Invesco Flows Stall as Passive Demand Cools
Net long-term inflows collapsed to $8.0 billion in the second quarter, down from $18.9 billion in the prior period.
Invesco’s organic growth engine sputtered in the second quarter as net long-term inflows fell to $8.0 billion from $18.9 billion in the first quarter and $18.2 billion in the final quarter of 2025. The slowdown marked the sharpest sequential deceleration in two years and left average active assets under management at $1,184.3 billion, a 3.3% quarterly decline.
The weakness was most pronounced in active strategies. Fundamental Equities saw net long-term outflows of $2.4 billion in the first quarter, dragging AUM down 1.1% to $318.1 billion in the second. QQQ, the firm’s flagship Nasdaq-100 ETF, reversed course after its December 2025 conversion to an open-end fund structure, posting $10.8 billion in net long-term outflows in the first quarter and a 10.8% quarterly AUM decline to $315.5 billion.
Passive demand remained a bright spot. ETFs & Index Strategies AUM rose 2.3% to $753.5 billion, outpacing the firm’s 0.7% total AUM growth, as market appreciation offset softer inflows. The China joint venture continued its expansion, with AUM up 3.2% to $135.5 billion after $8.7 billion in net long-term inflows in the prior quarter.
Liquidity preferences shifted decisively. Global Liquidity AUM jumped 5.0% to $214.5 billion, fueled by $14.3 billion in net inflows—the segment’s strongest quarterly intake since early 2025. The rebound reversed a first-quarter stagnation and contrasted with net outflows of $1.8 billion in the fourth quarter of 2025.
Profitability bore the brunt of the revenue slowdown. Adjusted operating margin compressed 190 basis points to 34.5% in the first quarter, pressured by higher employee compensation and marketing costs. The squeeze came despite lower property and technology expenses, which provided only partial relief.
Capital return took center stage. Invesco repurchased $40 million in common shares (1.6 million shares) in the first quarter, a sharp increase from negligible levels in prior periods, and raised its quarterly dividend to $0.215 a share. The moves signaled a renewed focus on returning cash to shareholders amid tepid organic growth.
Management offered little near-term relief. With active equity outflows persisting and QQQ’s post-conversion tailwinds fading, the firm’s ability to reignite inflows will hinge on its passive and liquidity franchises—where demand remains uneven.