Businessweek Talks- Invesco CEO Marty Flanagan

upcoming issue of Bloomberg Business Week magazine. Marty, nice to have you here. How are you well? Thanks to happy and UHO, great and happy one to you and all your listeners and watchers. Well, good to have you here in fingers Cross. That is not like how do you see it? And do you think it's going to be another difficult market year? Uh? Look at you bring up a good point. Was you know something that none of us have ever imagined living? And uh, I will say a lot of the work that was done in sets

up a very interesting environment going in one. I think everybody's looking for strong economic growth in the United States, in particular in those countries around the world, driven by the optimism and the ability to start to get back to work with the vaccine coming and all us frankly learning how to work in different ways. Yeah. Absolutely. Well, what's interesting is our Peter Koy, Bloomberg Economics editor, uh,

Bloomberg Business Week Economics editor. He's got a story out there about whether or not we're setting up to be like the roaring nineteen twenties, the what we saw after another time period in our history where we had a pandemic, we had a tough economy. Um, and whether or not we see we you know, we come roaring back. How

do you see it? Do you think that we might be creating bubbles right now and that we're going to pay the piper at some point, or do you see us setting up for maybe a really positive type of market environment, some economic momentum that feels much more normal and maybe even upbeat. Yeah, so, uh, lots of good

thoughts there. Let's go to the more immediate outlook, and I think you can really have, as your connects are saying, a really strong economy right with all the fiscal stimulus has been put in there, with all the monetary policy of changes that have been put in monetary support. But Frankly, all businesses really put the head down and did everything they can to be operating more efficiently. You know, really is a protection last year been you look into this year,

you can see some real earning surprises. We're going to need that because of some of the evaluations. But you know, the momentum that we're seeing in our business is as strong as it's been in two and a half years. So I do think that as part of the optimism that's coming out of it, and really people seeking greater returns as you know, with heels being so low and you know so much of the markets. So Marty, what will the pandemic? What's been the impact on your business

and running uh a money management business? Uh in what has been kind of the lasting impact here? Yeah, so I would, uh, you have to put in perspective, um, you know, I would say it was harder for money managers. I'd say us, I will say specifically than the national crisis, just because the steepness of that and so quickly the market pullback. And whoever would imagine having in your global workforce working from home. We didn't, everybody else did. But

how we're interacting the clients around the world has forever changed. Um. Yeah, every you know that we can bring uh you know, the whole organization to our clients in a moment's notice. Now we could have done it before. It just wasn't the cultural thing to do. We will end up seeing clients in person going forward. But these digital engagements have just really changed the game. I think that's a really positive thing. Um And I will say the other thing.

Our industry has been, as you know, you know, going under tremendous change. And that was happened before the crisis. But the bigger gonna be bigger and their only stronger. It's going to happen faster posts this pandemic. Well, and it's interesting. We've seen a fair amount of consolidation too in your industry. What's your expectation do you think that there will be further consolidation within the asset management and

money management industry this year? I do? You know, Look, I've been saying that for a period of time, but I will say, uh yes, ever since I've gotten the industry, there's calls for consolidation. Very little happened. It's very different though. Now clients are working fewer money managers than that's happening around the world. Uh, there's a greater expectation what clients

want from money managers. That's ultimate a very good thing for clients and consumers, but it is putting a lot of pressure on money managers and that is really where you absolutely need scale within your business at multiple levels UM, and that's how you're going to serve your clients. They want depth and breadth and capabilities beyond just managing money. So I think you're going to continue to see combinations.

But the other thing, YEA, the growth, it's not all going to be through M and A. I mean there will be just firms that are disadvantaged to leave no good of the stronger firms. Nelson Pelts is on your board. His try On Fund Management has a nearly ten percent holding in the company, I think the third largest in invest go. What's the end game? I mean we're just talking about consolidation UM. What are you hearing from him or what do you expect in terms of how this

relationship might impact the company? Yes? So, Uh, Nelson joined the board as it ed Garden, his partner and Tom Fink, who was the CEO of UM Bearings at the end of last year. As you know, both all three really

talented people that they know that's center extremely well. UM and uh Nelson and Ed and UM consists of our board view the industry in a very same way, UM that it can just be a large, growing industry, but it's going through dramatic change and that UM, you know, this this sort of movement to stronger and stronger, larger than more capable firms is really you know, top of mind with them, and UM, you know, it's just very helpful to have you know, people have been through uh

all sorts of change in development and other industries to and bring in that perspective. So it's been early days for all three of them, but it's been great additions to what is already a very strong board. Is it safe to say you have to you have to be bigger to go after the likes of black Rock and Vanguard. Uh? Yeah,

So I look at a different way. Really, it's really to serve our clients, right, and you know what we're seeing from our clients all around the world is they want everything for passive portfolios, to factor portfolios, to high conviction active alternatives, and they want you know, a bunch of analytical tools and support to help them do their job. And you really have to have skill to do that.

And so not just you know, investment keep uh skills, but also the operational skills and the ability to invest in things like technology of CERTA clients. And if you do that very well, UM, you know you're going to continue to grow. Hey listen, you know you just said you know, yeah, I know you talk about all the options that your clients want, and that's really what you know what you guys stay focused on what your clients want,

want investors want. But I do wonder to UM, we've had so many conversations here at Bloomberg about you know, actively managed e t f s. You know, what do you think is the future of that? So we just launched for nonparents parent ETFs in December. UM, it's actually very interesting. So obviously the EATYP growth has been just spectacular. It's largely been in capulating indexes as you know, uh, but where we have been very successful is in the

factor area. So it creates another alternative where you can have no transparent ets for active management within a different vehicle. There is a preference towards that vehicle. UM. That said, we're really excited with the launches, but I suspect this kind of take some time before you're going to see a lot of momentum in the area. But again, very few money managers have that capability one of them, and

we're happy to have it. Hey, listen, One place that you guys are seeing a lot of momentum in and you continue to focus on it, Marty, is obviously what you're doing in China. And I know you guys are looking for growth. I think you put this out last year of more than your China assets in three years. Um, how is that going? And I know you've been looking to boost your ownership to I think in the joint

venture that you have there. How is it going? And are you at all a little nervous about a new administration and what the relationship will be between the US and China. So UM, you know, right now we manage seventy six billion dollars of assets in China for Chinese, whether it be through our joint venture you're referring to directly with institutions. The growth has been unbelievable. It was a record year again for um our China business. In the last half of the year, they had something like

seventeen billion dollars and that inflows. So it is um, you know, an overnight success after twenty plus years. Uh, you know in the marketplace. UM, I think frankly, uh uh, the relations between US and China is important. Uh. It was definitely creating complications for all of us that were operating there. Um, you know, not in the material way, but I'd say it was uneasy as you were looking

into the future. And I think it's really important for two world powers to um, you know, be on the same page, and it's good for each country, is good for the world. So I'm hopeful that that's what's gonna happen us we look forward here. Okay, it does feel like a little bit of a new day, safe to

say early days, but it sure does. Yes. Well, let me also ask you, um, just some of the things you just have about a minute or so, a minute and a half left here, some of the things that we are talking about increasingly, whether it's bitcoin, whether it's Robin hood, what of kind of some of the newer trends that are out there that you find it interesting that you think investors overall, folks in the financial community, in the investment management world need to pay attention to

right now. Yeah, so it's it's a good question. It all depends on who you are, right but I think you have the reality still gets back to basics. Truly understand what you're trying to accomplish, what returns you're trying to get, what risk really to take in, you know, the basic of time horizons. Uh, developments such as bitcoin and the like. I think it's still early days. It's obviously very very topical. You're seeing a lot of energy behind it right now. Uh, I'd say it's not not

for everybody. And my basic view is that, um, very interesting. But you know you're going to see central banks in the game, you know, at some point too, and I think that puts the value of it at risk quite frankly. Is that two years after so I don't know. Yeah, Hey, let's one last thing. Um, spacks is another thing that they're just kind of exploding. Um. Does it make you at least a little bit nervous in terms of what that might mean for the investment world? Does that look

like a bubble to you? And just got about thirty seconds here, Yeah, so any time something grows that fast and it's so wonderful. It's probably good to question, you know, how long it's gonna last, so I would warn the bubble camp quite frankly. So all right, we're gonna leave it on that note. And Marty, thank you so much.