Investment strategies for institutional investors - Invesco
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Investment strategies for
institutional investors
This brochure is for Professional Clients only. Please do not redistribute.
Investment strategies for institutional investors 1
Embracing change, focused on the
long-term
As we look to capitalise on new opportunities in 2019, few need reminding that only
a handful of market segments achieved positive returns last year. With economic and
geopolitical uncertainty seemingly here for some time, investors and asset managers
must continue to adapt to succeed.
While many institutions still value independent, specialist expertise, others are
choosing to work with fewer asset managers – seeking partners that offer a broad
range of investment capabilities which can be aligned with their long-term financial
objectives.
Alongside the established strategies Invesco offers, we continue to innovate to meet
growing demand for factor investing and fully customised solutions. Through this
client-driven approach, Invesco has grown to manage over $880 billion in assets with
Chris Evans
7,400 employees located in 25 countries (as of 31 December 2018).
Head of UK Institutional &
EMEA Consultant Relations
Inside this brochure are a cross-section of strategies that reflect the varied needs of
Tel: +44 (0)1491 417717
institutional investors – from multi-factor enhanced equity strategies and income-
seeking real estate opportunities, to partnering to create outcome-based customised
portfolios.
We hope you find this of interest and look forward to discussing how Invesco’s
capabilities might assist your organisation achieve its investment goals over the short,
medium and long-term.
Chris Evans
Investment strategies for institutional investors 2
Contents
4 Real Estate Strategies
7 Invesco Global Direct Real Estate Fund
8 Invesco Real Estate - European Fund
9 Invesco Real Estate - Asia Fund
10 Invesco Real Estate - European Hotel Real Estate Fund
11 Invesco Real Estate - UK Residential Fund
12 Fixed Income Strategies
13 Senior Secured Loans Strategies
15 Invesco US Senior Loan Fund
16 Invesco European Senior Loan Fund
17 Invesco Global Senior Loan Fund
18 Investment Grade Bond Strategies
19 Invesco Global Investment Grade Corporate Bond Strategy
20 Invesco US Corporate Credit Strategy
21 Multi Sector Credit Strategies
23 Invesco Active Multi-Sector Credit Strategy
24 US Municipal Bond Strategies
26 Invesco High Yield Municipal Strategy
27 Liquidity Management Strategies
29 Invesco Global Liquidity Strategies
31 Factor Investing Strategies
36 Invesco Global Enhanced Strategy
37 Invesco European Quantitative Core Strategy
38 Invesco European Low Volatility Strategy
39 Invesco Eurobloc Enhanced Strategy
40 Multi Asset Strategies
41 Global Targeted Returns Strategy
43 Invesco Global Targeted Returns Fund (UK)
44 Risk Parity Strategies
47 Invesco Balanced-Risk Allocation Fund
48 Invesco Macro Allocation Strategy Fund
49 Index Strategies (ETFs and ETCs)
54 Investment Solutions
57 Annualized returns of selected asset classes
58 About Invesco
60 Your contacts
Investment strategies for institutional investors 3
Real Estate Strategies 496 investment professionals • 65.6 billion US dollars assets under • management 21 • locations worldwide: Atlanta, Dallas, Hong Kong, Hyderabad, London, Luxembourg, Madrid, Milan, Munich, New York, Newport Beach, Paris, Beijing, Prague, San Francisco, Seoul, Shanghai, Singapore, Sydney, Tokyo and Warsaw Selected Strategies: Direct Real Estate Strategies • Invesco Global Direct Real Estate Fund • Invesco Real Estate - European Fund • Invesco Real Estate - Asia Fund • Invesco Real Estate - European Hotel Real Estate Fund • Invesco Real Estate - UK Residential Fund
Direct Real Estate Strategies
Why consider Direct Real Most institutional investors are familiar with the appeal of holding real estate. With
Estate? historically low correlation to other asset classes, it can help serve as an instant
diversifier. Historically, real estate has delivered strong relative performance across
a number of generally longer time periods, and its characteristically stable relative
income can make it a compelling alternative to traditional asset classes.
Why consider Invesco Real We at Invesco Real Estate have the global strength of a large organisation
Estate for Direct Real Estate? complemented by the expertise of our on-the-ground specialists in the main real
estate markets worldwide. Our investment professionals are active in their local
markets every day working to implement clients‘ investment objectives.
−− Strong track record: proven investment track record of more than 35 years with a
performance driven focus. We have navigated through various real estate market
cycles and have been active with selective transactions during these periods.
−− Applied research: dedicated global research team whose forward-looking research
is complemented by the first-hand expertise of on-the-ground investment
professionals who are active in their local markets every day. A deep understanding
of the markets we are invested in is integral to the strategy and decisions we make
to ensure investments in the right markets at the right time.
−− Broad range of investment solutions: truly global investment manager covering
all regions and risk categories, listed and unlisted investments, across all the
commercial sectors, hotels and multi-family sectors. All aimed at meeting clients’
strategic investment needs.
−− Sustainable investment manager: sustainability is not a badge-wearing exercise
for Invesco as a company. We have a global sustainability policy and share best
practice across our global business.
−− Institutional dedication: focus on clients‘ objectives, risk appetite and capital
available to determine the most appropriate method for investment. All strategies
can be implemented through fund-based solutions and as separate accounts. Real
estate equity strategies (REITs) are offered as commingled funds and separate
accounts.
What is so special about the Over 490 staff located around the globe in 21 offices, responsible for 65.6 bn USD of
team? AuM, are all dedicated to enhance the investment outcomes we deliver to our clients.
−− Independent and focused: real estate investment management is all we do. Our
sole business is managing investments, working with our clients’ interests in mind
and concentrating on the delivery of returns.
−− Stable: 16 years average tenure and 27 years industry experience of global senior
team.
−− Cross-border specialism: globally minded with local knowledge and on-the-ground
experts in Atlanta, Dallas, Hong Kong, Hyderabad, London, Luxembourg, Madrid,
Milan, Munich, New York, Newport Beach, Paris, Beijing, Prague, San Francisco,
Seoul, Shanghai, Singapore, Sydney, Tokyo and Warsaw.
−− Broad service range: from fund management, investment, debt structuring and
transactions, to client servicing, asset management and research.
Investment strategies for institutional investors 5
What are the main features Each mandate is based on defined investment objectives. The investment strategy is a
of the investment process? result of these objectives. Properties are then acquired and managed according to the
defined specific requirements so there is no “style drift”.
What makes the investment Local market knowledge
process so robust, repeatable −− Specialised in cross-border investments in real estate.
and transparent? −− Present in all of the world’s major real estate markets, resulting in off-market
opportunities and extensive on-the-ground information which is used in our
research forecasts.
−− Local market know-how and a permanent presence are the cornerstones of
long-term sustainable value development.
Research-based investment approach
−− Fund strategy and investment decisions rely on global research and market
forecasts.
−− 300 markets are monitored, and our in-depth analysis is shared with our investment
experts to implement in our fund strategies. This “applied research” is key when it
comes to timing and investing.
−− Expertise across all commercial sectors (office, retail and logistics) as well as hotels
and multi-family sectors.
Active management
−− Basis for risk management is the disciplined investment process.
−− All internal analyses involve specialists from the departments of financing, asset
management and research.
What strategies do you offer? −− Invesco Global Direct Real Estate Fund.
−− Invesco Real Estate — European Fund.
−− Invesco Real Estate — Asia Fund.
−− Invesco Real Estate — European Hotel Real Estate Fund.
−− Invesco Real Estate — UK Residential Fund.
−− Tailor-made solutions (segregated accounts).
Investment strategies for institutional investors 6
Invesco Global Direct Real Estate Fund
Objective Key arguments
The fund enables investors to invest in −− Global, high quality and stable real estate portfolio diversified by geography and by
global direct real estate strategies “from a product type (office, retail, industrial, multi-family housing).
single source”. The four underlying
open-ended core and income producing −− Strong relative performance across multiple cycles of the underlying strategies.
strategies comprise a real estate portfolio
with 183 properties with an aggregate −− Generate durable income with strong focus on high quality assets in gateway and
value of over 23 billion US-Dollars in primary markets with credit-worthy tenants and long-term leases.
Europe, Asia and the United States. The
fund aims for a steady distribution yield −− Core real estate provides a transparent and efficient vehicle for its investors including
and a long-term total return of over 7% to transparency of valuations and an efficiently structured investment vehicle.
10% p.a. (gross of fees). There is no
guarantee that this performance target will −− Due to its worldwide presence on the ground, Invesco Real Estate is perfectly
be achieved. positioned to offer a global direct investment strategy for real estate.
−− Consistent global house view and investment process provide for consistent global
Fund facts strategy implementation.
AuM −− Single manager set-up with single cost level - no dual charging of fees.
72.1m USD (umbrella level)
−− Benefits within a multi asset class portfolio: Core real estate provides diversification
Number underlying investments benefits due to the low correlation to stocks and bonds, lower volatility relative to
investments publically traded investments and higher correlations to inflation than stocks and
183 bonds.
Occupancy −− Reserved exclusively for institutional investors.
94.6%
Loan to Value Invesco Global Direct Real Estate Fund allocations
26.0%
Sector allocation Geographical allocation
Average investment volume
121m USD (at underlying portfolio level)
Minimum investment
5m USD
Inception date
31 March 2017
Vehicles available
- Fonds Commun de Placement
(FCP-SIF) domiciled in Luxembourg • Office 49% • Retail 23% • Europe 47% • USA 34%
- Tailor-made solutions (segregated • Industrial 16% • Apartments 12% • Asia 19%
accounts)
Source: Invesco Real Estate, as of 31 December 2018.
Performance (in USD)
Total return development (gross, %) Q4 Q1 Q2 Q3 Q4 1 year Since
2017 2018 2018 2018 2018 inception
Capital return 1.8 1.9 -1.7 0.8 0.2 0.9 3.0
Income return 0.8 0.7 1.1 0.9 1.0 4.2 3.9
Total return 2.6 2.6 -0.6 1.7 1.2 5.1 6.9
Rolling 12-month performance (net, %) 12/2013– 12/2014– 12/2015– 12/2016– 12/2017‑
12/2014 12/2015 12/2016 12/2017 12/2018
Invesco Global Direct Real Estate Fund - - - - 7.3
Source: Invesco Real Estate, as of 31 December 2018. Gross returns represent the returns to investors from GDRE excluding withholding taxes applicable to the Feeder
Fund. Including these expenses results in a 7 bps drag on the quarterly Feeder Fund-level gross return and a 29 bps drag on the YTD Feeder Fund-level gross return.
Total Gross Return includes Fund-level operating expenses. Fund inception date: 31 March 2017. The net of fee returns includes the flat fee rate charged to GDRE,
currently 1.25%. Future fees could differ based on the size of the GDRE Lux investment. Past performance is not a guide to future returns.
Please refer to page 61 for a description of the strategy’s key risks.
Investment strategies for institutional investors 7
Invesco Real Estate – European Fund
Objective Key arguments
The fund offers the possibility to invest in −− High quality real estate portfolio, broadly diversified by geography and by product
a diversified pan-European real estate type (office, retail, industrial, residential) in Europe.
portfolio with a focus on high-quality
assets in prime locations that are −− Largest pan-European real estate core fund.
expected to deliver a sustainable income
return. The fund aims for a steady −− Strong relative performance across multiple cycles.
distribution yield and a long-term total
return of over 6% p.a. There is no −− Income orientation: The fund provides an income-oriented portfolio consisting of
guarantee that this performance target assets that have both relatively durable and growing income and are assets of a
will be achieved. nature that maximises liquidity when desired.
−− Core real estate provides a transparent and efficient vehicle for its investors
Fund facts including transparency of valuations and an efficiently structured investment
vehicle.
AuM
4.7bn EUR −− Benefits within a multi asset class portfolio: Core real estate provides diversification
benefits due to the low correlation to stocks and bonds, lower volatility relative to
Number of investments publically traded investments and higher correlations to inflation than stocks and
41 bonds.
Occupancy −− Reserved exclusively for institutional investors.
94.4%
Loan to Value Invesco Real Estate – European Fund allocations
24.7%
Sector allocation Country allocation
Average investment volume
97.4m EUR
Minimum investment
5m EUR
Inception date
1 August 2008
Vehicles available
- Fonds Commun de Placement
(FCP-SIF) domiciled in Luxembourg • Office 52% • Retail 30% • France 29% • Germany 22%
- Tailor-made solutions (segregated • Logistic 17% • Apartments 1% • Spain 14% • Poland 13%
accounts)
• UK 12% • Sweden 5%
• Italy 4% • Netherlands 2%
Source: Invesco Real Estate, as of 31 December 2018.
Performance (in EUR)
Total return development (gross, %) Q4 Q1 Q2 Q3 Q4 1 year 3 years 5 years Seit
2017 2018 2018 2018 2018 Auflegung
Capital return 1.6 0.4 0.3 0.4 0.4 2.7 2.1 2.6 1.9
Income return 1.1 1.1 1.2 1.1 1.1 4.6 4.7 5.0 5.4
Total return 2.7 1.5 1.5 1.5 1.5 6.1 6.6 7.5 7.4
Rolling 12-month performance (net, %) 12/2013– 12/2014– 12/2015– 12/2016– 12/2017‑
12/2014 12/2015 12/2016 12/2017 12/2018
Invesco Real Estate — European Fund 6.8 8.4 4.7 6.4 4.9
Source: Invesco Real Estate, as of 31 December 2018. Returns stated above are total gross returns. Longer term measures reflect compounded quarterly numbers.
Investment performance is represented by time-weighted returns before fund level expenses and taxes and before fund fees and individual unitholders‘ taxes.
Performance is presented based on Class A units. Fund inception date: 1 August 2018. Performance shown is starting from 12 months after the purchase of the first
asset for the fund on 31 December 2009. Net returns are based on the fund’s aggregate fees from all investors and may not represent return of individual investors.
Past performance is not a guide to future returns.
Please refer to page 61 for a description of the strategy’s key risks.
Investment strategies for institutional investors 8Invesco Real Estate – Asia Fund
Objective Key arguments
The fund offers the possibility to invest in −− High quality real estate portfolio, broadly diversified by geography and by product
a broadly diversified real estate portfolio type in Asia-Pac (office, retail, industrial, residential) in Asia Pac.
with a focus on high-quality, high-yield
properties with long-term leases in prime −− Strong relative performance across multiple cycles.
locations in gateway markets in the
Asia-Pacific region. The fund aims to −− Income orientation: a total income return to be at least 50% of the returns and the
achieve a stable distribution yield and a fund aims to provide an income-orientated portfolio consisting of assets that have
long-term overall performance of over both durable and growing income and are assets of a nature that maximize liquidity
8% p.a. There is no guarantee that this when desired.
performance target will be achieved.
−− Core real estate provides a transparent and efficient vehicle for its investors including
transparency of valuations and an efficiently structured investment vehicle.
Fund facts
−− Benefits within a multi asset class portfolio: Core real estate provides diversification
AuM benefits due to the low correlation to stocks and bonds, lower volatility relative to
2.5bn USD publically traded investments and higher correlations to inflation than stocks and
bonds.
Number of investments
16 −− Reserved exclusively for institutional investors.
Occupancy
99% Invesco Real Estate – Asia Fund allocations
Sector allocation1 Country allocation2
Loan to Value
30.2%
Average investment volume
142m USD
Minimum investment
10m USD
Inception date
18 February 2014
Vehicles available • Office 66% • Logistic 14% • Australia 28% • Japan 25%
- Fonds Commun de Placement • Retail 13% • Cash/Other 7% • South Korea 18% • China 11%
(FCP-SIF) domiciled in Luxembourg • New Zealand 11% • Cash/Othere 7%
- Tailor-made solutions (segregated
accounts) 1 Additional allocation in residential sector planned.
2 Additional allocation in Hong Kong and Singapore planned.
Source: Invesco Real Estate, as of 31 December 2018.
Performance (in USD)
Total return development (gross, %) Q4 Q1 Q2 Q3 Q4 1 year 3 years Since
2017 2018 2018 2018 2018 inception
Capital return 2.7 1.1 -2.1 -0.8 1.0 -0.8 5.7 5.1
Income return 0.9 0.8 1.0 1.2 1.0 4.0 4.5 4.9
Total return 3.6 1.9 -1.1 0.4 2.0 3.2 10.4 10.3
Rolling 12-month performance (net, %) 12/2013– 12/2014– 12/2015– 12/2016– 12/2017‑
12/2014 12/2015 12/2016 12/2017 12/2018
Invesco Real Estate — Asia Fund - 6.6 12.3 14.4 2.4
Source: Invesco Real Estate, as of 31 December 2018. Returns stated above are total gross returns. Longer term measures reflect compounded quarterly numbers.
Investment performance is represented by time-weighted returns before fund level expenses and taxes and before fund fees and individual unitholders‘ taxes. Fund
inception date: 18. Februar 2014. Time-weighted returns since inception are calculated from the date of first capital call (17 March 2014). Fiscal year of this fund
ends in every June, 30. Performance shown is starting from 12 months after the purchase of the first asset for the fund on 31 December 2009. Net returns are
based on the fund’s aggregate fees from all investors and may not represent return of individual investors. Past performance is not a guide to future returns.
Please refer to page 61 for a description of the fund‘s key risks.
Investment strategies for institutional investors 9Invesco Real Estate — European Hotel Real Estate Fund
Objective Key arguments
The fund offers investment opportunities −− The fund provides access to a growing sector that has been delivering stable yields
with the aim of enabling stable long-term for 15 years.
returns with potential for value growth
through investments in leased hotel −− Invesco Real Estate has a track record of managing hotel funds and individual
properties. The fund aims for a total mandates since 2006 and was one of the first investment managers, who
return of 7% to 8% over a rolling five-year developed a decided European hotel strategy.
period with a payout yield of 6% to 7%
p.a. (gross before fees). There is no −− Diversification through countries, brands and operators: the core portfolio should
guarantee that this performance target comprise high quality and established hotels of international brands within Europe.
will be achieved. This is complemented by modern hotels with new and innovative brands in growing
segments such as lifestyle hotels and serviced apartments.
Fund facts −− Relatively stable income from large and mid-market hotels, growth from lifestyle
hotels and serviced apartments.
AuM
398.5m EUR −− Own expert team: the hotel strategy is managed by a well established team of hotel,
real estate and investment experts with in-depth knowledge in these sectors.
Number of investments
5 −− Reserved exclusively for institutional investors.
Number of hotel rooms
1,454 Invesco Real Estate — European Hotel Real Estate Fund allocations1
• Germany 77%
Loan to Value
36.4% • Netherlands 23%
Average investment volume
75.4m EUR
Minimum investment
10m EUR
Inception date
7 April 2017 1 Additional allocations are planned in Belgium, Italy, Spain, France and Poland.
Source: Invesco Real Estate, as of 31 December 2018.
Vehicles available
- Fonds Commun de Placement
(FCP-RAIF) domiciled in Luxembourg
- Tailor-made solutions (segregated
accounts)
Performance (in EUR)
Total return development (gross, %) Q4 Q1 Q2 Q3 Q4 1 year Since
2017 2018 2018 2018 2018 inception
Capital return 0.2 -0.3 -0.6 -0.1 1.2 0.2 3.5
Income return 1.2 1.3 1.0 1.4 1.4 5.1 7.5
Total return 1.4 1.0 0.4 1.3 2.5 5.3 11.2
Rolling 12-month performance (net, %) 12/2013– 12/2014– 12/2015– 12/2016– 12/2017‑
12/2014 12/2015 12/2016 12/2017 12/2018
Invesco Real Estate — European Hotel Real Estate Fund - - - - 5.1
Source: Invesco Real Estate, as of 31 December 2018. Returns stated above are total gross returns. Longer term measures reflect compounded quarterly numbers.
Investment performance is represented by time-weighted returns before fund level expenses and taxes and before fund fees and individual unitholders‘ taxes. Fund
inception date: 7 April 2017. Time-weighted returns since inception are calculated from the date of first capital call (1 August 2017). Net returns are based on the
Fund’s aggregate fees from all investors and may not represent return of individual investors. Past performance is not a guide to future returns.
Please refer to page 61 for a description of the fund‘s key risks.
Investment strategies for institutional investors 10Invesco Real Estate – UK Residential Fund
Objective Key arguments
The fund provides access to investment −− Access to one of the UK’s fast growing and highest performing real estate asset
opportunities in the private rented sector classes over the medium to long-term (10-15 years).
in Greater London and other UK cities,
pursuing a strong pipeline of potential −− Low correlation with commercial real estate, equities and bonds.
residential opportunities. Too few houses
built each year together with challenging −− Relative stability of income the sector may offer.
house price affordability has created an
increasing supply and demand imbalance. −− Active investment pipeline of £1.1 billion.
Aim is a net distribution yield of 4% and
a net internal rate of return of 8% to −− Recognised locations with proven strong demand.
10%. There is no guarantee that this
performance target will be achieved. −− Large letting markets that are monitored by the research team.
−− Sufficiently large to allow for economies of scale.
Fund facts
−− Professionally managed, high quality rental accommodation.
AuM
425m GBP −− Sustainability program:
- Annual participation in complete Global Real Estate Sustainability Benchmark
Number of investments (GRESB).
10 - Conduct sustainability assessments during due diligence.
- All landlord-controlled energy and water usage/cost is benchmarked and monitored
Number of rental apartments in MSCI Eco-ledger.
1,689 (thereof 1,081 units currently - The implementation of sustainable practices as well as energy and water saving
under construction) measures is tracked in the annual ABP/budget process.
- Annually evaluate sustainability certifications.
Minimum investment
10m GBP
Invesco Real Estate - UK Residential Fund allocations
Inception date
• Greater London 38%
21 December 2015
• North West England 32%
Vehicles available • South East England 18%
- Luxembourg special limited partnership. • East England 6%
Open-ended, denominated in Sterling. • South East England 5%
- Tailor-made solutions (segregated
accounts)
Source: Invesco Real Estate, as of 31 December 2018.
Performance (in GBP)
Total return development (gross, %) Q4 Q1 Q2 Q3 Q4 1 year Since
2017 2018 2018 2018 2018 inception
Capital return -0.9 -0.5 -0.4 0.4 0.1 -0.4 -3.8
Income return 0.0 0.4 0.1 0.1 -0.2 0.3 -1.0
Total return -0.9 -0.1 -0.3 0.5 -0.2 -0.1 -4.8
Rolling 12-month performance (net, %) 12/2013– 12/2014– 12/2015– 12/2016– 12/2017‑
12/2014 12/2015 12/2016 12/2017 12/2018
Invesco Real Estate — UK Residential Fund - - - -6.1 0.0
Source: Invesco Real Estate, as of 31 December 2018. Returns stated above are total gross returns. Longer term measures reflect compounded quarterly numbers.
Investment performance is represented by time-weighted returns before fund level expenses and taxes and before fund fees and individual unitholders‘ taxes. Fund
inception date: 21 December 2015. Time-weighted returns since inception are calculated from the date of first capital call (31 December 2016). Net returns are based
on the fund’s aggregate fees from all investors and may not represent return of individual investors. Past performance is not a guide to future returns.
Please refer to page 61 for a description of the fund‘s key risks.
Investment strategies for institutional investors 11Fixed Income Strategies 226 • professionals, thereof 169 investment experts 300.1 billion US dollars assets under • management 12 locations worldwide: Atlanta, Chicago, • Hong Kong, London, Louisville, Mumbai, New York, Palm Harbor, Portland, San Diego, Shenzhen and Toronto Selected Strategies: Senior Secured Loans Strategies • Invesco US Senior Loan Fund • Invesco European Senior Loan Fund • Invesco Global Senior Loan Fund Investment Grade Bond Strategies Invesco • Global Investment Grade Corporate Bond Strategy • Invesco US Corporate Credit Strategy Multi Sector Credit Strategies Invesco • Active Multi-Sector Credit Fund US Municipal Bond Strategies High • Yield Municipal Strategy Liquidity Management Strategies Invesco • Global Liquidity Strategies
Senior Secured Loans Strategies
Why consider Senior Secured Senior Secured Loans can offer a combination of relatively attractive current income
Loans? coupled with a short duration profile and have the potential to be an uncorrelated
source of return.
−− Long-term strategic and tactical investment opportunities arising from
developing credit trends and attractive relative value.
−− Typically high level of current income consistent with the preservation of
principal, as a result of its position at the top of the capital structure which may
help in the event of default.
−− The asset class has exhibited relatively low correlation with other traditional asset
classes.
−− Loans have exhibited less volatility than traditional assets — including fixed
income.
Why consider Invesco Fixed The Senior Secured Loans team seeks to enhance investors’ ability to achieve stability
Income for Senior Secured of returns, preservation of principal, and continuity of income through dedicated
access to the senior loan asset class, with an explicit focus on credit fundamentals and
Loans? proprietary tools that encourage investing across a full credit cycle.
−− Distinctive access: as one of the world’s largest loan managers, with USD 38.2
billion in senior loan assets under management, Invesco’s market presence offers
investors distinctive access to the asset class.
−− Private Side Investor: unlike many senior loan competitors, the team has
strategically remained on the private side to enhance its research capabilities. The
decision to remain private is driven by the belief that access to management and
management-level financial information and projections will aid investment
decisions through a full credit cycle. The team has the ability, on a case-by-case
basis, to become a public-side investor when it has conviction that the public
securities can offer better risk-adjusted relative value.
−− Leadership: as a result of its leadership position in both active and passive
management, the team is one of the most significant trading counterparties in the
global senior loan market in both the primary and secondary markets.
−− Economies of scale: the scale of its senior loan platform may benefit investors
through preferred access to new opportunities and top-tier allocations on deals that
pass the rigorous credit process.
−− Active trading: Invesco‘s active trading style makes it a top tier trading counterparty
to the dealer community, further enhancing our ability to access all available
secondary market opportunities, and help garner favorable trade execution.
−− Expanded opportunities: comprehensive US and European market coverage
establishes expanded opportunity set with global intelligence and perspective.
−− Broad coverage: platform provides product offerings for all segments of the market:
- Commingled US, European and global institutional funds.
- Separate institutional accounts for clients worldwide.
−− Distinctive perspective: the platform provides the team unique insights of investor
behavior and supply/demand dynamics.
Investment strategies for institutional investors 13What is so special about the −− Experts in the loan asset class; distinctive perspective and experience gained
team? through managing loan assets since 1989 under a consistent approach executed
through a variety of vehicles and strategies over multiple market cycles.
−− 45 professionals dedicated to the Senior Loan team.
−− Exclusive focus of 29 seasoned investment professionals achieves powerful
informational and operational advantages.
−− Leadership by a 5-person Investment Committee averaging more than 27 years of
experience and 19 years tenure at the firm.
−− Commitment and support are demonstrated by Invesco, the global parent company,
with dedicated operations, legal, risk, and compliance resources.
What are the main features of Invesco’s senior loan investment process is based on a disciplined, fundamental
the investment process? approach to investing. Our analysts are structured by industry specialization and have
a deep understanding of the companies that operate in the senior loan space. In
addition to credit selection, the process is based on active portfolio management and
is designed to optimize portfolio returns while minimizing downside credit risk
investing through a full credit cycle.
The investment process is based on fundamental, dedicated bottom-up credit research
resulting in two internal ratings:
1) Probability of Default Rating: grading of issuers with respect to the risk of default.
2) Expected Recovery Rating: grading of issuers with respect to the expected
recovery rates in the event of default.
What makes the investment −− The team’s core investment philosophy and process is grounded in fundamental
process so robust, repeatable bottom-up risk assessment of each issuer/issue in which it invests, coupled with
topdown macro risk positioning tied to broader economic trends.
and transparent?
−− Invesco’s customised proprietary tool suite, including Rock Bottom Spread (RBS),
supports a quantitative analytical framework, to identify relative value opportunities
and predictive credit research in senior secured loans.
−− The Investment Committee is comprised of our most seasoned and senior investment
professionals.
What strategies do you offer? −− Invesco US Senior Loan Fund.
−− Invesco European Senior Loan Fund.
−− Invesco Global Senior Loan Fund.
−− Customised solutions with an investment minimum of 150m USD or equivalent.
Investment strategies for institutional investors 14Invesco US Senior Loan Fund
Objective Key arguments:
The fund aims to provide a high level of −− One of the largest managers of senior secured loans in terms of assets under
current income, consistent with the management with significant presence in all aspects of the US and European loan
preservation of capital, by investing markets.
primarily in adjustable rate senior loans
whose interest rates float at a spread −− Experienced and well resourced team with global reach, disciplined fundamental
above Euribor and reset on average research focus and customised proprietary tool suite.
approximately every 60 days. There is no
guarantee that this performance target −− The fund has a strong track record, coupled with relatively low correlation with
will be achieved. other risk asset classes.
Fund facts Senior secured loans – potential portfolio diversification benefits
Correlation of assets from 1997 - 2018
AuM
7.85bn USD Asset class Senior secured HY Treasuries Equities IG
loans Bonds Corporates
Senior secured loans 1.00 0.77 -0.35 0.44 0.34
Reference index
HY Bonds - 1.00 -0.15 0.63 0.55
Credit Suisse Leveraged Loan Index
Treasuries - - 1.00 -0.27 0.62
Equities - - - 1.00 0.22
Inception date
IG Corporates - - - - 1.00
11 August 2006
Source: Standard & Poor’s LCD and S&P/LSTA as from January 1997 to December 2018. Loans represented
by the S&P/LSTA Leveraged Loan Index; HY Bonds represented by the BAML US High Yield Index; IG
Vehicles available Corporates represented by the BAML US Corporate Index; Treasuries represented by the ML 10yr US Treasury
- Specialized Investment fund (SIF) Index; Equities represented by the S&P 500.
domiciled in Luxembourg
- Tailor-made solutions (segregated
accounts)
Performance (H-shares, acc., in USD)
Calendar year performance 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
(gross, %)
Invesco US Senior Loan Fund 50.57 10.72 3.50 12.23 6.92 1.94 -0.64 11.09 4.49 0.74
Credit Suisse Leveraged Loan Index 51.62 10.13 1.52 9.66 6.15 2.06 -0.38 9.88 4.25 1.14
Rolling 12-month performance (net, %) 12/2013– 12/2014– 12/2015– 12/2016– 12/2017‑
12/2014 12/2015 12/2016 12/2017 12/2018
Invesco US Senior Loan Fund 1.06 -1.53 10.11 3.52 -0.15
5-year risk/return statistics (gross) Annualized Standard Sharpe Up-Capture Down-Capture Max
return deviation p.a. ratio ratio ratio drawdown
Invesco US Senior Loan Fund 3.44% 2.88% 0.96 104.33% 105.70% -5.23%
Credit Suisse Leveraged Loan Index 3.33% 2.60% 1.02 100.00% 100.00% -4.70%
Source: Invesco, Morningstar, as of 31 December 2018. Gross performance is gross of management fees. Net performance is net of management fees. Management
fees and other costs related to the management of an investment portfolio will detract from clients’ actual returns. Past performance is not a guide to future returns.
Please refer to page 61 for a description of the fund‘s key risks.
Investment strategies for institutional investors 15Invesco European Senior Loan Fund
Objective Key arguments:
The fund aims to provide a high level of −− One of the largest managers of senior secured loans in terms of assets under
current income, consistent with the management with significant presence in all segments of the US and European loan
preservation of capital, by investing markets.
primarily in adjustable rate senior loans
whose interest rates float at a spread −− Experienced and well resourced team with global reach, disciplined fundamental
above Euribor and reset on average research focus and customised proprietary tool suite.
approximately every 60 days. There is no
guarantee that this performance target −− The fund has a strong track record, coupled with relatively low correlation with
will be achieved. other risk asset classes.
Fund facts Senior secured loans – potential portfolio diversification benefits
Correlation of assets from 1997 - 2018
AuM
1.59bn EUR Asset class Senior secured HY Treasuries Equities IG
loans Bonds Corporates
Senior secured loans 1.00 0.77 -0.35 0.44 0.34
Reference index
HY Bonds - 1.00 -0.15 0.63 0.55
Credit Suisse Western European
Treasuries - - 1.00 -0.27 0.62
Leveraged Loan Index
Equities - - - 1.00 0.22
IG Corporates - - - - 1.00
Inception date
Source: Standard & Poor’s LCD and S&P/LSTA as from January 1997 to December 2018. Loans represented
31 May 2012 by the S&P/LSTA Leveraged Loan Index; HY Bonds represented by the BAML US High Yield Index; IG
Corporates represented by the BAML US Corporate Index; Treasuries represented by the ML 10yr US Treasury
Vehicles available Index; Equities represented by the S&P 500.
- Specialized Investment fund (SIF)
domiciled in Luxembourg
- Tailor-made solutions (segregated
accounts)
Performance (GX-shares, dist., in EUR)
Calendar year performance (gross, %) 2013 2014 2015 2016 2017 2018
Invesco European Senior Loan Fund 9.61 2.98 6.04 7.43 2.99 -0.05
Credit Suisse Western European 8.73 1.96 3.14 6.52 3.30 0.55
Leveraged Loan Index
Rolling 12-month performance (net, %) 12/2013– 12/2014– 12/2015– 12/2016– 12/2017‑
12/2014 12/2015 12/2016 12/2017 12/2018
Invesco European Senior Loan Fund 2.06 5.18 6.58 2.20 -0.78
5-year risk/return statistics (gross) Annualized Standard Sharpe Up-Capture Down-Capture Max
return deviation p.a. ratio ratio ratio drawdown
Invesco European Senior Loan Fund 3.48% 2.35% 1.69 114.42% 90.62% -2.13%
Credit Suisse Western European 3.07% 1.93% 1.65 100.00% 100.00% -1.99%
Leveraged Loan Index
Source: Invesco, Morningstar, as of 31 December 2018. Gross performance is gross of management fees. Net performance is net of management fees. Management
fees and other costs related to the management of an investment portfolio will detract from clients‘ actual returns. Past performance is not a guide to future returns.
Please refer to page 61 for a description of the fund‘s key risks.
Investment strategies for institutional investors 16Invesco Global Senior Loan Fund
Objective Key arguments:
The fund aims to provide a high level of −− One of the largest managers of senior secured loans in terms of assets under
current income, consistent with the management with significant presence in all aspects of the US and European loan
preservation of capital, by investing markets.
primarily in adjustable rate senior loans
whose interest rates float at a spread −− Experienced and well resourced team with global reach, disciplined fundamental
above Euribor and Libor and reset on research focus and customised proprietary tool suite.
average approximately every 60 days.
There is no guarantee that this −− The fund has a strong track record, coupled with relatively low correlation with
performance target will be achieved. other risk asset classes.
Fund facts Senior secured loans – potential portfolio diversification benefits
Correlation of assets from 1997 - 2018
AuM
570.38m USD Asset class Senior secured HY Treasuries Equities IG
loans Bonds Corporates
Senior secured loans 1.00 0.77 -0.35 0.44 0.34
Reference index
HY Bonds - 1.00 -0.15 0.63 0.55
Blended benchmark of Credit Suisse
Treasuries - - 1.00 -0.27 0.62
Leveraged Loan Index & Credit Suisse
Equities - - - 1.00 0.22
Western European Leveraged Loan Index
IG Corporates - - - - 1.00
Source: Standard & Poor’s LCD and S&P/LSTA as from January 1997 to December 2018. Loans represented
Inception date by the S&P/LSTA Leveraged Loan Index; HY Bonds represented by the BAML US High Yield Index; IG
29 November 2013 Corporates represented by the BAML US Corporate Index; Treasuries represented by the ML 10yr US Treasury
Index; Equities represented by the S&P 500.
Vehicles available
- Specialized Investment fund (SIF)
domiciled in Luxembourg
- Tailor-made solutions (segregated
accounts)
Performance (G-shares, acc., in USD)
Calendar year performance (gross, %) 2014 2015 2016 2017 2018
Invesco Global Senior Loan Fund 2.07 1.19 10.34 4.44 1.32
Blended benchmark of Credit Suisse Leveraged Loan 2.03 0.25 9.57 4.42 1.11
Index & Credit Suisse Western European Leveraged
Loan Index
Rolling 12-month performance (net, %) 12/2013– 12/2014– 12/2015– 12/2016– 12/2017‑
12/2014 12/2015 12/2016 12/2017 12/2018
Invesco Global Senior Loan Fund 1.21 0.44 9.51 3.64 0.59
5-year risk/return statistics (gross) Annualized Standard Sharpe Up-Capture Down-Capture Max
return deviation p.a. ratio ratio ratio drawdown
Invesco Global Senior Loan Fund 3.82% 2.59% 1.21 106.80% 98.18% -3.89%
Blended benchmark of Credit Suisse Leveraged Loan 3.42% 2.44% 1.12 100.00% 100.00% -4.16%
Index & Credit Suisse Western European Leveraged
Loan Index
Source: Invesco, Morningstar, as of 31 December 2018. Gross performance is gross of management fees. Net performance is net of management fees. Management
fees and other costs related to the management of an investment portfolio will detract from clients’ actual returns. Past performance is not a guide to future returns.
Please refer to page 61 for a description of the fund‘s key risks.
Investment strategies for institutional investors 17Investment Grade Bond Strategies
Why consider investment Bond purchases of sovereign debt and other securities under the central banks’
grade credit strategies? QE policies have depressed yields and suppressed market volatility, crowding out
institutional investors, particularly pension funds and insurers looking for income
generating securities that match their liabilities. The global investment grade credit
market offers an attractive combination of investment quality, size and liquidity and
most importantly higher yields than government bonds.
Why consider Invesco Fixed If you have central banks and politicians to a large degree determining the direction of
Income for investment grade the markets, the approach to credit investing by looking at market direction, predicated
on economic data, is no longer effective. At Invesco Fixed Income, we have built on the
credit strategies? traditional tenets of portfolio construction, namely determining the market direction,
selecting the right assets and getting market timing right to acquire securities to
generate alpha. We have added three more stages in our investment process that refine
our investment strategy: thematic, relative value and macro overlays.
What are the main features of Portfolio Managers develop strategies whilst working closely with the Investment
the investment process? Strategy Team and Credit Analysts to form their investment opinion. They construct
macro themes identified to be the most appropriate using security selection in order
to best represent the view and potentially capture the highest risk adjusted returns
within the guidelines of the strategy.
The investment approach is centred around 3 core pillars:
1) Macro Positioning: understanding macro developments to identify macro risk
factor positioning and sector allocation.
2) M
acro & Credit Investment Themes: once identified, the themes are constructed
to capture the relative value between different parts of the market.
3) Issuer & Security Selection: identifying primary market opportunities, aiming to
identify potential winners and avoid potential losers.
What makes the investment −− Theme based approach designed to capture value opportunities for the next 12 to
process so robust, repeatable 18 months.
and transparent? −− Combination of Top-down (allocation) and Bottom-up approach (corporate bond
selection).
−− Fund managers responsible for leveraging platform breadth.
−− Ability to manage credit, interest rate and currency exposure separately (through
derivatives).
What strategies do you offer? −− Invesco Global Investment Grade Corporate Bond Strategy.
−− Invesco US Corporate Credit Strategy.
−− Segregated account solutions in consideration of individual design preferences. In
the process, the following parameters can be set:
- Regional exposures
- Inclusion of high yield bonds
- Foreign currency exposures
- Asset ratings
- Purchase prices
- Adjustment of the portfolio’s active share:
- Active with the aim of generating alpha
- Buy and hold approach with a focus on avoiding defaults and downgrades
Investment strategies for institutional investors 18Invesco Global Investment Grade Corporate Bond Strategy
Objective Investment universe
The strategy aims to generate an −− Minimum of 70% invested in investment grade corporates.
attractive total return by investing in
investment grade corporate bonds. It −− No sector or country limits.
pursues a theme-based approach
designed to identify relative value −− Discretion to invest in rising star/fallen angel opportunities (typically 5% to 10%, not
opportunities in the corporate bond lower than BB).
markets. There is no guarantee that this
performance target will be achieved.
Key arguments
−− Benchmark-agnostic, active management.
Composite facts
−− Risk-controlled process on Invesco Fixed Income global platform with a team based
AuM approach.
1.25bn USD
−− Fund managers access resources and know-how of the entire platform.
Benchmark
Bloomberg Barclays Global Aggregate −− Fund managers evaluate investment opportunities in collaboration with Invesco
Corporate Index (USD-Hedged) Fixed Income globally.
Composite inception date −− Macro overlays to mitigate risk.
1 September 2009
−− Industry experienced fund management, Lyndon Man: 17 years, Luke Greenwood:
Vehicles available 24 years.
- Open-ended UCITS fund
- Tailor-made solutions (segregated
accounts)
Performance (Composite, in USD)
Calendar year performance (gross, %) 2010 2011 2012 2013 2014 2015 2016 2017 2018
Invesco Global Investment Grade Corporate 7.09 3.25 13.96 2.49 11.70 2.39 7.24 7.76 -2.34
Bond Composite
Bloomberg Barclays Global Aggregate 6.66 2.84 13.50 2.08 11.25 1.99 6.81 7.33 -1.00
Corporate Index (USD-Hedged)
Rolling 12-month performance (net, %) 12/2013– 12/2014– 12/2015– 12/2016– 12/2017‑
12/2014 12/2015 12/2016 12/2017 12/2018
Invesco Global Investment Grade Corporate 11.25 1.99 6.81 7.33 -2.73
Bond Composite
5-year risk/return statistics (gross) Annualized Standard Sharpe Up-Capture Down-Capture Max
return deviation p.a. ratio ratio ratio drawdown
Invesco Global Investment Grade Corporate 5.24% 3.70% 1.23 122.40% 92.00% -3.44%
Bond Composite
Bloomberg Barclays Global Aggregate 3.60% 3.02% 0.97 100.00% 100.00% -3.08%
Corporate Index (USD-Hedged)
Source: Invesco, eVestment, as of 31 December 2018. Performance data were calculated from monthly composite returns. Where performance is gross of
management fees, management fees and other costs related to the management of an investment portfolio will detract from clients’ actual returns. This information
provided by Invesco is supplemental to the GIPS® disclosure. Please refer to page 62/66 for further information. Past performance is not a guide to future returns.
Please refer to page 61 for a description of the strategy‘s key risks.
Investment strategies for institutional investors 19Invesco US Corporate Credit Strategy
Objective Investment universe
The strategy aims to generate an −− Minimum of 65% invested in investment grade rated securities.
attractive total return by investing in
investment grade corporate bonds. It −− Maximum sector exposure of 25%.
pursues a theme-based approach
designed to identify relative value −− Discretion to invest in below investment grade debt up to 10%.
opportunities in the corporate bond
markets of US issuers, which are −− Focus on US dollar denominated debt (minimum of 70%), non-US dollar
denominated in USD. There is no denominated debt is hedged back into US dollar.
guarantee that this performance target
will be achieved.
Key arguments
−− Investment themes are constructed to seek to perform well in all market conditions
Composite facts whilst macro overlays are designed to potentially reduce downside during periods of
weakness.
AuM
1.65bn USD −− Selective high quality High Yield has provided flexibility to capture market
inefficiencies resulting from severe price action against bonds downgraded from
Benchmark investment grade to sub-investment grade.
Bloomberg Barclays U.S. Credit Index
−− Fund managers have 21 years of industry experience on average.
Composite inception date
31 August 2002
Vehicles available
- Open-ended UCITS fund
- Tailor-made solutions (segregated
accounts)
Performance (Composite, in USD)
Calendar year performance (gross, %) 2010 2011 2012 2013 2014 2015 2016 2017 2018
Invesco US Corporate Credit Composite 10.71 7.25 12.54 0.90 9.27 -0.72 9.06 8.28 -3.29
Bloomberg Barclays U.S. Credit Index 8.47 8.35 9.37 -2.01 7.53 -0.77 5.63 6.18 -2.11
Rolling 12-month performance (net, %) 12/2013– 12/2014– 12/2015– 12/2016– 12/2017‑
12/2014 12/2015 12/2016 12/2017 12/2018
Invesco US Corporate Credit Composite 8.89 -1.07 8.68 7.90 -3.62
5-year risk/return statistics (gross) Annualized Standard Sharpe Up-Capture Down-Capture Max
return deviation p.a. ratio ratio ratio drawdown
Invesco US Corporate Credit Composite 4.38% 3.95% 0.93 115.28% 96.51% -3.64%
Bloomberg Barclays U.S. Credit Index 3.22% 3.58% 0.71 100.00% 100.00% -3.82%
Source: Invesco, eVestment, as of 31 December 2018. Performance data were calculated from monthly composite returns. Where performance is gross of
management fees, management fees and other costs related to the management of an investment portfolio will detract from clients’ actual returns. This information
provided by Invesco is supplemental to the GIPS® disclosure. Please refer to page 62/66 for further information. Past performance is not a guide to future returns.
Please refer to page 61 for a description of the strategy’s key risks.
Investment strategies for institutional investors 20Multi-Sector Credit Strategies
Why consider Multi Sector −− The challenges of the current low interest-rate environment require different
Credit strategies? approaches and disciplines than were necessary in the strong bull market for
bonds of the past two decades.
−− Multi-Sector Credit is an efficient and unique approach to global credit investing.
By leveraging the global opportunity set and overlaying risk management to
minimize drawdowns, investors can achieve an appropriate risk-adjusted return.
Why consider Invesco Fixed −− Invesco Fixed Income AuM amounts to over 300 billion US dollars globally.
Income for Multi Sector
−− 169 fixed income investment professionals in 10 locations worldwide.
Credit strategies?
−− Invesco Fixed Income is a global credit manager with the depth and expertise in the
four major Fixed Income sectors utilized in the Multi-Sector Credit Strategy.
−− We believe that global capacity and local presence to underwrite credit is a
necessity for a Multi-Sector Credit investment process. The credit teams operate
around the globe from lead investment centers in Atlanta, London, and Hong Kong,
and from specialist management locations in cities such as Chicago and Louisville.
−− This global presence also allows us to look for pricing advantages between regions
for similar or identical credit risk. Portfolio construction reflects the Multi Sector
Credit team’s aggregation, approval, and redirection of active management
decisions by the individual sector teams, supported by the work and resources of
the Fixed Income organization.
−− This strategy will specifically target corporate credit, diversified across the global
market place and dynamically managed around a long term strategic design,
intended to produce favorable returns across a full credit cycle.
−− Our Multi-Sector Credit strategy is designed to deliver returns in excess of those
available in the high yield market with a lower risk profile. There is no guarantee the
outperformance target will be achieved.
What is so special about the −− 4 fund managers supported by a strong team of 8 fixed income sector specialists
team? (High Yield, Bank Loans, Emerging Markets, Global IG) and 99 global research
analysts.
−− Fund managers have an average working experience of 23 years, and analysts an
average of 16 years.
What are the main features of −− The strategy has been constructed to provide returns approaching those achieved
the investment process? in the global high yield market while exposing the portfolio to significantly less risk.
−− Strives to capture returns across diverse credit markets. The four core sectors
include global investment grade credit (IG), global high yield (HY), emerging
market debt (EM Debt) and floating rate securities (FRNs).
−− The strategy includes the following three components:
1) A strategic asset allocation forms the strategy‘s foundation, assigning equal
amounts of risk to each sector (risk parity).
2) Tactical asset allocation rotates exposure toward those sectors where we have
the most conviction about return opportunities. There is a 15% limit on a tactical
asset allocation to credit asset classes outside the four core sectors.
3) Through fundamentally based security selection, seeks to generate additional
returns.
Investment strategies for institutional investors 21Full Cycle Strategic Allocation
The strategic asset allocation (a base allocation derived from historic credit cycle analysis) process
ensures potential excess return is driven by high-conviction tactical allocation and security selection
decisions.
Global Investment Grade
Risk budget: 25% 40% Investment Grade
Capital allocation: 55%
Risk budget: 50%
Emerging Markets 15%
Risk budget: 25%
Senior Secured Loans 30%
Risk budget: 25% Non-Investment Grade
Capital allocation: 45%
Risk budget: 50%
High Yield 15%
Risk budget: 25%
Source: Invesco.
What makes the investment −− Vigorous credit analysis: At the sector level the thematic approach with vigorous
process so robust, repeatable credit analysis has been proven over time.
and transparent? −− Best ideas: By using the global team‘s best ideas we are also able to add value
through the opportunistic bucket. Senior portfolio managers‘ views and decisions
are reviewed and discussed weekly, and overall performance and risk is overseen by
the firm‘s chief strategist and an independent risk monitoring group.
−− Effective combination: The combination of a baseline strategic allocation with
overrides through tactical allocations seeks outperformance of passive credit
approaches across all market types. The strategy should perform best in periods of
moderately strong economic growth and may lag in performance during
recessionary periods, given its focus on corporate credit.
−− Allocation ability: The ability to allocate across credit asset classes tactically
enables the portfolio management team to deliberately capture opportunities and
inefficiencies that exist in different market environments..
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