Money Fund Intelligence recently interviewed the Chief Executive Officer of Invesco Worldwide Fixed Income and Executive V.P. of Invesco Aim Distributors Karen Dunn Kelley. Kelley, who joined what was then known as AIM Investments in 1989 as money market portfolio manager, now oversees Invesco's $160 billion, 120-person fixed income and cash management business.
We asked Kelley, "What have been the biggest contributors to the success of money funds and to Invesco Aim over the years?" Kelley tells us, "Everybody you talk to about money funds will focus on the three philosophical tenets -- safety, liquidity, and yield. The interpretation of those three little words is the key to the success of the money market business.... It was said years ago, Liquidity is like water, you don't know how important it is until you don't have it."
She continues, "Our belief is that the customer is entitled to and wants their dollar to move in and out on a daily basis. So liquidity has to be an overall philosophy, and of course safety is a critical underlying element of liquidity. Right away we understood that safety, liquidity, and yield were not just portfolio management issues, they were a business model. In other words, a portfolio manager is not only required to know the market, but in the money fund business much more is required to execute your fiduciary responsibility."
"One of the things that the founders of AIM -- Ted Bauer, Bob Graham, and Gary Crum -- believed was that a separation of credit and portfolio management was critical in risk management. That is a very unique model in terms of the business. In many areas in portfolio management, the credit people, the traders, the investor are all put together in one reporting structure, or are in many cases one person themselves. We have always felt that in the money fund business you have to have staff dedicated to specific money market research. There has to be a balance between those people having the independent discrete credit decision making responsibilities and those who are making the independent discrete investment decisions," she tells us.
Finally, MFI asks, "Has Invesco Aim managed to escape the SIV turmoil unscathed?" Kelley says, "We have not been in the headlines. We have just not been impacted by it. We don't buy an instrument unless its long-term tested in the market and market cycles. That means we usually don't participate in a new type of security until it gets into the marketplace for a significant amount of time and is well understood. The limited participation we've had in SIVs were not an issue to our portfolios in terms of the few names we bought, the credits we bought and where we bought them on the curve. So we have absolutely had no issues in terms of the SIVs."
See the latest MFI or ask Pete for a copy of the full interview.
