Chief Investment Officer, Multi-Asset Strategies Scott Wolle
CFA
Introducing the Invesco Balanced-Risk Allocation Fund
The fund aims to achieve true economic diversification for a more consistent investment experience through the full economic cycle.
Balancing risk
Invesco’s Balanced-Risk Allocation Fund (IBRA) is diversified across three major macro factors – growth, defensive, and real return – represented by three major asset classes – equities, bonds and commodities – with each of these benefitting from either growth, recessionary or inflationary macro-economic environments.
Why Invesco Balanced-Risk Allocation?
The portfolio’s strategy is essentially an alternative beta strategy, but comes with the benefits of a mutual fund. For example, it has daily liquidity, daily valuation, high transparency and lower costs compared to most other alternative strategies.
The fund balances risk across the three major economic scenarios (growth, recession and inflation). As such, we believe the risk of a large drawdown is significantly lower than that of an equity fund, or even a traditional balanced portfolio consisting of equities and bonds.
Most investors are focused on balancing their exposure to asset classes. Often, this leaves them heavily overexposed to equity risk. In contrast, IBRA ensures that the risk contribution from each macro factor (growth, defensive, and real return) never exceeds 50% of total portfolio risk, ensuring a much more balanced risk exposure for investors.
Access the Invesco Balanced-Risk Allocation Fund product page to view KIDs/KIIDs and factsheets.
The investment concerns the acquisition of units in an actively managed fund and not in a given underlying asset. The fund is not managed in reference to a benchmark.
Investment risks
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For complete information on risks, refer to the legal documents. 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. Debt instruments are exposed to credit risk which is the ability of the borrower to repay the interest and capital on the redemption date. Changes in interest rates will result in fluctuations in the value of the fund. The fund uses derivatives (complex instruments) for investment purposes, which may result in the fund being significantly leveraged and may result in large fluctuations in the value of the fund. Investment in instruments providing exposure to commodities is generally considered to be high risk which may result in large fluctuations in the value of the fund. The Fund may invest in a dynamic way across assets/asset classes, which may result in periodic changes in the risk profile, underperformance and/or higher transaction costs.
Meet the team
The Invesco Balanced-Risk Allocation Fund is managed by Invesco’s Global Asset Allocation (GAA) team. This team consists of six seasoned portfolio managers and two analysts, with 23 years of average industry experience.
Scott Wolle, CIOThose who want to successfully invest their money are well advised not to put all their eggs in one basket. Investors should diversify their investments across several asset classes. The key is to get risk and return into the right balance.
Fund facts
IBRA’s portfolio management team aims to outperform traditional balanced portfolios by balancing the fund's risk exposure across three macro factors; growth, defense and real return. This approach aims to reduce volatility, and maximise the return per unit of risk taken.
Grounded in true economic diversification
Potential for equity-like returns with lower volatility
Seasoned investment team
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FAQs
A traditional balanced portfolio is typically invested in bonds and equities, and typically in roughly equal shares. As equities tend to be significantly more volatile than bonds, the overall portfolio is usually significantly overexposed to equity risk.
In contrast, IBRA is invested in bonds, equities and commodities, across three macro factors (growth, defense, and real return) with the exposure to each of these three macro factors guided by its relative risk. To be exact, the ‘neutral’ risk exposure to each macro factor is 33%, and can range from 16% to 50%, depending on where the investment team sees the best opportunities.
A full economic cycle usually takes several years (often around 3-5) and is dominated by three market environments: growth, inflation and recession. Equities tend to perform well in periods of economic growth, commodities in periods of inflation, and bonds in periods of recession. IBRA is invested in all three asset classes and can therefore help smooth the performance over the full economic cycle.
Most investors believe splitting investments fairly equally across different asset classes gets them most of the way to a truly diversified portfolio. While this may be true for portfolio returns, this is certainly not true for portfolio risk. And for many investors, diversifying portfolio risk can be more relevant than diversifying portfolio return. Typically, risk-diversified portfolios have a higher allocation to asset classes with lower market risk (such as bonds), and a lower allocation to asset classes with higher market risk (such as equities). This allows them to balance the risk contribution from each single asset class such that each has more equal opportunity to fulfil their intended roles.
Important Information
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Data as at 30.11.2023, unless otherwise stated. This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. Views and opinions are based on current market conditions and are subject to change. For information on our funds and the relevant risks, refer to the Key Information Documents/Key Investor Information Documents (local languages) and Prospectus (English, French, German, Spanish, Italian), and the financial reports, available from www.invesco.eu. A summary of investor rights is available in English from www.invescomanagementcompany.lu. The management company may terminate marketing arrangements. Not all share classes of this fund may be available for public sale in all jurisdictions and not all share classes are the same nor do they necessarily suit every investor.
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