Chart 56: What would get you more interested in investing in IVZ stock?
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Consistent above Amore favorable Lessregulationfor | More operating Longer term FX average organic —s market backdrop the industry leverage hedges growth
Source: BofA Merrill Lynch Global Research
« |VZ is confident it can achieve its 3-5% organic growth rate driven by three main pillars. The first being the ongoing search for yield driving fixed income flows/allocation which IVZ has benefitted from and should continue to benefit given their strong performance, distribution, and product set. The second being ongoing “barbelling” by clients which drives flows into passive and alternatives, two products IVZ has leadership in. Lastly, |VZ sees opportunity in its institutional channel, particularly in Asia which has had notable momentum.
e — Given the run up in rates, IVZ touched upon its fixed income exposure and what might be at risk of underperformance/outflows. IVZ mentioned roughly $100B of its AUM or ~13% was in fixed income that didn’t include short duration or floating rate, a number they feel is relatively small compared to some of its peers. Additionally, within that $100B a major portion had been underperforming because of strategic shorter duration, which in a rising rate environment should lead to outperformance and potentially negate some of the flow headwind.
« Regarding potential changes from the election, while very early, management thinks that whatever happens to the DOL Fiduciary Rule (delay, modify, etc.), the industry has already been shifting in a fiduciary direction, and they expect that to continue, though the pace could vary depending on the eventual outcome. Additionally, IVZ is relatively well positioned given its diversification among ETF/passive and active Strategies, as well as similar regulations in Europe that it has managed through. In terms of a lower corporate tax rate, that would not have much impact to IVZ given its Bermuda domicile.
eaiey Vance (EV), B-3-7, Underperform Presenting from EV was Thomas Faust, CEO, Laurie Hylton, CFO, and Dan Cataldo, Head of IR and Treasurer. Management reported relatively positive F4Q flows, expects organic growth to hold up well given its mix and performance, and does not expect a significant change in the DOL impact from the election, but would expect a significant benefit from a lower US corporate tax rate.
e | When asked what would get you more interested in EV’s stock, the majority of investors were fairly split between better high fee flows and ETMFs taking off (38%/31% respectively). Investors also thought increased capital return was
Bankof America
Merrill Lynch 2016 Future of Financials Conference | 17 November 2016 37
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