I'll make a couple of comments and Andrew can chime in. So -- but we're very bullish. I mean, it is a single largest opportunity in asset management. Just if you look at a global flows into the industry, China is going to make up third of those flows over the next three to five years. And that's just for all the reasons that we know the size of the population, the absolute focus on developing a retirement system and so very different than most markets. You're not in over in dollars, there's new money coming in. So if you're strongly placed, you're going to grow and we are strongly placed. Also very differently that ever started it on so much the money probably half the flows are coming through a digital wealth platforms right now. It's actually astonishing just -- and financial, for example, they have 800 million clients and so you don't need a lot of money to make a big impact. So I'd say we're just early days in what you're going to see happening. So the cost structure, I think it's also very important to know, it's a very, very competitive market. It's probably most might be the most competitive market in the world. So it's not easy to be successful there, and it's not inexpensive to operate there. But Allison can speak in more details. It's very profitable, and we have scale and it's reflected in the margins that we have. But ---

Yeah. I would say, look, it's accretive to the firm margins. It's a well-scaled business, even though we think we've got a lot of room to continue to grow it, but it is accretive to the firm margins overall. And while it is a competitive marketplace, as Marty noted, we're the 12th largest asset manager in China and the -- we're the largest foreign asset manager. The 11 ahead of us are all Chinese owned. And so we are very well positioned. We are a very competitive player. We have an opportunity to really not only grow as the market grows there, but also take market share as we've been able to do in the last few years. So in terms of the cost of gathering, I think it's a very well-managed accretive business overall.

Yeah. And the only thing I'd add just -- and it was reminded actually being on the region recently, as Marty mentioned, I mean it's we're very well regarded in the market. And our reputation has been built over 20 years. In fact, we're celebrating our 20th anniversary this year of IGW, of Invesco Great Wall, and being in that market for a long period of time, not only build the scale that we have today that Allison was mentioning, but also just the reputation with all parts of the ecosystem there. And so we think it's a real differentiator, just the longevity of our JV.

Great. Thank you.

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

Hi, good morning, everyone. I think this was the first quarter of meaningful UK inflows in many years. Could you flesh that out a bit more? Is there something unique or lumpy that happened? Or are you starting to sense a real positive shift is finally emerging there? Thank you.

Look, I'll make a comment, Andrew, and EMEA for a number of years. So he was lucky enough to be there during the Brexit. So perspective. A lot of changes happen and a lot of good work. I feel really good about what's happening in the UK, and around the continent. I was in institutional retail, and there's been a lot of focus there. There was a big institutional mandate that funded this quarter, but I'd say the underlying fundamentals are strong. And we anticipate -- also noted, all things being equal, we anticipate to be a net inflow here for the year, but Andrew you want to add.

Yeah. I mean, it's all -- we've always had a high-quality sort of active focus in the marketplace in the UK, in particular, our legacy on the equity side and the performance is getting -- has gotten stronger in those asset classes and as some demands come back, we're capturing it. So I'd say it's largely on the back of good investment performance.

Yeah. On the yields of that investment performance, we're seeing retail redemption improve overall. And so obviously, the UK is working through their rate environment and their economic environment, much like we are -- we think we're really well positioned to capture additional flows, though, as rates stabilize and as sentiment at some point, improved over there as well.

Thank you.

Thank you. Our last question comes from Alex Blostein with Goldman Sachs. Your line is open.

Hi, all. Thanks for taking the question. This is Luke on Alex's behalf. As part of Andrew's announcement, you guys highlighted a number of other operational realignments. Can you just help frame the operational benefits of these and any potential cost saving opportunities that could be realized? And over what period of time do you think that could occur? Thanks.

Yeah. So I'll pick up on some of the benefits, and I'll let Allison chime in as well here. So there's a few, and let me start at the top. We definitely believe it's going to help us accelerate the execution of the strategy and the strategic priorities we've been outlining. We think it's going to help us internally streamline some decision-making, simplify ourselves and be able to move at pace, and that's what's required by our clients right now to move at pace and to deliver good results and quality service. We think that these changes will also help us enhance our investment quality over time. And ultimately, we think it's going to help us further leverage the global operating platform and the scale that we've built over time. Allison?

Yeah. Look, I wouldn't point to cost savings just yet. There are a lot of ins and outs and puts and takes as we're thinking about reorganizing around these changes, but really chiming in on Andrew's comments. We're very focused on making the organizational -- organization simpler and more streamlined so that as we gain scale, we can generate additional operating leverage and really starting to get ourselves organized in a way that we do not have to grow expenses too much as markets improve. But more importantly, as we grow organically and create that organic fee rate growth. So I think at this point, we think these changes are going to be very helpful, and they organize the company in a more simple way. And we'll look forward to sharing more as we continue working away.

And let me just wrap up. So the other really important thing and we've been talking about it here today and previously, this will absolutely facilitate being able to reallocate assets or dollars in time and expertise to areas of growth. I have a high degree of confidence and Andrew and Allison and the team, I said that before, is going to be the most experience and talented team that Invesco has ever had and a high degree of confidence in the future and what they're going to be executing against. So it's really very exciting for clients, employees and shareholders very importantly. So with that, thank you very much, and we'll talk to you in July.

Thank you.

Thank you.

Thank you. And that concludes today's conference. You may all disconnect at this time. Speakers, you may stand by for post conference.