Access an unconstrained bond fund with the ability to invest in opportunities along the entire credit spectrum. The fund can actively manage duration, yield curve and currency risks.
This fund aligns risk to reward by making adaptable and opportunistic bond market allocations.
The portfolio is dynamic, and we are able to change the asset allocation quickly when markets move. If we think that the risks are not being well rewarded, we can become more defensive. Equally, when opportunities arise, we can dial risk up in the fund.
The aim is to provide investors with income and capital growth.
We are benchmark agnostic. In practice, this means we can access opportunities across the full credit spectrum. This can include everything from government-issued debt right through to lower-rated emerging market bonds.
This flexibility allows us to actively manage duration, credit, yield curve and currency risk. We can also invest in derivatives to hedge or access attractively-valued risks.
We can change the funds duration as market conditions evolve. We can and have reduced duration completely in market environments where this risk is not being well rewarded. At other times we have been prepared to hold higher levels of duration than the market.
The fund has a cash-like index as its performance reference benchmark. This decision reflects the defensive nature of the fund during periods where we don’t see opportunity. We are prepared to de-risk and pass up short-term income to maintain the right balance and deliver on the fund’s mandate.
Stuart Edwards and Julien Eberhardt, who manage the fund, have a combined 45 years of experience in bond markets.
The fund was launched in 2010 and has experienced multiple investment cycles.
Access the Invesco Tactical Bond Fund (UK) product page to view KIIDs and factsheets.
Bond markets generally struggled in October as the market reevaluated the interest rate outlook, following a strong rally leading up to the Federal Reserve’s first rate cut. Read our latest thoughts on how fixed income markets performed during the month and what we think you should be looking out for in the near term.
Catch up on monthly fixed income insights from our emerging market local debt team.
In our regularly updated macroeconomic analysis we offer an outlook for interest rates and currencies – and look at which fixed income assets are favoured across a range of market environments.
Stuart Edwards and Julien Eberhardt are responsible for managing the fund. They are supported by an experienced team of credit analysts, FX and rates specialists, and an economist.
Stuart Edwards, Co-Fund Manager, Invesco Tactical Bond Fund (UK)The fund’s flexibility allows us to adapt quickly to market conditions. It means we can build a portfolio of our best ideas with the aim of generating strong risk-adjusted returns.
The fund managers have 45 years of combined industry experience. At times when they think that risk is not well rewarded, they can hold large allocations to cash or cash equivalents. Equally, when they do think there is opportunity, they can quickly dial up the fund's risk. This flexibility is central to the fund’s approach.
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Strategic bond funds are products with flexible mandates, investing across a broad range of fixed income asset classes. The investment teams that manage these products can dynamically evolve their asset allocation as markets change.
To carry out the fund’s mandate, it can be necessary to reduce the total risk of the portfolio substantially when markets do not offer enough value. This can mean foregoing some of the yield that the market is offering in order to try and defend the downside. Clients need to understand this feature of the fund and we have tried to make it explicit by choosing a cash-like index as the performance reference benchmark.
Over the history of the fund, a period when interest rates and credit spreads have reached historic lows at several points, we have reduced total fund duration to zero and below. But we have also been prepared to ‘re-risk’ the fund quickly. This was evidenced in the early life of the fund, when we were coming out of the financial crisis, and in the second quarter of 2020.
In 2020, we shifted a significant portion of the fund into credit risk in reaction to the much higher yields on offer after the market dislocation in March.
The fund aims to achieve income and capital growth over the medium to long term (three to five years plus).
The fund can allocate flexibly to corporate and government debt securities (which may be investment grade, non-investment grade, or have no credit rating). Depending on market conditions, the fund may also be fully invested in cash and near cash instruments at times. Finally, it can also use derivatives to reduce risk and costs and to generate additional capital and income.
The fund is actively managed and follows an unconstrained approach. UK 3 Month Treasury Bills are used as a comparator benchmark for performance monitoring purposes. This benchmark is shown for performance comparison purposes only. The Fund does not track the benchmark.
We have chosen a cash-like index as the reference benchmark to reflect the fact that the fund can reduce risk substantially in periods where the market doesn’t look attractive.
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. The securities that the Fund invests in may not always make interest and other payments nor is the solvency of the issuers guaranteed. Market conditions, such as a decrease in market liquidity for the securities in which the Fund invests, may mean that the Fund may not be able to sell those securities at their true value. These risks increase where the Fund invests in high yield or lower credit quality bonds. The fund has the ability to make significant use of financial derivatives (complex instruments) which may result in the fund being leveraged and can result in large fluctuations in the value of the fund. Leverage on certain types of transactions including derivatives may impair the fund’s liquidity, cause it to liquidate positions at unfavourable times or otherwise cause the fund not to achieve its intended objective. Leverage occurs when the economic exposure created by the use of derivatives is greater than the amount invested resulting in the fund being exposed to a greater loss than the initial investment. The fund may be exposed to counterparty risk should an entity with which the fund does business become insolvent resulting in financial loss. As the fund can rapidly change its holdings across the fixed income and debt spectrum and cash, this can increase its risk profile. The fund has the ability to invest more than 35% of its value in securities issued by a single government or public international body. The fund’s performance may be adversely affected by variations in interest rates. The fund may invest in contingent convertible bonds which may result in significant risk of capital loss based on certain trigger events.
This is marketing material and 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.
All data is as at 31/12/2023 and sourced from Invesco unless otherwise stated.
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.
For the most up to date information on our funds, please refer to the relevant fund and share class-specific Key Investor Information Documents, the Supplementary Information Document, the Annual or Interim Reports and the Prospectus, which are available using the contact details shown.
EMEA3382912/2024
