Good morning, and thank you all for joining us. As a reminder, this conference call and the related presentation may include forward-looking statements, which reflect management's expectations about future events and overall operating plans and performance. These forward-looking statements are made as of today and are not guarantees. They involve risks, uncertainties, and assumptions, and there can be no assurance that actual results will not differ materially from our expectations. For a discussion of these risks and uncertainties, please see the risks described in our most recent Form 10-K and subsequent filings with the SEC. Invesco makes no obligation to update any forward-looking statements. We may also discuss non-GAAP financial measures during today's call. Reconciliations of these non-GAAP financial measures may be found at the end of our earnings presentation. Welcome to Invesco's second quarter results conference call. All participants will be in a listen-only mode until the question- and- answer session. At that time, to ask a question, press star one. This call will last one hour. To allow more participants to ask questions, only one question and a follow-up can be submitted per participant. Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now, I would like to turn the call over to your speakers for today, Martin Flanagan, President and CEO of Invesco, and Allison Dukes, Chief Financial Officer. Mr. Flanagan, you may begin. Thank you. Thank you, operator, and thank you, everybody, for joining us. We've reached the halfway point in the year, and we're continuing to see strong momentum in our business as you can see from the results that we reported this morning. Before I begin, I'd like to take a minute to recognize the hard work of our team at Invesco. Like most everybody, our employees have been working in a work-from-home or hybrid environment for more than a year now, and they've achieved these results in a very challenging environment. I'd like to thank the team for their dedicated focus and adaptability during this time. With the success of the virus, many of us have been coming back to the office and working together the last few months, and I can tell you it's good to see our colleagues once again. We are at different stages of reopening around the globe, and one thing that I hear from everybody that is able to get back to the office is how great it is to see one another and work together. I will say we're at our best when we're working together, collaborating, and innovating. I'm excited about the future as we continue to open our offices to more employees and welcome them back. As always, we'll follow the status of COVID and local guidelines as we transition back to the office, meeting client needs, helping them ensure the continued health and well-being of our employees. Now let me turn to the results, and if you're so inclined to follow the presentation, I'm going to start on slide three which is the highlights for the quarter. We achieved a new record in the second quarter for long-term net inflows totaling $31 billion. This follows net inflows of $24.5 billion last quarter and nearly $18 billion in the second half of last year. Growth was led by net inflows into institutional ETFs, fixed income, and various alternative capabilities. As you can see on slide three, the key capability areas where we have scale, investment readiness, competitive strength, growth, again in the quarter. These are areas where our investment performance is strong. We're highly competitive and well-positioned for growth. Looking at our ETFs, excluding the Qs, it generated net long-term inflows of $12 billion during the quarter. Net long-term inflows from alternatives during the quarter were $4.3 billion, including strength in our private markets business. We launched two CLOs during the period, raising $1 billion and generated net inflows into our real estate business of $1 billion. We continue to focus and invest in our alternative capabilities, a space where we also see the benefit of our partnership with MassMutual, which we highlighted last quarter. MassMutual has committed over $1 billion to various alternative strategies, materially increasing the speed with which we can get to market for the benefit of our clients. We continue to innovate with strategies for retail investors through the launch of products such as INREIT and the partnership we announced with UBS, in which we will provide bespoke global property investment services for management clients of UBS in Switzerland and other parts of EMEA and Asia. We also have $5 billion in direct real estate capital available for deployment. We had net long-term inflows of $8.8 billion into active fixed income. Within active global equities, our $52 billion developing markets fund, a key capability that came with the Oppenheimer combination, continued to see net inflows of nearly $1 billion during the quarter. Second quarter flows included net long-term inflows of $2 billion from Greater China and our Chinese joint venture continues to be a source of strength and differentiation for us as an organization. In addition, our solutions-enabled institutional pipeline accounts for 35% of the pipeline at quarter end. This following the funding of a large passive mandate from Australia in the second quarter, which was enabled by our solutions team. Allison will provide more information in a moment on flows, the pipeline results in the quarter, including the continued progress towards our net savings target. I would note the growth we are experiencing is driving positive operating leverage, producing an adjusted operating margin of 41.5% for the quarter. Strong cash flow is being generated from our business, improved our cash position, helping build a stronger balance sheet and improving our financial flexibility for the future. Invesco scale, investment readiness, competitive strength position us well going forward, and we continue to focus our efforts on delivering positive outcomes for clients. With that, I will turn it over to Allison to walk through the results in greater detail. Thank you, Martin, and good morning, everyone. If you'll turn to slide four, our investment performance was strong in the second quarter, with 72% of actively managed funds in the top half of peers or beating benchmark on a five-year and a 10-year basis. This reflected continued strength in fixed income, global equity, including emerging market equities and Asian equities, all areas where we continue to see demand from clients globally. Moving to slide five. We ended the quarter with $1.525 trillion in AUM. Of the $121 billion in AUM growth, approximately $66 billion is a function of increased market values. Our diversified platform generated growth inflows in the second quarter of $114.4 billion. This is an 82% improvement from one year ago. Net long-term inflows in the second quarter were $31.1 billion, representing 10.6% annualized organic growth. Active AUM net long-term inflows were $2.1 billion, and passive AUM net long-term inflows were $29 billion. The retail channel generated net long-term inflows of $9.5 billion in the quarter, driven by positive ETF flows. This represents a $24.1 billion improvement in net long-term inflows from one year ago, driven by significant improvement in equities in the Americas. The institutional channel generated net long-term inflows of $21.6 billion in the quarter, augmented by the funding of the nearly $18 billion Australian passive mandate. Looking at retail net inflows, our ETFs, excluding the QQQ, generated net long-term inflows of $12.1 billion. Our global ETF platform, again, excluding QQQ, again captured flows in excess of its market share of AUM in the second quarter and for the first half of 2021. Net ETF inflows in the U.S. included a continued high level of interest in our S&P 500 Equal Weight ETF, which generated $2.6 billion in net inflows in the second quarter, following $4 billion of net inflows in the first quarter. Looking at flows by geography on slide six, you'll note that the Americas had net long-term inflows of $5 billion in the quarter, driven by net inflows into ETFs, various fixed income strategies, private market CLOs, and the direct real estate net long-term inflows that Martin mentioned. Asia Pacific again delivered another strong quarter with net long-term inflows of $28.3 billion. Net inflows were diversified across the region. Nearly $18 billion was from the large passive Australian mandate that funded from our institutional pipeline in May. The balance reflects $4.8 billion of net long-term inflows from Japan, $3 billion in inflows from Greater China, of which the majority was from our China JV, $1.8 billion from Singapore, the remainder arising from other areas across the region. Long-term inflows for EMEA, excluding the U.K., were $1 billion, driven by retail flows, including net inflows into alternatives, particularly our US and European Senior Loan Fund. ETFs net inflows into EMEA were $2.2 billion in the quarter. Finally, the U.K. experienced net long-term outflows of $3.2 billion in the second quarter, driven largely by net institutional outflows in multi-asset and investment-grade capabilities. $2.4 billion of these net long-term outflows relate to our Global Targeted Return capability, which has $10.2 billion globally in AUM at the end of June. The overall U.K. net long-term outflows in the second quarter were an improvement of $2.7 billion as compared to the first quarter net long-term outflows of $5.9 billion. This improvement was driven by U.K. retail, primarily inflows into the European Equity Fund and lower net outflows during the quarter across a number of fixed income and U.K. equity capabilities. Turning to flows across asset classes, equity net long-term inflows of $15 billion reflect a good portion of the Australian mandate and ETF, including our S&P 500 Equal Weight ETF that I mentioned. We continue to see broad strength in fixed income in the second quarter, with net long-term inflows of $13.6 billion. Drivers of fixed income flows include institutional net flows into investment-grade strategies and retail net long-term inflows into various municipal funds and fixed maturity products in Asia. It's worth noting that although we did have fund launches in China in the second quarter, they were not at the pace of what we experienced in the first quarter. You see this largely reflected in the $9.1 billion decrease in the net flows in the balanced asset class during the quarter to net outflows of $1.8 billion. Our alternative asset class holds many different capabilities, and this is reflected in the flows we saw in the second quarter. Net long-term flows and alternatives improved by $4.5 billion over the first quarter, driven primarily by our private markets business through a combination of inflows from the newly launched CLOs, direct real estate, senior loan, and commodities capabilities. Included in these alternative flow results is also the GTR net outflow that I just noted. If you do exclude the global GTR net outflows, alternative net long-term inflows were $7.2 billion, quite significant in the quarter. Moving to slide seven. Our institutional pipeline was $33.3 billion at June 30th, reflecting the funding of the large passive indexing mandate in Asia Pacific, assisted by our Custom Solutions Advisory team. Excluding the impact of the $18 billion passive mandate in the first quarter, the pipeline has increased in size and remains relatively consistent to prior quarter levels in terms of asset and fee composition. Overall, the pipeline is diversified across asset classes and geographies, our solutions capability enabled 35% of the global institutional pipeline and created wins in customized mandates. This has contributed to meaningful growth across our institutional network, warranting our continuing investment and focus. Turning to slide 11, you'll note that our net revenues increased $52 million, or 4.1% from the first quarter as a result of higher average AUM in the second quarter. The net revenue yield excluding performance fees was 34.8 basis points, a decrease of 0.9 basis points from the first quarter yield level. The decrease was driven mainly by asset mix shifts, including higher QQQ and money market average balances, as well as the impact of the large passive Australian mandate that funded in May. This decrease was partially offset by the improvement in markets in the quarter. The incremental impact relative to Q1 of higher discretionary money market fee waivers was minimal in the second quarter, but the full impact on the net revenue yield for the second quarter was 0.7 basis points. We do expect fee waiver to remain in place for the foreseeable future until rates begin to recover to more normalized levels. Total adjusted operating expenses increased 1.9% in the second quarter. The $14.4 million increase in operating expenses was mainly driven by variable compensation and marketing. Higher variable compensation is a result of higher revenue, offset by the reduction in payroll taxes and certain benefits from the seasonally higher levels that we experienced in the first quarter. We also further recognized savings in the quarter resulting from our strategic evaluation. Marketing expenses increased $9.8 million in the second quarter, mainly due to seasonally higher levels relative to the first quarter, which is typically the low point for marketing spend annually. We also reevaluated the timing of various branding campaigns and launched targeted initiatives in the quarter across the globe. Operating expenses remained at lower than historic activity levels due to pandemic-driven impacts to discretionary spending, travel, and other business operations. However, we did resume some client activity and business travel late in the second quarter, which is reflected in both marketing and G&A expense. As we look ahead to the third quarter, our expectations are for third quarter operating expenses to be modestly higher compared to the second quarter, assuming no change in markets and FX levels from June 30th. We expect that the higher AUM levels driven by net inflows and market improvement in the second quarter will have a modest carryover impact on both revenues and associated variable expenses in the third quarter. We also expect a modest seasonal increase in marketing-related expenses as spend typically increases in the third and fourth quarters. One area that's still more difficult to forecast at this point is when COVID-impacted travel and entertainment expense levels will begin to normalize. We are engaging in more domestic travel and in-person engagement, we do expect to see continued modest resumption of these activities across the third quarter. Additionally, our US Mutual Funds board has approved certain changes to the pricing of transfer agency services that we provide to our funds. As a result, we anticipate that our outsourced administration costs, which we reflect in property office and technology expenses, will increase by approximately $25 million on an annual basis. Offsetting this will be a corresponding increase in service and distribution revenues, resulting in a minimal impact to operating income. We expect this new pricing structure to go into effect in the third quarter and to be fully in place by the fourth quarter. Moving to slide nine, we update you on the progress we have made with our strategic evaluation. As we've noted before, we are looking across four key areas of our expense base. Our organizational model, our real estate footprint, management of third-party spend, and technology and operations efficiency. Through this evaluation, we will continue to invest in key areas of growth, including ETFs, fixed income, China, solutions, alternatives, and global equities. In the second quarter, we realized $7.5 million in cost savings. $2 million of the savings was related to compensation expense and $5 million related to property, office, and technology expense. The $7.5 million in cost savings, or $30 million annualized, combined with the $95 million in annualized savings realized through the first quarter of 2021 brings us to $125 million in total, or 63% of our $200 million net savings expectation. As it relates to timing, we still expect approximately $150 million, or 75%, of the run rate savings to be achieved by the end of this year, with the remainder realized by the end of 2022. Of the $150 million in net savings by the end of this year, we anticipate we will realize roughly 70% of the savings through compensation expense. The remaining 30% would be spread across occupancy, tech spend, and G&A. We expect the total program savings to be 65% in compensation and about 35% spread across the other categories. With $125 million of the expected $150 million in net savings by the end of this year already in the quarterly run rate, the degree of net savings per quarter will continue to moderate going forward. In the second quarter, we incurred $20 million of restructuring costs. In total, we've recognized nearly $170 million of our estimated $250 million - $275 million in restructuring costs that were associated with this program. We expect the remaining transaction costs for the realization of this program to be in a range of $85 million - $105 million through the end of 2022. As a reminder, the costs associated with the strategic evaluation are not reflected in our non-GAAP results. Moving to slide 10, adjusted operating income improved $38 million - $541 million for the quarter, driven by the factors we just reviewed. Adjusted operating margin improved 130 basis points to 41.5% as compared to the first quarter. Most importantly, our degree of positive operating leverage reflected in our non-GAAP results was 1.8 x for the quarter, underscoring our focus on driving scale and profitability across our diversified platform. I'll also point out that our adjusted operating margin back in the third quarter of 2019, which was our first full quarter following the Oppenheimer acquisition, was 40.9%. At that time, we reported a net revenue yield excluding performance fees of 40.7 basis points. At the end of the second quarter of 2021, our net revenue yield ex performance fees was 34.8 basis points. Our adjusted operating margin was 41.5%. We have been building out our product suite to meet client demand, and client demand has been in lower fee products. We're focused on aligning our expense base with changes in our business mix, enabling the firm to generate positive operating leverage and operating margin improvement. Non-operating income included $42 million in net gains for the quarter, compared to $26 million in net gains last quarter, primarily from increased unrealized gains on seed money and co-investment portfolios. The effective tax rate for the second quarter was 22.8%, as compared to 24% in the first quarter. The effective tax rate on net income was lower in the second quarter, primarily due to a change in the mix of income across taxing jurisdictions. We estimate our non-GAAP effective tax rate to be between 23% and 24% for the third quarter. The actual effective rate may vary from this estimate due to the impact of non-recurring items on pre-tax income and discrete tax items. A few comments on slide 11. Our balance sheet cash position was $1.3 billion at June 30th, approximately $750 million of this cash is held for regulatory requirements. Our cash position has improved considerably over the past year, increasing by nearly $350 million, largely driven by the improvement in our operating income. Our debt profile has improved considerably as well, with no draws on our revolver at quarter end. As a result, we've substantially improved our net leverage position. During the quarter, we repaid the remaining $177 million forward share repurchase liability in April, and there are no remaining share repurchase contract liabilities. In terms of future cash requirements, in the second quarter, we recorded an adjustment to the MLP liability associated with the Oppenheimer purchase, reducing this liability from our original estimate of nearly $385 million down to $300 million. We anticipate funding this liability in the fourth quarter of 2021. While we do anticipate a degree of insurance recovery related to the matter, the insurance claims process is inherently complex, and we do not have an update at this stage as to timing or size of that recovery. Overall, we believe we're making solid progress in our efforts to improve liquidity and build financial flexibility. In summary, we continue to see growth in our key capabilities. We remain focused on executing the strategy that aligns with these areas while completing our strategic evaluation and reallocating our resources to position us for growth. Finally, we remain prudent in our approach to capital management. We're in a strong position to meet client needs, run a disciplined business, and to continue to invest in and grow our franchise over the long- term. With that, I'll ask the operator to open up the line to Q&A. Our first question comes from Glenn Schorr with Evercore ISI. Your line is open. Hi. Thank you very much. I wonder if we could talk a little bit about private markets. You talked a little bit about what went well in the second quarter. Curious if we could maybe get a bigger picture view of what has the highest growth potential, what specifically you're doing on the retail side to drive growth. Maybe I'll take a chance to see what's your vision of how big this segment can be? Yeah, Glenn, thank you for that. Obviously it's been an area of focus for much of the industry. Our principal driver right now has been real estate. It's a very strong global real estate group, direct real estate. Some of the more recent developments has been trying to get that into the retail channel. INREIT, which is non-public, is now available in the U.S. It's early days. That was also what was funded by MassMutual for about $400 million, which is really important. We think that has great potential in the next year or so as it's in the marketplace based on the historical performance of our real estate group. The other was really a venture with UBS and offering same thing, direct real estate with some listed real estate securities through Switzerland, other parts of EMEA, Asia Pac. Those seem to be really immediate opportunities. Quite frankly, some of our private credit has more recently been gaining attention with institutional investors. They have a very good track record, and with that track record, we're now seeing the follow on with us. We look at this as a very important part of our business as we go forward. Thanks. Maybe just a quick one for Allison. Allison, you mentioned about the modest pickup on the expense side in 3Q. If we could just, I don't know if you're able to level set us on how much below normal are we? I appreciate we don't know when normal travel, normal spend is happening, but if you could just say. Right now you have very normal expenses with really strong markets and flows, but not so normal expenses. Can you give us a way to dimensionalize that? It's a hard one, because we have to look back at to where we were in the last half of 2019 to try to figure out what normal might have been. Not sure that that's normal going forward. I think that's the real challenge. I'd say we're probably $10 million-$15 million per quarter below what we would've seen in the last half of 2019. I don't expect we'll see all of that come back, just when we get back to whatever some permanent state is. I think we're a ways off from that, just given the international travel restrictions that look like they're going to be in place for a while. I do think, we are certainly starting to see a resumption of domestic travel within regions that are allowing it. We're certainly seeing, as we reopen offices, some pickup and just client activity overall. I think probably a good estimate is to think about being maybe $15 million below what normal used to be. Some element of that will come back over time. That's awesome. Thank you for that. Appreciate it. Thank you. Our next question comes from Ken Worthington with J.P. Morgan. Your line is open. Hi. Good morning. Thank you for taking my questions. Super high level, maybe first for you, Martin. As you look to the future, maybe over the next three to five years, what do you see as the most significant factor that's influencing the direction you're taking Invesco? I think if I asked that question maybe five years ago, you might have said something like factor-based investing, but what are your thoughts today? Yeah. Ken, it's a good question. I think you've raised this before. If you look at the firm right now, a number of the investments that we've made over the years are coming through in a very material way. Probably, first and foremost, the impact of China. You're just seeing it just continue to be a source of strength for us as an organization. Quite frankly, I think by many estimates within asset management globally, we've seen things that could explain half of all the flows within our industry in the next five years. Whether that's right or not, I don't know, but what I can say, it's a major factor. The other element is really how solutions is being embedded in almost all of our client engagements. Institutionally, we've called it out, you see that. By the way, it is also true in retail engagements that we're seeing. You mentioned factors. We talked about that five years ago. It's a huge part of our ETF business and frankly our index business. It's going to continue to be an important part of what we do. As you do know, just recently, at least in the last two years, we've taken that factor capability, indexing capability to institutional clients. We did it with a very strategic view, with the recognition that clients are using fewer and fewer money managers, and they want the totality of the capabilities coming from money managers. You've seen some of the impact here most recently with the IOOF in Australia. What you really do is you become very important to clients holistically. Those would be the biggest trends that I would point to. I think the reality is it's actually happening right now. That's my personal perspective. Awesome. Great. Thank you. Then maybe Allison, you mentioned U.K. outflows, including some outflows from GTR. Does the decline in GTR assets lower the capital that you're either required to operate within Europe or volunteer to hold to operate in Europe? Or is the growth elsewhere in Europe or the U.K. mitigating these declines? Unfortunately, the short answer to that question is no. The AUM decline there does not impact the regulatory capital that we have to hold. It's a little more complicated than that. It focuses a little bit more on the P&L, specifically expenses, than it does AUM levels. Okay, great. Thank you very much. Thank you. Our next question comes from Robert Lee with KBW. Your line is open. Great. Thanks for taking my questions. Martin, I had a question for you on Greater China. Some of your competitors have opened up wholly owned, or are opening, I guess, a wholly owned subsidiary. Others have been able to take on a, I guess, a majority stake. I know you've talked about it for a while, but could you update us on where Greater China stands with your movement to at least economically taking a majority stake? I know operationally you've done it, but just update us on where that stands. Yeah, great. It might be somewhat repetitive, but to remind everybody, we own 49% of the joint venture right now. Our partner, Huaneng Power, we have been in conversations for two years to take majority stake. There has been an agreement in principle, but it has not moved forward for the various reasons, COVID being one of them. Quite frankly, that would be the principal reason. It has not hurt us. I think this is a really important thing. To contrast our position to others, we've had management control since the beginning of the venture. That really is what separated our success as compared to our competitors. We literally operate as one entity within China in the retail markets for Invesco Great Wall, but institutionally we'll go to large institutions with the retail platform and our institutional platform. Again, that's really what's enabling the growth. We also have a wholly owned subsidiary focused on other elements within China, and I think as you look at where others are, I think what's important to look at is separate announcements from the actual has it happened. Generally, it's slowed down over the last 18 months for most institutions trying to get to market with some of these new undertakings. Great. Maybe if I follow up on the Intelliflo. Haven't talked about it too much for a while, but I guess a year or so ago, you launched on the Citi platform. I saw the other day, I think it was State Farm is going to start using the platform. You may be up there somewhere. That is, if it's meeting your expectations. If you are, as well as that, do you see that contributing to a new product sale? Right now there's $1 trillion in assets under advisement. You've seen some nice growth. State Farm is an important addition. Obviously it's very early days and in when you track our relationship with Citi, really the focus of the past year was really pulling together the different elements of Intelliflo and creating sort of a single operating platform to go to the clients holistically. You're now starting to see the outcomes of that. We'll be more specific as sort of events are material enough to have that conversation. Again, we're starting to get the momentum back in the business. Again, last year slowed down some just with the COVID environment. Again, we're still optimistic about the prospects of Intelliflo. Great. Thanks for taking my question. Yeah. Thank you. Our next question comes from Brian Bedell with Deutsche Bank. Your line is open. Great, thanks very much. Good morning, folks. Good morning. Good morning. The organic fee growth as compared with the organic growth. If you could just, maybe Allison just touch on what you think the outlook for the net revenue yield going into third quarter, given the strong growth in passive versus active in the second quarter. Can you benefit at all from lower money market fee waivers given the rate in the IOER rate? Yeah. I'd say a couple of things, just keeping in mind, the biggest drivers of net revenue yield quarter- to- quarter is really going to be the mix of flows. That's really just a function of client demand and making sure, and again, we feel like we're driving scale across a really well-diversified platform. We're going to capture demand where demand exists. That mix will certainly have an impact on net revenue yield. Market impact obviously is going to be always impactful on any given quarter. Then money market waivers, as I noted, money market waivers right now this quarter accounted for about 0.7 of a basis point of a drag. In terms of where do we see that going? IOER would be helpful. A movement in Federal funds would certainly be more impactful, but it isn't as perfectly correlated as just that, because they're competitive dynamics as well. We're going to be thoughtful about where we're positioned vis-a-vis the competition and making sure we're being thoughtful and smart about these waivers, sharing in them with our distribution partners across the institutional element of our waivers. I'd note our money market waivers are kind of 80% to the institutional channel and about 20% to retail. We are able to share in some of these waivers as we work with our partners to ensure clients are really getting the outcomes that they're expecting. Coming back to net revenue yield, I do think we'll probably see a modest sort of grind down, but what did I focus you on is some of the comments we were making as we look back at 2019. Net revenue yield is 6 basis points lower than it was a couple of years ago, and yet our operating margin is higher at 41.5%. I recognize net revenue yield is something that we want to make sure we get into models. Really we don't think about net revenue yield quarter- to- quarter. We think about revenue and driving positive operating leverage across our platform. I think our performance over the last year especially really underscores our ability to do that. Yep. That's a good point. Thank you for that. Just on sustainable product flows, either Martin or Allison, can you talk a little bit about, first of all, how much did sustainable products, both active and passive, drive flows in the second quarter, and then what's your AUM in what you would classify as sustainable products? Just an update on that. Just in terms of the game plan for product launches going forward in this area, even if you can sort of generalize what the strategy is. Let me make a couple comments just on sort of sustainable ESG capabilities, and then I'll let Allison pick up. Yeah, obviously for us, we look at ESG as an incredibly important part of what we do. We are absolutely focused on integrating ESG capabilities across the whole organization. 75% of all our assets now have integrated ESG within our capabilities. I think as you know it's really been driven out of EMEA in the first instance. This is a business necessity, and we think it is throughout the totality of our organization. If you look specifically at dedicated ESG assets under management, it's about $52 billion today. We continue to see growth there. If you look at our ETFs, we have one of the highest market shares of ESG ETFs. This has been a long track record. Again, they'll continue to see flows because of that. Again, if you look at this as just an absolute imperative for us to get right throughout the organization, whether it be how we manage money, but also the capabilities in the marketplace, and literally working with clients to ensure that we're hitting what is important to them as we work through this. I think Martin hit on most of it. In terms of flows for the quarter, they were softer than the first quarter. I think it was a little less than $2 billion. We saw quite a bit stronger flows in the first quarter, which really, I wouldn't say there's anything specific driving the lower flows in the second quarter other than perhaps the market headwinds. We certainly saw some highs in the first quarter and a little bit of pullback from that could point to just some post-election highs that were driving the first quarter and some modest shifts from growth. Overall, our ESG capabilities continue to be quite strong in terms of both performance and demand. As Martin noted, we're capturing more than our fair share of the market in terms of flows into these ESG capabilities. Great. Thank you for the update. Thank you. Thank you. Our next question comes from Daniel Fannon with Jefferies. Your line is open. Thanks. Good morning. I wanted to follow up on your comments around balance. I think, Allison, you mentioned there were fewer fund launches. That category obviously had some outflows. The performance was good. Maybe if you could give us an update on kind of the outlook for that category. Yes. What really drove the real strength in the first quarter were the fund launches in China in particular. We had probably a high watermark, just given the strength of those launches, both in terms of just size and performance overall. I think inside of China and the JV, we had seven fund launches again in the second quarter. I think about five of them were balanced, again, driving about $1 billion in flows. It continues to be strong overall. Just some lumpiness quarter- to- quarter. I wouldn't necessarily point to anything specific beyond that. Okay. That's helpful. Then just on the strategic evaluation and understand the targets and kind of where you sit today, but curious as you've kind of gone through this in the areas of investment that you're looking to put some of those savings in and some of those buckets, if there's been any real changes from your original expectations that you're allocating more dollars to or seeing more growth or it seems like we're getting the same kind of message each quarter, but curious if there's any more detail around things that might be different than you originally outlined. Yeah. I'll start and let Martin chime in there. I would say, you're getting the same message each quarter because our strategy isn't changing. I think it's that focus on our strategy and the continuity of that. The consistency is something I hope you'll pick up on because there's consistency in our focus and our approach. The key areas of investment, these key capabilities are things that we really do believe are the areas where we need to be invested ahead of client demand. We're seeing client demand in some of these capabilities today, but we expect there to be continued demand, and we're going to stay focused on those key capabilities. In terms of changes, I don't know that I would say there's anything specific that would cause us to change. We're always going to see sentiment may soften in China a little bit. I don't think that takes away from our focus or our belief that that is a key growth area for us, despite what market sentiment or political noise may be out there quarter- to- quarter. Our solutions capability, I think we're as convicted as ever that that is a key capability for the future, and I think you really see how that is driving our growth both in the institutional pipeline and overall. Our ETF capabilities continue to be real drivers of growth as we're capturing more than our market share in terms of flows. I think our capture of flows this past quarter was somewhere around 4.2%. Our market share is 2.7%. But even more important than that is our capture of the revenue pool. We captured about 8%, a little north of 8% of the revenue pool of flows in ETFs over the last quarter, which I think really points to the strength of our capabilities there, how they're positioned. They are some of the higher fee capabilities relative to the ETF universe. There's real demand because they're differentiated in terms of performance and outcome. I don't know that we've had any surprises as I think back over the last year. It's been a supportive market in this past year, and that's helpful. That doesn't deter our focus on making sure we're aligning our cost base to deliver exactly what you've seen us deliver in this past year, which is real strength in our operating margins and operating income growth. Allison, that's well said. Dan, it's no mistake when you look at the second quarter highlights where we call out the key capability areas. They haven't changed because that's where our head's down. We see that as the greatest opportunity for us as an organization. They align with some of those macro trends that we talked about a few minutes ago, and it has been disproportionate investment from us and also disproportionate results. You're not going to see a change much quarter-to-quarter. Thank you. Yep. Thank you. Our next question comes from Brennan Hawken with UBS. Your line is open. Good morning. Thanks for taking my questions. You think about the success that you've had with your solutions offering, how do you build on that strength? How do you maintain differentiation? Are you seeing competitors try to emulate the success that you've had there? How do you stay a step ahead? How much of this business actually repeats, whether that be a few quarters or a few years subsequent? I know it's early, any stats you can provide or estimates or sense you have on that? Yeah. It's a great question. I can't describe what the competitors are doing. Our approach was a little bit different from the standpoint of, we started with the recognition any number of years ago that our clients wanted a broad range of investment capabilities, and that's what we've been building out as we've talked about. Importantly, what we did building a Solutions team is it sits on top of the investment team. It does not compete with the investment teams. It uses our existing capabilities, that is somewhat unique as best we can tell in the marketplace. The client engagements are such that it's literally an engagement where the clients understand what are they trying to accomplish with the portfolios and delivering any range of capabilities along the lines. That's what we've seen. The more recent one, though, as I mentioned a few minutes ago, was introducing index capabilities to institutions. The totality of that is what creates the importance of relationships with clients. You end up expanding your mandates per client in these relationships. It's early days, but we're seeing it is persistent in time. Again, as I said a few minutes ago, we're seeing it's very important institutionally. It's also quite important in the retail channel also. We just look at it as the way that business is being done as we look to the future. Okay. Second question, probably more for Allison. I know we've seen liquidity continue to improve. You laid out the idea that we're going to be having the MLP liability funding later this year. Still some calls on liquidity, but without question, in a far better position and with those calls dramatically lower than they were a year ago. With that in mind, what are your updated capital management priorities? How should we think about the likelihood of a step up in buyback? I know we got the increase in the dividend recently. How are all of those different calls on liquidity, how do they rank in your mind for you, Allison? Sure. Thanks, Brennan. Yes, the resolution of the MLP matter will be a terrific milestone for us to get through. That's been out there for a while now and something we've been anticipating and reserving for. As we think about the funding of that matter and the fact that the liability at this moment does appear to be lower than what we were previously anticipating is good news. We do look forward to the resolution of that in the fourth quarter. As we get through that does in fact clear out a lot of these, I'll call them contingent liabilities, that were things we needed to be cognizant of and manage our cash flow for over the past year plus. As we look forward beyond the resolution of that, I'd say a couple of things. One, we continue to focus on just the improvement of our balance sheet overall. Our leverage profile, as I noted, continues to improve with the strength of EBITDA, depending on how you think about our leverage. Looking at the non-preferred element of the capital structure, we're below one time now with the results in the second quarter, and that's strong improvement. We're going to continue to be focused on opportunities that we have to improve our balance sheet. I don't know what that means just yet, we do have maturities, as you know, that come up in 2022 and 2024. Those remain areas of optionality for us as we think about balance sheet improvement. Beyond that, we are going to continue to be committed to that sustainable and modestly increasing dividend. We, as you noted, increased the dividend last quarter. We will continue to look for opportunities to increase the common dividend concurrent with improvement in our performance and our results. Longer- term, resuming share buybacks. I don't know when that will be. As I said, we want to get through the MLP matter, and we continue to be focused on the leverage profile. Share buybacks certainly remain an opportunity for us to continue to return capital to shareholders. Thanks for that color. Thank you. Our next question comes from Bill Katz with Citigroup. Your line is open. Okay. Excuse me. Thank you very much for taking the question this morning. Martin, maybe a question for you. Just as you think about your relationship with MassMutual, where does that go from here? As you maybe think through, discuss maybe the seed capital need versus maybe opportunity to grow organically through their distribution pipe. Maybe any opportunity that you could see working with them on M&A. Yeah. Thanks, William Katz. Again, it has been multifaceted, as you're pointing out. One is sort of a co-investor, seed enabler in alternatives. That's been very, very positive, not just for the investment itself, but really the credibility of a sophisticated investor with other institutional clients. As you said, the retail channel is about, correct me, Allison, about $10 billion on the retail platform right now. We're the number two flowing organization within that right now. As you know, they've recently closed an acquisition of the business. That looks like it's going to be an opportunity for us as we move forward. Again, we just continue to work together on a very regular basis on various opportunities as we look to the future. With regard to M&A, I'm not exactly sure what the question is. They understand our strategy very much as an organization. If something made sense along the lines we've talked about in the past that it improves our strategic position, it's complementary to our business. There's sort of, if you want to call it, the necessity of cultural alignment. I'm sure they would be supportive of that. Yeah. The one thing I'd say is we manage about $5 billion on their broker-dealer platform. Excuse me. Sorry. Yeah. Yeah. Second in flows there. Okay. It's helpful. Just a follow-up, coming back to capital management for a moment. Certainly appreciate a little uncertainty as you go to the end of the year with the liability still outstanding. Just given where the stock is trading today against your relative positioning, I'm just surprised that buybacks would be fourth on your list. Can you talk a little bit about maybe the internal rate of return assumption you have between new business growth coming in the door versus the opportunity to buy back stock at these price points? Thank you. Yeah. I don't want to imply that it's fourth on the list. As we've said before, it's not quite as neat of a waterfall as that would imply. We are being thoughtful about the timing and when we would resume buybacks. Certainly, we are thoughtful about how we think about that internal rate of return relative to other opportunities. The one thing I didn't say, and I should have said, is the number one opportunity we have is to continue to invest in our own growth. We are constantly thinking about the opportunity we have to invest in our own product launches, invest in our own capabilities. We think that drives longer-term growth that shareholders are really looking for. Buybacks aren't fourth and last by any means, but we've had a number of parallel paths we've been running over this past year in resolving some of these contingent liabilities as well as improving the balance sheet overall. We're making good progress there, and we're going to continue making progress as we think about all these opportunities we have. Thank you, guys. Thanks. Thank you. Thank you. Our next question comes from Alexander Blostein with Goldman Sachs. Your line is open. Great. Good morning. Thanks for taking the question as well. I was hoping to go back to private markets discussion for a second and really zone in on the retail opportunity you see for Invesco. Maybe just a little more color on what products specifically you're sort of aiming to penetrate the retail footprint with. Sort of what is your go-to-market strategy there? Considering significant amount of kind of open space and building appetite for private market solutions in the retail channel, can you get there organically or do you think you need to acquire additional capabilities? Yeah. It's a very good question, and what I started to talk about was the INREIT, which is being introduced to the retail market right now. Real estate capability. Our view is that the largest opportunity for growth for direct real estate capability is in the retail channel globally, and that's not unique to us. I think many firms have tried to figure out how best to, alternative firms in particular, how to best access that channel. It's very hard from the standpoint of most firms if you're an alternative firm, have the capability, but you really need that retail presence with distributors, wholesalers, and the like to be successful. There are very few firms like us that can pull that off. We look at this as a really important development for us. Again, just what we've done with UBS and now through multiple distributors here in the U.S. We have capabilities that are in demand within that channel, and it's early days as far as I'm concerned for what we're going to see as we move forward here. It sounds like organically is kind of the path here on private market alts as opposed to anything inorganic. Yes. We have plenty to do with the capabilities that we have right now in the retail channel. Got you. Great. Just maybe a quick follow-up, Allison, for you. Apologies if I missed it, can you talk a little bit about the fee rates associated with the $33 billion institutional pipeline? Curious again, within the alt part of the institutional pipeline, what strategies does that comprise of? Thanks. Sure. As I look at the pipeline and look at the fee rate, I think what we've disclosed previously is the fee rate for our institutional pipeline tends to be, it's below the firm average, but it tends to be in the kind of high 20s, low 30s basis points. As I look at the fee rate of the pipeline at the end of the second quarter, it's the highest I've seen since I've been at Invesco. I'm quite bullish as I look at the pipeline, both in terms of the size that it was replenished back to $33 billion following the $17 billion funding of the Australian mandate, and the composition of the pipeline itself in terms of average fee rate and the balance across those regions and asset classes. It's pretty balanced across the United States, Asia Pacific, and EMEA. In terms of asset classes, kind of coming back to the second part of your question, it's actually a little bit higher on the alternative side than it has been in the last few quarters. That really, I think, again, points to our private markets capabilities, both our real estate capabilities as well as our senior loan capabilities. I think, again, speaks to just the strength of those capabilities, the demand that exists in the institutional channel, and our performance overall. Great. Thank you very much. Thank you. Our last question comes from Michael Cyprys with J.P. Morgan. Your line is open. Hey, it's Michael Cyprys from Morgan Stanley. Thanks for squeezing me in here. A question on China, given the success that you guys had over there. Hoping you talk a little bit about your approach to distribution in China. What's worked? What hasn't worked as well? What lessons do you take away from your deep experience in the region as it relates to distribution? Maybe you could also touch upon some of the digital distribution initiatives as well and how that's evolving. Yeah. Thanks, Mike. Great question. Needless to say, it's a very competitive market, and success is only going to come from the retail channel if you are deeply embedded in China and have your business driven by local Chinese, which is the case for us. You have what would be a little more typical that we might see in the United States where there are very important engagements with large banks, insurance companies getting on platforms and circuits in that way. I will say half of our retail flows right now on some type of digital platform. It started with us with Ant Group as we began in the early, I think the first foreign money manager to their very large money fund, and it then expanded from that into other capabilities and then onto other platforms within the marketplace. What you also see is the digital engagement is at a level that is the most sophisticated in the world. How you engage with clients, the demands on the organization are quite extraordinary. By the way, the benefit is it just has helped us in other parts of the world as we think of those types of engagement as they continue to evolve in different marketplaces. In the retail channel, institutionally, same thing, some of the most sophisticated institutional investors in the world. You just have to bring the best and brightest within the organization representing the full range of capabilities. This is another example where some of the largest penetrations with those institutional clients, multiple mandates is in China for us. It just really reflects the necessity of the depth and breadth of an organization and to be able to serve institution clients at a very high level. I don't know if that's insightful, but that's what's worked for us. Great, thanks. Just a follow-up question, maybe more for Allison around the impact of market movements on your expense base. I think in the past, you've said maybe about a third of the expense base is variable or so or moves with markets. Is that still right? I see you call that about $18 million or so impact on the comp side from market movements on slide nine. Should we think about that being driven by the 5% market appreciation in your AUM in the quarter translating into that $18 million impact, so $72 million annually? How should we be thinking about that? A couple of things. One, I'd say yes, the portion of our expenses that would be variable in nature and primarily driven by market, but certainly other flows would drive it as well, would be about a third. In terms of that market variable comp on slide nine, there's FX in there as well. Do keep that in mind. Yes, you can really kind of look at that relationship of just comp to revenue even and see there's some consistency, but as revenue increases, AUM performance, all of these things drive compensation and drive the increase in variable compensation. I wouldn't point you to any break in the historical relationship there. It's still consistent with what we've guided to in the past. Yeah, I'll leave it at that. Does that answer your question? Sure. Thank you. Thank you. Okay. Operator? I'm sorry. Did I cut you off? Go ahead, sir. Okay. Yeah, good. I just want to, on behalf of Allison, I thank you very much for your time and appreciate the engagement, and we'll be in touch. Have a good rest of the day. Thank you. That concludes today's conference. Thank you for participating. You may disconnect at this time.