UNITED STATES-BASED fund management company Invesco is extending its global reach on the back of a fundamental shift in the way people are investing. 'These are exciting times. There is huge potential,' said Michael Benson, chief executive of Invesco Global, which operates in 25 countries. 'Across the world there is a change in saving patterns as they relate to retirement. Up until the last five years governments have had that responsibility. 'Now it is an impossible thing to do. We have a massive shift of wealth away from governments into the private sector.' Invesco has made big strides in the global arena in an effort to face up to the challenge for investment companies. It is firmly on track after a strong 2000, with operating profits up 82 per cent to US$134.1 million (about HK$1.04 billion). Business in continental Europe doubled over the period, with sales in Asia up 60 per cent. Last year, Invesco Global purchased Perpetual in Britain and Trimark Financial in Canada, creating the second-largest mutual fund companies in both countries. It also entered an alliance with Shenzhen-based Penghua Fund Management to position itself ahead of China's World Trade Organisation entry. Invesco will take an advisory role on the introduction of open-ended funds as the sector opens to foreigners. In Australia, its most recent acquisition, County Investment, from National Australia Bank for A$110 million (about HK$446 million) last month has made it the country's 14th-largest fund management company in asset terms. It hopes to work itself into the top five. Combining the two businesses will allow it to become a full-service fund management provider in the wholesale and retail business. 'Back in 1997 when we pulled all our global operations together under one banner we made profits of some US$12.2 million,' Mr Benson said. 'Now we manage US$73 billion to US$74 billion. We really have grown very significantly.' Gaining a foothold in Hong Kong's Mandatory Provident Fund market has been part of the strategy. 'We are putting a lot of resources into the MPF which is very important, not only in terms of Hong Kong. Over the next few years we believe more countries in Asia will follow the same model. Even China, although that may be further along. If we are successful in our efforts with the MPF it will spill over into the rest of Asia,' said Mr Benson. According to Invesco Asia chief executive Andrew Lo, the company has signed up firms which represent about 100,000 employees, although take-up rates are still uncertain. Invesco also offers a fund management service to banks, bringing its share of the MPF market to an estimated 8 to 10 per cent. While mutual fund penetration rates in Asia are still a long way behind the 45 per cent level in the US, Invesco is confident that such investment vehicles will become more popular. 'The household penetration ratio for mutual funds in Hong Kong is 7 per cent,' Mr Lo said. 'It took six years to move from 4 per cent to 7 per cent. But with the MPF and increased education, the penetration ratio will probably go up quite fast.' Mr Lo said it took only seven years for the US to reach a penetration rate of 20 per cent, from 5 per cent at the start of the 401(k) pension system in 1980. Today, half of all mutual fund assets in the US are from pension plans. In a sign of a maturing market, Invesco will introduce its B-share class of mutual funds in Hong Kong next month, which carry no front-end charge. Back-end charges will decrease incrementally to zero over four years, encouraging long-term investment. The company has seen a trend towards more broad-based investing in Hong Kong, with clients choosing a range of instruments in different locations. Mr Benson believes the investment industry has not yet realised the responsibility it has to help create wealth to support an ageing population. China's one-child policy would lead to a similar problem faced by Western countries in funding pension liabilities, but on a much larger scale. Educating employees about long-term strategies was imperative. 'If Asia wants access to the capital markets then it has to move in tune with the provider of the capital, which is the Western world,' he said. 'A lot of money is going into China at the moment but the real amount of capital they are going to need over the next 20 years is vast. They will have to follow practices which have grown up in the West.'