Invesco Perpetual Global Targeted Returns Fund
May 2017 (Content as at 30 April 2017)
The Fund aims to achieve a positive total return in all market conditions over a rolling 3 year period. The Fund targets a gross return of 5% per annum above UK 3 month LIBOR (or an equivalent reference rate) and aims to achieve this with less than half the volatility of global equities, over the same rolling 3 year period. There is no guarantee that the Fund will achieve a positive return or its target and an investor may not get back the full amount invested.
Global equities managed to maintain an optimistic outlook during April despite geopolitical events continuing to provide an unpredictable backdrop. First quarter corporate earnings in both the US and Europe were encouraging, but headlines were focused on President Trump’s tax reform proposal, violence in Syria and sabre-rattling in the Korean peninsula. European politics were again in focus and the outcome of the first round of the French presidential election was viewed as a positive, especially for the pro-European movement. In the UK, Prime Minister Theresa May called a snap election for June, which promises to test the patience of a somewhat fatigued electorate. The immediate impact was a rally in the pound against the dollar and to a lesser extent against the euro, as markets speculated that a government with a new five-year term would have more chance of avoiding a hard Brexit. Fixed interest had a mixed month as uncertainty around Syria, North Korea and the French elections saw investors prefer government bonds to corporate bonds initially, however, the market friendly outcome of the French election helped reverse this into month end.
One new idea was added to the fund during the month. The new ‘Equity – Dispersion’ idea is a long term trade which hopes to take advantage of the continued low correlation (the relationship between two financial instruments) between S&P 500 constituents and the index itself. The realised correlation of stocks within the S&P500 has fallen, which reflects the less ‘macro’ nature of the equity market relative to the past and indicates that individual stock returns are starting to diverge. We believe this will continue and have implemented a view which captures the rising dispersion between stock returns. We implement this view through buying volatility on a basket of individual stocks using options relative to the volatility of the S&P500 index. The team closed two interest rate ideas in Japan and Europe, as longer term rates rose faster than short term rates. Both had provided positive returns to the fund and the team no longer believed in potential further returns. Additionally, in Japan there was a lack of clarity on the future direction of bond yields. In Europe, more hawkish comments from the European Central Bank meant near-dated government debt may not be as anchored as it once was and could rise relative to longer-term debt.
|Launch date||09 September 2013|
|Sector||IA Targeted Absolute Return NR|
|Available in an ISA?||Yes|
|Team:||Invesco Perpetual - Multi Asset|
|Team:||Invesco Perpetual - Multi Asset|
|Title:||Head of Multi Asset|
|Team:||Invesco Perpetual - Multi Asset|
|Accounting period ends||
|Accumulation (No Trail)||B8CHD05||GB00B8CHD050|
|Minimum lump sum||£500|
|Minimum monthly amount||£20|
|Minimum additional lump sum||£100|
One-off charges taken before you invest
The entry charge for the fund is up to 5%. This is the maximum that might be taken out of your money before it is invested. For example, if you invest £1,000, an entry charge of 5% means £950 of your money will be used to buy shares in the fund.
The entry charge covers the costs of setting up your investment.
If you invest through a third party (such as a financial adviser), but do not receive financial advice on your investment, this charge may include payments to that third party. For more details see "What share classes are available for your ICVC funds?".
There is no exit charge for the fund.
Charges taken from the fund over a year
The ongoing charge figure is based on a fixed, all-inclusive fee and excludes portfolio transaction costs. The ongoing charge for each share class can be found in the relevant Key Investor Information Document available under 'Literature'. Investors will be provided with advance notice if any increases to this figure occur.
The ongoing charge covers all aspects of operating the fund during the year, including fees paid for investment management, administration and the independent oversight functions.
If you invest through a third party (such as a financial adviser), but do not receive financial advice on your investment, this charge may include payments to that third party. Once invested, your contract note or acknowledgement letter will show the amount of any payment in cash terms. For more details see "What share classes are available for your ICVC funds?".
Charges taken from the fund under specific conditions
No performance fee is charged.
Portfolio transaction costs
The fund was launched on 9th September 2013. On average, since launch, the fund incurred broker commissions of 0.07% and transfer taxes of 0.08%, as a necessary part of buying and selling the fund’s underlying investments in order to achieve the investment objective. A proportion of these costs are recovered directly from investors joining and leaving the fund.
When the fund buys or sells shares, broker commissions and transfer taxes are paid by the fund on each transaction. In addition, there is a dealing spread between the buying and selling prices of the underlying investments. Unlike shares, other types of investments (such as bonds, money market instruments and derivatives) have no separately identifiable transaction costs; these costs form part of the dealing spread. Dealing spreads vary considerably depending on the transaction value and market sentiment. The estimated average dealing spread for the fund is 0.79% of the transaction value.
Comparing portfolio transaction costs for a range of funds may give a false impression of the relative costs of investing in them, for the following reasons:
- Transaction costs do not necessarily reduce returns. The net impact of dealing is the combination of the effectiveness of the manager's investment decisions in improving returns and the associate costs of investment
- Historic transaction costs are not an effective indicator of the future impact on performance
- Transaction costs for buying and selling investments due to other investors joining or leaving the fund may be recovered from those investors. For further information see Pricing policy note below
- Transaction costs vary from country to country
- Transaction costs vary depending on the types of investment in which a fund invests
- As the manager's investment decisions are not predictable, transaction costs are also not predictable
Pricing policy note
We operate a single pricing methodology for this fund and reserve the right to adjust the fund's price to protect your investment from the costs of buying and selling investments that result from other investors joining or leaving the fund. The amount of any such adjustment is calculated by reference to the estimated costs of dealing in the underlying investments.
Typical adjustments to the fund’s price are to increase it by 0.55% for net inflows and decrease it by 0.45% for new outflows.
We usually adjust the price to the maximum extent possible when the value of net contributions or withdrawals is significant, which helps to protect your investment from the costs of the resultant transactions.
1The fund's financial year end is 31 December 2016. Figures in these sections are as at 31 December 2016.
Product & fund information
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. Past performance is not a guide to future returns.
The fund makes significant use of financial derivatives (complex instruments) which will result in the fund being leveraged and may 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. This counterparty risk is reduced by the Manager, through the use of collateral management.
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 and where we use derivatives.
Yield and performance figures are based on the z (accumulation) share class.
All fund portfolio figures are as at date shown (source: Invesco Perpetual).
Performance figures are shown in sterling, inclusive of reinvested income and net of the ongoing charge and portfolio transaction costs to date shown. The figures do not reflect the entry charge paid by individual investors (source: Lipper).
The Historic Yield reflects distributions declared over the past twelve months as a percentage of the mid-market price of the fund, as at the date shown. It does not include any entry charge and investors may be subject to tax on their distributions.
Where Invesco Perpetual has expressed views and opinions, these may change. Where securities are mentioned they do not necessarily represent a specific portfolio holding and do not constitute a recommendation to purchase, hold or sell.
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 Short Reports and the Prospectus, which are available using the contact details shown.