Invesco Perpetual is bringing a range of multi-asset, risk-rated funds to the UK run by its Atlanta-based global asset allocation team headed by CIO Scott Wolle.
The group already runs a $12.2bn quantitative strategy for US and European clients and is now bringing this to the UK in response to clients’ demand for products that transparently manage volatility.
Invesco Perpetual’s Balanced Risk 6, 8 and 10 funds, launched today, are named after the volatility level they are targeting. For example, the Invesco Perpetual Balanced Risk 8 fund will target an average volatility of 8% over a full market cycle.
Craig Newman, Invesco Perpetual sales director, said: “The Balanced Risk 8 fund is a medium risk fund with slightly less volatility than the average Cautious Managed fund. Our clients in the US have used it as a core to their portfolios, building other products around that, and it is transparent in what it owns and the volatility it targets.”
The global asset allocation team can invest in equities, bonds and commodities, using 16 underlying positions on each fund, and adjust their exposures according to the risks.
“The lack of correlation between these asset classes is at the heart of these funds. The team are trying to find asset classes that behave differently in different economic environments for a smoother outcome,” Newman said.
This means funds can capture up to 75% of the upside but only 25% of market losses, he added.
Manager Wolle said: “In a period of non-inflationary growth, developed equities are likely to perform well. In a recession the fund’s bond exposure is designed to preserve portfolio value. And during times of inflationary growth, commodities have traditionally performed well.”
Derivatives such as futures contracts will be used to make tactical adjustments to the portfolio and capture additional returns, said Invesco Perpetual. Property will not be included as the asset class is “too illiquid” and can enhance the correlation between asset classes, which the team is trying avoid.
Invesco Perpetual has chosen to place the funds into the Specialist sector, rather than the Mixed Investment categories, because the vehicles are “a new concept” in the UK market place and it determined the Specialist sector was the most “appropriate”.
Newman added the group is “mindful” investors may be concerned about the US location of the managers. It will be working hard to ensure they are accessible to investors in the UK by ensuring regular trips from the States and using digital formats for investor updates.
Other groups offering risk-rated funds to UK investors include Skandia with its £1.2bn Spectrum range. Standard Life Investments also launched the MyFolio range, run by Bambos Hambi, in October 2010 and this has grown to over £1bn.
The minimum investment on the Invesco Perpetual Balanced Risk range is £500 and the AMC is 1.25%. The full initial sales charge is 5%.
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