What Invesco’s Summer Shakeup Means for Its International Funds

It may not have been as brutal as Game of Thrones’ Red Wedding, but in the asset management world, Invesco’s drastic action on June 23, 2025—whether labeled a streamlining, a revamp, or a purge—merits a special place in investment lore. Now that the dust has settled, it deserves a close look.

Fund companies often replace portfolio managers if their funds don’t deliver the goods. Occasionally, a fund’s mandate will change. Rarely, though, does an asset manager impose a raft of management and mandate changes on a broad swath of funds all at once.

Last June, the $1.7 trillion firm placed entirely new management teams on six of its international-equity funds and adjusted two others. It also altered personnel on a real estate strategy and a precious-metals fund. The particulars varied wildly from one fund to the next.

The deposed personnel left Invesco. Including managers, analysts, and a few others, about 20 people were sent packing. One of the ousted managers was among the most well-known in his field.

The episode provides a case study of how the installation of a new CIO, sometimes practically a nonevent, can on occasion presage vast changes, and how fund shakeups can range from minor tweaks to complete restarts.

New CIO, New Plan

Sergey Davalchenko joined Invesco in October 2024 from AllianceBernstein, about 16 months after Andrew Schlossberg ascended to the role of Invesco’s CEO.

At the time, Invesco already had embarked on some efforts to increase coordination among its various global offices. But before Davalchenko’s arrival, Invesco still had three international/global investment teams—in New York and Austin, Texas, in the US and Henley-on-Thames in the UK—that operated independently of one another.

That changed when Davalchenko was appointed CIO of all three groups. Along with other executives, he surveyed the landscape and saw no reason to have three separate teams that, in some cases, were running different versions of the same mandate.

To be clear, the decisions weren’t his alone. Davalchenko reports to co-head of investments Stephanie Butcher. The most prominent manager to lose his job, Justin Leverenz of Invesco Developing Markets ODMAX, reported to Butcher, not Davalchenko. More broadly, Invesco says that a wide variety of people from across the firm played a role in the decisions. And it’s unlikely these moves would have proceeded without Schlossberg’s approval and involvement.

The new managers took their places immediately. For regulatory reasons, the funds with substantially new mandates couldn’t put those into effect for 60 days.

A Major Surprise

The most surprising news was the sacking of Leverenz. Under Leverenz, who took the helm in 2007, Invesco Developing Markets—a former Oppenheimer fund—had become one of the biggest and most successful emerging-market vehicles. A key to its success was Leverenz’s willingness to stand out from the crowd; the fund’s country and stock weightings often looked quite different from those of benchmarks and peers.

But in 2021, China’s crackdown on online-education firms waylaid this portfolio, and in early 2022, its heavily overweight Russia stake was assigned a value of zero after that country invaded Ukraine. Then, an underweight in India proved costly; Leverenz considered that market’s stocks to be vastly overpriced, but they continued to soar. Yet another problem was his commitment to Mexican stocks, which stung when that market and currency both fell after the 2024 election results.

(As it turned out, Leverenz was just a bit early with his enthusiasm for Mexico and his skepticism toward India. Over the past 12 months, Mexico has ranked among the best of the larger emerging markets, with India among the worst.)

As Invesco Developing Markets’ performance declined, investors fled, an alarming trend for one of the firm’s biggest and most prominent strategies. Leverenz’s missteps also harmed performance at another big Invesco fund, International Diversified OIDAX. That fund of funds had a substantial allocation to Invesco Developing Markets.

To a degree, Leverenz reined in his pronounced contrarian streak after these struggles. He reduced his extreme country overweightings (though not underweightings). Apparently, these adjustments weren’t enough. On June 23, Leverenz was let go, along with the entire seven-person team he had built. Invesco handed the fund to a team from its UK office that has a solid record running an emerging-market strategy.

Invesco’s reasoning may have gone beyond performance woes. Davalchenko and his superiors want more collaboration among the various international/global teams and more consultation with Invesco’s risk specialists. Such a system isn’t an ideal match for someone with Leverenz’s independent bent.

Given Leverenz’s previous record of success and his prominence in the industry, removing him could be considered an excessive response. Many shareholders apparently disagreed with the decision: After the change of management, the already-worrisome level of outflows, which had been moderating, skyrocketed.

At least Invesco chose the replacement team wisely. Shareholders who stuck with the fund may be content with the new managers. Although they don’t veer as far from the benchmark weightings as Leverenz did, they’re no index-huggers.

As a result, while the dismissal of Leverenz can be debated, this move at least stands as an understandable and defensible transition.

A Puzzling Move

It’s infinitely more difficult to make a case for Invesco’s transformation of Invesco EQV European Equity into Invesco International Value AEDAX. There, the firm replaced the Austin team with a duo, Steve Smith in the UK and Zach Sacks in New York; changed the fund’s mandate from Europe to broad international; and dumped its moderate-growth, all-cap approach in favor of one that targets large-cap value.

The two new managers have never worked together. They’ve never even been on the same team. Smith does have managerial experience; he has served as a co-lead manager of several strategies run out of the UK. But those portfolios are limited to European stocks. Sacks had not previously been a listed manager on any fund, and he and his New York colleagues favor growth, not value.

For all practical purposes, therefore, this is an entirely new fund—one with little appeal.

True, the Henley office does tilt toward value, and it boasts a substantial number of experienced managers and analysts who can provide support. But this is hardly an encouraging setup, and it’s certainly not the mandate or managers that shareholders signed up for.

Davalchenko explained the mandate shift as a response to the limited appetite in the US for funds restricted to European stocks. As for the style shift, he said Invesco International Diversified, that fund of Invesco funds hit hard by Leverenz’s struggles, needed a value option to balance its growth-heavy lineup. So, Invesco created one.

Tough Times in Texas

Invesco’s reorganization left a deep impact on the Austin group. That team had been running at least six strategies; now it runs just one. Four portfolio managers and several analysts lost their jobs. Davalchenko said the team’s attention had been spread too thin, and the remaining managers now can focus on their flagship core offering, Invesco EQV International Equity AIIEX.

The most defensible of the Austin decisions was to maintain the mandate of the Asia-Pacific fund while reassigning it to a team in the UK that already runs a highly successful Asia strategy. Other Austin funds underwent more drastic transformations. For example, an all-cap emerging-market fund is now an ex-China vehicle, and a Europe small-company strategy broadened to a global mandate with mixed UK/US management.

The Future Will Tell the Tale

For a long time, Invesco’s international funds were among the relatively few notably strong points in the firm’s sprawling array of teams and strategies. However, the performance of many of the funds run by the Austin and New York groups had weakened in recent years. Replacing managers at some of them was a reasonable response. Changing mandates is harder to justify. If shareholders of the Austin team’s emerging-market fund had wanted an ex-China fund, they would have bought one.

In the end, the overall success or failure of this sweeping revamp will depend on how it affects performance, flows, and cost savings—and less tangibly, whether it has a negative impact on morale. None of this will be evident for a while. In the meantime, don’t be surprised if other fund firms are taking notes.