Chief Investment Officer, Multi-Asset Strategies
Scott Wolle
CFA
Multi Asset
Invesco Balanced-Risk Allocation Strategy
From the global financial crisis to eurozone instability – recent events have meant challenging times for investors. The Invesco Balanced-Risk Allocation Strategy aims to provide investors with a smoother investment experience throughout the course of the economic cycle.
At a glance
A risk-balanced strategy whereby asset classes are chosen based on their resilience to specific economic environments. The risk contributed by each asset class is then balanced to avoid becoming overly reliant on one particular asset class or economic environment to drive returns.
Uncorrelated returns
Our strategy has exhibited only moderate correlation to core asset classes such as equity, bonds and commodities.
Winning by not losing
Our strategy aims to mitigate losses during bear markets.
Team stability and tenure
The strategy is managed by the 18-strong Invesco Global Asset Allocation team, whose average tenure at Invesco spans 15 years.
Goals
Our strategy aims to achieve a positive total return with low to moderate correlation to traditional financial market indices. To achieve this objective, we gain exposure to equities, bonds and commodities by balancing the amount of risk each asset class contributes to the portfolio. This is followed by tactical adjustments designed to take advantage of near-term market opportunities.
Investment process
A three-step investment process.
Step 1: Asset selection
Different economic scenarios are likely to favour different asset classes. In this step of the investment process, assets that do well in the three primary phases of the economic cycle are selected for inclusion in the portfolio: inflationary growth (commodities), non-inflationary growth (equities) and recession (long-term government bonds).
Step 2: Portfolio construction
We take a purposeful, benchmark-agnostic approach to building our asset exposures within each asset class. Proprietary estimates for risk and correlation are used to create an optimized portfolio, which aims to provide high risk-adjusted returns and seeks to limit the frequency and magnitude of drawdowns (extended periods of negative returns).
Step 3: Tactical allocation
We evaluate the assets using three factor concepts (valuation, the economic environment and investor positioning) and make tactical adjustments. This should align the portfolio with the prevailing market environment and allows us to emphasize assets, which we believe are most likely to outperform.
Why Invesco
Trusted partner: Invesco ranks as one of the world’s largest risk parity managers with an experienced and stable team of investment professionals.
Prepare, protect and participate: The strategy seeks to minimise the negative effects of market downturns and participate during periods of market growth.
Innovative investment approach: We use a risk-balanced approach to investing, which seeks to weight each asset class, so that it contributes a relatively equal amount of risk to the portfolio.
Lower correlation: The strategy seeks a low to moderate correlation to traditional financial market indices.
Liquidity and transparency: Daily pricing and ample liquidity.
Investment team
The 18-strong Global Asset Allocation (GAA) team has USD26.9 billion¹ in assets under management in various strategies. Our team is committed to achieving strong investment performance and delivering investment excellence for clients.
- Competency and diversification: Competency and diversification: 17 team members, 25 years’ average industry experience².
- Stability: 18 years with Invesco on average.
- Clients first: To have someone entrust you with their money is a privilege. To ensure absolute alignment with client interests, senior portfolio managers invest their own personal assets alongside that of their clients.
Meet the team
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Footnotes
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1 Source: Invesco as at 31 December 2021.
2 Source: Invesco as at 30 June 2022.
Investment risks
- The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested. Changes in interest rates will result in fluctuations in value. The strategy uses derivatives (complex instruments) for investment purposes, which may result in a portfolio being significantly leveraged and may result in large fluctuations in value. The strategy may hold debt instruments which are of lower credit quality which may result in large fluctuations in value.
Important Information
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Data as at 30 June 2022, unless otherwise stated. By accepting this document, you consent to communicate with us in English, unless you inform us otherwise. Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.
