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August 23, 2005

Invesco Braves Team Trading

By Michael Scotti

(Traders Magazine, August 2005) -- It's "the team within the team." That's how Patricia Johnston, head of equity trading at Invesco North America, described the structure of her trading desk. The money manager, with $54 billion in equities under management, launched a team trading approach some 18 months ago.

"It's been really great how the traders have embraced change," said Johnston, who was named to head the desk two years ago. She moved to Atlanta from Invesco Funds' desk in Denver to be head of trading for Invesco North America. "I think this team approach has reinvigorated everyone."

The team trading approach began after a six-month assessment. Johnston realized the desk had some challenges. First, there were multiple investment products that were managed at three external sites: The Atlanta desk trades for portfolio managers in offices in Boston and New York, both of which focus on structured products, as well as in Dallas, where its REIT portfolio managers reside. Atlanta investment products include equities, both domestic and international, as well as managed accounts and derivatives.

The goal was to set up the desk so the level of service and communication flow with portfolio managers were the same as if everyone were in one location. "I thought it was critical that we give all the portfolio managers the same attention," Johnston said.

She also learned the nine traders had skills and experience trading other investment products, besides the one in which they specialized. Consequently, after discussions with the traders and the various portfolio managers, regarding their needs and expectations from the desk, the team approach was born.

"We wanted to provide depth," Johnston said. "Depth to the portfolio managers and depth for the product." Each investment product now has a team of no fewer than three traders.

Traders also work on multiple teams or products. This "cross-pollenization" of having traders on different products has enabled them either to learn new investment products or hone their skills in more familiar areas. "I think they've enjoyed the challenge," Johnston said. "It makes them more viable traders." Another benefit is that it has made the desk more cohesive and close-knit.

Johnston believes the portfolio managers have placed greater reliance on the trading desk, and their particular teams.

That's because of the increased information flow. "We've got a deeper bench now," Johnston said.

The increased level of information flow and greater reliance on traders' opinions, have raised the desk's status within the firm. "We have worked very hard to nurture the relationship and to make ourselves available," Johnston pointed out. So how has the roughly 18-month project gone? "We've received positive feedback from the portfolio managers," Johnston said.

The portfolio managers rate the trading desk each quarter. Each team gets graded by its portfolio managers in the areas of communication and trading. "It keeps us on our game," Johnston said.