Invesco Perpetual has rolled out its first multi-asset fund strategy for former Standard Life Investments' (SLI) managers David Millar, Dave Jubb and Richard Batty.
The trio, who worked on the GARS team at SLI, joined Invesco Perpetual in March and have run a model portfolio version of the new Global Targeted Returns fund since then.
Aiming to return 3-month LIBOR +5% per annum on a rolling three-year basis, with less than half the volatility of global equities, the fund seeks to “dispense with asset class labels”.
Instead, the team will implement its best cross-asset class ideas through investing in both a selection of Invesco Perpetual funds and derivative-based strategies.
At launch, the vehicle is composed of 22 investment ideas, seven of which are expressed through the group’s existing funds.
These internal investments, which form around 60% of the portfolio, include positions in the group’s UK and European equity vehicles, and aid in lowering the fund’s risk profile.
On the fixed income side, however, Millar and team are limiting their fund exposure.
Instead, they are looking for “pinpoint ideas” expressed through the overlay strategy – for example, a trade aiming to profit from the changing shape of the US yield curve amid the prospect of a tapering of US QE.
These ideas also extend to other asset classes. Positions include a strategy pitting Asian market volatility against US volatility, as well as a “good tech/bad tech” play.
With bonds and equities having fallen in tandem at certain times this year, Millar (pictured) recognises the need to be aware of correlation risk.
“How the individual ideas work together is as important as how they stack up on their own merits,” he said. “Our central economic scenario is for a continued slow recovery but, if that does not come to pass, we will still be expected to deliver a positive return.”
The group has hired Georgina Taylor, formerly head of equity strategy at State Street Global Markets, EMEA, to aid the team and help explain the nature of the fund to clients.
Invesco Perpetual said it is likely to launch further funds in the range in future. The fund has a 1.1% clean share class and a Z share class at 0.9%, as well as a 1.6% class. It will sit in the IMA Targeted Absolute Return sector.
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