Invesco s European Strategies Changing times for European equities?

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1 Invesco s European Strategies Changing times for European equities? This marketing document is exclusively for use by Professional Clients and Financial Advisers in Continental Europe (as defined in the Important Information) and Qualified Investors in Switzerland. This document is not for consumer use; please do not redistribute L H H 1020 L

2 Europe staying on track The forecast: Expansion to continue 2017 was a good year for the European economy: economic growth, in the 28 EU countries as well as in the 19 Eurozone economies, was at its strongest rate for ten years. The unemployment rate continued to fall, and inflation and interest rates stayed low. Although business confidence indicators have softened a little in early 2018, we think this year will be another one of benign economic conditions should be another good year The eurozone s economic turnaround in 2017 took many by surprise. Overall GDP growth for the region was 2.5%, more than twice the rate generally expected at the start of the year. Consensus forecasts are for overall GDP growth to be over 2% again in In a sense, this revival of growth takes the eurozone back to the future. From the euro s launch in 1999 until 2007, average GDP growth for the region was 2.6% p.a. and there was no recession (see Figure 1). Recessions a recent memory The eurozone expansion has now continued for more than 4 years. Partly because of the region s deep recession in 2011/12, some are concerned that growth is fragile and may not last. However, expansions do not die of old age as Janet Yellen, former US Fed chair, memorably commented. Indeed, they can last for many years. Some point to Australia s economic expansion which has now continued for 26½ years. Yet, maybe even more remarkable is that before Australia set that record, the award for the longest expansion was held by the Netherlands (which is now, of course, a member of the Eurozone). How did it manage that? A large part of the answer lies in the flexibility of its economy. According to the Heritage Foundation, the Netherlands is the freest of the large Eurozone economies. It is encouraging that, notably in France, the clear trend now is to embrace economic reforms. Although at times that is difficult, especially when vested interests are challenged, it is, without doubt a key to lasting growth. One other cause for optimism is that the Eurozone s government deficits and debt levels are now under control. It was unsustainable government finances that were at the root of the Eurozone crisis, of course: so, in that sense, this development is especially welcome. External events are still a potential risk. One of these a potential US-China trade war has attracted much attention recently. While difficult to judge the outcome, we are optimistic that it can be contained or even avoided and the effects on Europe will not be large. Eurozone growth: back to the future? Eurozone GDP growth* average Global Financial Crisis Eurozone Crisis Consensus Forecast * evolving membership Source: Eurostat and Consensus Economics March Invesco s European Strategies

3 Two teams, one objective: excellence for European Equities For us, diversity of thought is more than just a nice-sounding phrase: it is a key element of how we work and of how we aim to create a recognisable investment experience for our clients. A perfect example is that we have two teams that share sound expertise for European equities, that have a proven track record and that take quite different investment approaches. Invesco Quantitative Strategies, comprises over 40 investment professionals in five locations on four continents: Frankfurt, New York, Boston, Melbourne, and Tokyo, systematically applying fundamental and behavioural insights. Managed funds include: Invesco Euro Structured Equity Fund (page 6) Invesco Pan European Structured Equity Fund (page 8) Invesco Pan European Equity Long/Short Fund (page 10) Invesco European Equities team in Henley, UK, with eight investment professionals, favours valuation-driven stock picking in a macro and market context. Managed funds include: Invesco Euro Equity Fund (page 14) Invesco Pan European Equity Fund (page 16) Invesco Pan European Equity Income Fund (page 18) Details of the main fund risks can be found on page 20 of this brochure. Invesco s European Strategies 3

4 Invesco Quantitative Strategies Systematically applying factors aiming to create excess returns Invesco Quantitative Strategies systematically applies fundamental and behavioural insights in their stock-selection process. An engineered discipline using quantitative modelling seeks to create excess returns within specified risk parameters. The team have been using factors e.g. Value for their investment strategies for more than 30 years, even if they did not call it factor investing. Invesco Quantitative Strategies: 1 region 3 equity funds Invesco Euro Structured Equity Fund Invesco Pan European Structured Equity Fund Invesco Pan European Equity Long/Short Fund Scope Investment universe captures the Eurozone equity universe offering a large source of fundamentally attractive and defensive stocks fulfilling the investment criteria. Investment universe is across Europe offering a large source of fundamentally attractive and defensive stocks fulfilling the investment criteria. Investment universe is across Europe, offering a large source of fundamentally attractive and defensive stocks for the long portfolio and unattractive stocks for the short portfolio. Style Low-volatility, quantitative approach, which is benchmark agnostic; clear & repeatable investment steps, focusing on risk, return & transaction costs projections leading to a portfolio with low-volatility characteristics and attractive risk-return profile. Low-volatility approach with stock selection expertise seeking to generate an attractive risk-return profile. Implementation of long/ short approach with a net long bias investment process. Goals* Seeking to outperform the MSCI EMU Index-NR (EUR) in the long term, with lower volatility than the broader market. Seeks to outperform the MSCI Europe NR in the long term, with lower volatility than the broader market. To achieve a positive total return over a market cycle with a moderate correlation to traditional European equity indices via a long/ short allocation. Risk management Constrained portfolio volatility, only taking risks where reward is expected. Avoid unrewarded volatility, strong risk management: only taking risks where reward is expected. Seeks to offer attractive risk characteristics based on the proven IQS investment process with around half the volatility of European equity indices over a market cycle. Facts* Diversification through stock (max. 2%), sector (max. 25%) and country (max. 40%) weights, quantitative investment approach excluding loss-producing emotional factors. Diversification through stock (max. 2%), sector (max. 25%) and country (max. 40%) weights, quantitative investment approach excluding loss-producing emotional factors, defensive nature in down markets. Average portfolio beta around 0.3, achieved through combination of long and short investments. * There is no guarantee that the funds will achieve the teams goals. For the funds stated objective and investment policy please see the current prospectus. 4 Invesco s European Strategies

5 The team has a clear goal for the funds: being at least as good as the stock market over the long term, but with less volatility. That may mean that performance may be behind the market during the good times because during the bad times performance is usually holding up quite well. The results so far are equity-like returns with significantly more stability. Diversification concerns are addressed through the introduction of ceilings for weights of individual stocks, industries, sectors and countries. Unconstrained portfolios may differ significantly from their reference indices in terms of risk and return characteristics (benchmark agnostic). Typically, their average market capitalisation will be somewhat smaller than the market index. The portfolio beta will typically be below one. Over the medium term this will lead to a more stable return pattern, while it will most likely hurt the short-term relative performance only in strongly rising markets. Investment philosophy Seek excess return through bottom-up stock selection built on 30 years of stock-selection expertise using proven fundamental and behavioural concepts An engineered discipline using quantitative modelling seeking to create excess returns within specified risk parameters Performance patterns that differ from those of traditional managers, e.g. in low-volatility equity strategies (through volatility control) or equity market neutral portfolios (application both long-only and long-short) Well-selected range of equities. The objective is to hold a diversified portfolio of stocks with attractive characteristics Investment approach The investment approach was developed in 1983 and has been continually refined ever since. The core criteria have held for over three decades: equities are attractive if they are undervalued, if earnings estimates increase, or if they are from well-managed companies. And because much of the stock market is actually psychology, IQS was one of the first portfolio management teams to take market sentiment into account. Many of the team s experts have worked together for decades. Investment process: Equities. Quantifiable. Controlled. Factors* Momentum Quality Value Balanced, time-tested Earnings Momentum Price Momentum Proprietary signals Quantifiable, predictive, complementary Earnings momentum Earnings/Sales Revisions Revisions against Trend Cash Flow Surprise Specific Momentum Risk-Adjusted Momentum Event Momentum Short Interest Net External Financing Net Asset Growth Profitability & Operating Efficienc Fundamental Health Accounting Integrity Cash Flow Yield Gross Profit Yield Earnings Yield Book Yield Dividend yield * Not all factors are used in all regions and sub-models. Additional factors are used in specific sub-models and definitions may vary across regions. Source: Invesco. As of 31 December For illustrative purposes only. Invesco s European Strategies 5

6 Invesco Euro Structured Equity Fund Eurozone equities with risk-dampener We believe that low-volatility equity portfolios are a smart way to capture the return potential of equities at a reduced risk level. Thorsten Paarmann Stock selection is based on a proprietary, quantitative model. The multi-factor portfolio aims to smooth out market fluctuations over a full market cycle, with the target to achieve a more stable performance than the broader market. In other words, the model aims to pick up comparatively less of downside market movement while capturing a lot of upside market movements. Alexander Uhlmann Fund profile A low-volatility, stable play The fund managers aim to offer investors the full long-term performance potential of Eurozone equities with a lower risk than that of the Eurozone equity market. Highly active investment strategy With a strong focus on the most attractive stocks, within the fund there is no allocation to index heavyweights, which the fund management believes to be unattractive. Reduced drawdown potential and smoothing effect The fund managers aim to smooth out the ups and downs of the Eurozone equity market. Especially in bear markets, when investors want to reduce losses in their portfolio, the fund aims to reduce drawdown potential. Diversification The fund offers the benefit of diversification due to its unique combination of systematic stock selection and volatility control that can deliver a very different return pattern compared to traditional managers and other low-vol managers. 6 Invesco s European Strategies

7 Positioning versus index Invesco Euro Structured Equity Fund MSCI EMU Index-NR (EUR) Micro Small Mid Large Giant Deep-Value Core-Value Core Core-Growth High-Growth Source: Morningstar Direct as of Indexed performance* Invesco Euro Structured Equity Fund Indexed, 7 October 2015 = MSCI EMU Index-NR (EUR) 80 09/15 03/16 09/16 03/17 09/17 03/18 Cumulative performance (%) 1 year since inception Fund Index Quartile ranking 1 - Fund facts Fund name Invesco Euro Structured Equity Fund Fund volume EUR mn Launch date 7 October 2015 Reference index MSCI EMU Index-NR (EUR) Base currency EUR Annual management fee 1.3% ISIN code A Shares (EUR,acc) LU Calendar year performance (%) Fund Index Rolling 12-month returns (%) Fund Index Risk-return statistics since inception Fund Peer group percentile Sharpe Ratio (arith) Information Ratio (arith) Past performance is not a guide to future returns. The performance data shown does not take account of the commissions and costs incurred on the issue and redemption of units. Source: 2018 Morningstar. Indexed performance: Performance of an investment of 100 in share class currency. Gross income re-invested to 31 March 2018 unless otherwise stated. The figures do not reflect the entry charge payable by individual investors. Invesco s European Strategies 7

8 Invesco Pan European Structured Equity Fund A defensive play on Europe Higher volatility stocks do not lead to better returns. Hence, we focus our investments on equities that have attractive fundamentals and limited risk. Thorsten Paarmann The fund managers believe they can add value through the systematic application of fundamental and behavioural insights. The concept of unconstrained optimisation was developed by Invesco Quantitative Strategies in When implementing the investment process, the fund managers concentrate on what the model identifies as the most attractive stocks, independent of the stocks index weight but taking into account risk and return forecasts. The optimisation process focuses on building portfolios that maximise the ratio of expected return versus expected risk. Rolling 3 year performance, 1 month shift (%) Fund outperforms 61 times (100%). Invesco Pan European Structured Equity Fund A EUR Acc 25 Michael Fraikin Past performance is not a guide to future returns. The performance data shown does not take account of the commissions and costs incurred on the issue and redemption of units. Gross income re-invested to 31 March 2018 unless otherwise stated. The figures do not reflect the entry charge payable by individual investors. Source: Morningstar Direct as of Time Period: Fund profile A low-volatility, stable play The fund managers aim to offer investors the full long-term performance potential of European equities with a lower risk than that of the European equity market. The concept of unconstrained optimisation was first applied to the Invesco Pan European Structured Equity Fund in September Highly active investment strategy With a strong focus on the most attractive stocks, within the fund there is no allocation to index heavyweights that the fund management believes to be unattractive. Reduced drawdown potential and smoothing effect The fund managers aim to smooth out the ups and downs of the European equity market. Especially in bear markets, when investors want to reduce losses in their portfolio, the fund aims to reduce drawdown potential. Diversification The fund offers the benefit of diversification due to its unique combination of systematic stock selection and volatility control that can deliver a very different return pattern compared to traditional managers and other low-vol managers. 8 Invesco s European Strategies

9 Positioning versus index Invesco Pan European Structured Equity Fund Micro Small Mid Large Giant Deep-Value Core-Value Core Core-Growth High-Growth Source: Morningstar Direct as of Indexed performance Invesco Pan European Structured Equity Fund Indexed, 31 December 2012 = /13 03/14 03/15 03/16 03/17 03/18 Cumulative performance (%) 1 year 3 years 5 years Fund Index Quartile ranking Calendar year performance(%) Fund Index Fund facts Fund name Invesco Pan European Structured Equity Fund Fund volume EUR 5.54bn Launch date 6 November September 2006 (strategy change (low vol)) Reference index Base currency EUR Annual management fee 1.3% ISIN code A Shares (EUR, acc) LU Morningstar Rating TM : Rolling 12-month returns (%) Fund Index year risk-return statistics Fund Peer group percentile Sharpe Ratio (arith) Information Ratio (arith) Past performance is not a guide to future returns. The performance data shown does not take account of the commissions and costs incurred on the issue and redemption of units. Source: 2018 Morningstar. Indexed performance: Performance of an investment of 100 in share class currency. Gross income re-invested to 31 March 2018 unless otherwise stated. The figures do not reflect the entry charge payable by individual investors. Invesco s European Strategies 9

10 Invesco Pan European Equity Long/Short Fund Defensive equity market participation The fund offers the opportunity to participate in the development of European equity markets, but with only about half the volatility. The fund aims to provide a positive total return over a full market cycle with a moderate correlation to European equity market indices with a long/short approach. The investment team builds the long portfolio with exposures to factors they like, while shorting characteristics they dislike. Martin Kolrep Visualisation of the optimal portfolio High alpha exposure through active management of the long/short leg Long Portfolio Short Portfolio Universe* Asset Stock attractiveness (Alpha) 4 3 Georg Elsaesser % 20% 30% 40% 50% 60% 70% 80% Stock-risk forecast * IQS European Equity universe. Forecasts are based on current market conditions and are subject to change. For illustrative purposes only. Source: Invesco, as at 7 December The size of each bubble represents the weight of the holding in the portfolio. Long portfolio/short portfolio = Invesco Pan European Equity Long/Short Fund at inception (7 December 2016). Defensive positioning towards equity markets The long portfolio seeks benchmark-unconstrained investment in the most attractive companies and shows high exposures of the expected long term-alpha driver using the full capability of the stock selection model. The short portfolio seeks to benefit from underperformance of unattractive companies. The target volatility* is around half the volatility of European equity indices over a market cycle. * There is no guarantee that the fund will achieve the team s goals. For the funds stated objective and investment policy please see the current prospectus. 10 Invesco s European Strategies

11 Fluctuating portfolio net exposure - How does it work? Fund facts 150% 100% 150% 150% - 50% Long Equity 100% Long exposure fluctuates Short Equity -50% Net Exposure 50% Fund name Invesco Pan European Equity Long/Short Fund Fund volume EUR 10.17mn Launch date 7 December 2016 Reference index Euribor 3 Month Index (EUR) Base currency EUR Annual management fee 1.4% ISIN code A shares (EUR, acc) LU For illustrative purposes only. Portfolio weightings and allocation are subject to change. Directional strategy By focusing on providing a positive total return over a full market cycle with a moderate correlation to European equity market indices with a long/short approach, the fund managers seek to participate in long-term equity markets with positive net equity exposure. They seek to offer attractive risk characteristics based on the proven IQS investment process with around half the volatility of European equity indices over a market cycle. The high-conviction strategy includes a minimum of 50% gross long exposure held for both return generation and hedging downside risk and up to 80% additional long exposure to dynamically manage market risk and seek return. Fund profile Net equity exposure During the optimization process, the team takes the expected market volatility into account, which is the main driver of net equity exposure. Cost-efficient implementation The fund offers a cost-efficient implementation with a combination of physical long positions and swaps. Non-euro denominated investments are hedged back to euro The fund managers have a focus on intended risks that deliver return potential. Invesco s European Strategies 11

12 Invesco s European Equities team Valuation as key determinant of future returns The Henley-based European Equities team is comprised of eight investment professionals and headed by Jeff Taylor. The team has an average of ten years tenure with Invesco and favours valuation-driven stock picking in a macro and market context. The team believes that markets are inefficient and provide opportunities to buy stocks below their intrinsic value. Valuation is the key determinant of future returns. The approach is pragmatic, flexible and conviction-driven, style-agnostic with avoidance of momentum strategies. Invesco s European Equities team: 1 region 3 equity funds Invesco Euro Equity Fund Invesco Pan European Equity Fund Invesco Pan European Equity Income Fund Scope Typically, 45 to 55 stock holdings; active share >75% relative to the benchmark. Flexibility to have exposure to non-msci EMU stocks. Typically, 65 to75 stock holdings; active share >70% relative to the benchmark, no more than 5% in any one stock, active position typically not over 3% in any one stock, sector, country, and style agnostic. Typically, 65 to 75 stock holdings; active share >75% relative to the benchmark, sector, country, and style agnostic. Style Active investing, fundamental stock picking, agnostic of benchmark, sector & country positioning. Fundamental stock-picking with a focus on valuation, taking advantage of market inefficiencies. Active stock picking approach based on fundamental analysis with a key focus on valuation. Goals* The Fund aims to outperform the MSCI EMU Index-NR (EUR) in the long term. The Fund seeks to achieve its objective through an active allocation to Euro Zone equities. The Fund aims to provide long-term capital growth by investing in a portfolio of equity or equity related instruments of European companies with an emphasis on larger companies. The Fund aims to generate income together with longterm capital growth. The Fund will seek to deliver an above average gross dividend yield. Risk management The approach targets the most appropriate long-term risk and reward combination (preferred investment horizon: 3 years). The approach targets the most appropriate long-term risk and reward combination. The approach seeks to achieve the most appropriate combination of income generation and capital appreciation, enabling it to adapt to different market conditions and types of risks (both micro and macro). Facts** Strong performance over 3Ys and 5Ys, significantly outperformed the benchmark over 5Ys 3 Strong performance over 5Ys, outperformed the reference index, successfully managed, over 15 years fund management experience Strong performance over 5 Ys, outperformed the reference index and GIFsector average industry experience across the European and UK Equities teams is 18 years 12 Invesco s European Strategies * There is no guarantee that the funds will achieve these goals. ** Past performance is not a guide to future returns. The performance data shown does not take account of the commissions and costs incurred on the issue and redemption of units. Gross income re-invested to 31 March 2018 unless otherwise stated. The figures do not reflect the entry charge payable by individual investors. 3 The fund was launched at 02/10/2015 and all data before 02/10/2015 is referring to the Invesco Euro Actions Fund. The Invesco Euro Actions Fund was merged at 02/10/2015 to the Invesco Euro Equity Fund.

13 The European Equities fund managers are based in Henley-on-Thames, away from the noise of the City of London. This gives them the space and freedom to think for the long term and not be distracted by day-to-day, short-term market fluctuations. They have built a centre of investment excellence, based around an active, long-term, fundamental research-driven approach to investing. Their asset class and regional equity experts provide both breadth and depth of investment knowledge. They make the most of that expertise by fostering a culture of idea sharing, collaboration and debate; different viewpoints are actively encouraged, which they think leads to better outcomes for investors. Investment philosophy Underpinned by a number of core beliefs, all of the Henley-managed European equity funds share an investment philosophy that is grounded in valuation-driven, active management. In common with all the investment teams located in Henley, the European Equities team firmly believe that investors are best served by a focus on long-term investing, avoiding an overemphasis on current trends and consensus. Companies operate in long-term cycles and so does the focus of the investment team s research. Investment approach: valuation matters The team s approach is to take advantage of inefficiencies in the market and buy stocks at below what they believe to be their intrinsic value. They do this through fundamental research, placing a strong emphasis on valuation, a key determinant of future returns. The team s approach has the following key characteristics: Active Interaction Top-down and bottom up fundamental analysis Valuation-driven Pragmatic and flexible The team believe in investing where they feel the best returns are to be found, irrespective of a stock s weight in the benchmark index. Leveraging the expertise of the wider investment capability in Henley, the team gain insight into other asset classes and equity markets and how these might impact the fundamentals of European equity markets at both a macro and micro level. While bottom-up research and analysis is the main focus for new idea generation and evaluation of existing holdings, understanding the macroeconomic background provides a critical component of the process and imparts the context against which this research takes place and can also add value. Valuation determines whether a stock is an attractive investment or not. The team focus their stock-picking on companies where they believe current and future prospects are not reflected in their valuations. There is no inbuilt country, sector or style bias. The fund managers invest where they believe the best opportunities to be at any particular point in time. Invesco s European Strategies 13

14 Invesco Euro Equity Fund Focus on valuation and investment flexibility As active fund managers who think long-term, we endeavour to take advantage of valuation anomalies in the market for the benefit of our investors. While spending a lot of time on stock-picking, we also keep an eye on the economic background, as that can clearly influence the investment choices we make. Jeffrey Taylor The Invesco Euro Equity Fund is a fundamentally managed, benchmark-agnostic fund. The fund managers Jeffrey Taylor and Oliver Collin do not favour any particular investment style, nor are they restricted by country, sector, stock or market cap limits. This dedicated investment approach has led the original fund to a very consistent outperformance of the fund s reference index, the MSCI EMU NR Index, irrespective of the market environment. Due to the fund s comparatively high up-capture ratio, investors have been provided with attractive alpha potential, particularly in strong equity markets. Rolling 3 year performance*, 1 month shift (%) Fund outperforms 49 times (100%). Oliver Collin Invesco Euro Equity Fund A EUR Acc MSCI EMU Index-NR (EUR) Past performance is not a guide to future returns. The performance data shown does not take account of the commissions and costs incurred on the issue and redemption of units. Gross income re-invested to 31 March 2018 unless otherwise stated. Source: Morningstar Direct as of Time Period: * The original fund (Invesco Euro Actions Fund) was merged on 02/10/2015 to the Invesco Euro Equity Fund. Fund profile A flexible investment approach With a typically high active share and no pre-conceived style bias, Jeff Taylor and Oliver Collin are agnostic with regarding sector or country positioning. They seek to take advantage of valuation anomalies through bottom-up stock selection, while adapting the strategy according to the macro-market environment and riskreturn assessment. Capitalising on valuation anomalies The team s investment approach seeks to capitalise on valuation anomalies in the market, with the benchmark considered more of a useful reference point. Avoiding reliance on short-term trends The investment team places more emphasis on the long term, avoiding any over-reliance on shorter-term trends such as momentum and other technical factors. Experienced team The fund manager and head of the European Equities team in Henley, Jeff Taylor, has over 30 years of industry experience. Average team industry experience is 16 years. 14 Invesco s European Strategies

15 Positioning versus index Invesco Euro Equity Fund MSCI EMU Index-NR (EUR) Micro Small Mid Large Giant Deep-Value Core-Value Core Core-Growth High-Growth Source: Morningstar Direct as of Indexed performance Invesco Euro Equity Fund Indexed, 31 March 2013 = MSCI EMU Index-NR (EUR) 80 03/13 03/14 03/15 03/16 03/17 03/18 Cumulative performance (%) 1 year 3 years 5 years Fund Index Quartile ranking Fund facts Fund name Invesco Euro Equity Fund Fund volume EUR 1.94bn Launch date 2 October 2015 Reference index MSCI EMU Index-NR (EUR) Base currency EUR Annual management fee 1.5% ISIN code A Shares (EUR, acc) LU Morningstar Rating TM : Calendar year performance(%) Fund Index Rolling 12-month returns (%) Fund Index year risk-return statistics Fund Peer group percentile Sharpe Ratio (arith) Information Ratio (arith) Past performance is not a guide to future returns.the performance data shown does not take account of the commissions and costs incurred on the issue and redemption of units. Source: 2018 Morningstar. Indexed performance: Performance of an investment of 100 in share class currency. Gross income re-invested to 31 March 2018 unless otherwise stated. The data shown relates to the Invesco Actions Euro Fund (French SICAV), which has been merged into the Invesco Euro Equity Fund (Luxembourg SICAV) on 2 October The figures do not reflect the entry charge payable by individual investors. Invesco s European Strategies 15

16 Invesco Pan European Equity Fund Strong emphasis on fundamental analysis and valuation Equity valuations in Europe remain compelling relative to history and compared to peers. This offers very interesting investment opportunities in my view, especially with earnings poised to recover as the macroeconomic backdrop improves. John Surplice The fund s long-term, valuation-oriented investment approach aims to deliver consistent, positive performance under most market conditions. The fund s investment approach is to take advantage of inefficiencies in the market, providing opportunities to buy stocks below their fundamental worth. This is achieved through extensive fundamental analysis, drawing on internal proprietary research, selected externally sourced research and extensive company contact, with a strong emphasis on valuation. Whilst the reference index acts as a useful reference point, investment decisions are driven by where the best risk-adjusted returns are to be found. Rolling 3 year performance, 1 month shift (%) Fund outperforms 38 times (62.30%). Martin Walker Invesco Pan European Equity Fund A EUR Acc Past performance is not a guide to future returns. The performance data shown does not take account of the commissions and costs incurred on the issue and redemption of units. Gross income re-invested to 31 March 2018 unless otherwise stated. The figures do not reflect the entry charge payable by individual investors Source: Morningstar Direct as of Time Period: Fund profile Bottom-up stock picking By not favouring any one particular investment style or factor, the fund managers seek to take advantage of what they consider to be the best mix of individual risk/reward opportunities in the market at any particular point in time, and in whatever stock, sector or country they are to be found. Valuation discipline Valuation is central to the investment process, which avoids any over-reliance on short-term trends such as momentum and other technical factors. The investment approach seeks to capitalise on valuation anomalies in the market, with the reference index considered more of a useful reference point. Experienced team Having managed the fund since 2003, the fund managers offer clients an average of over 16 years fund management experience, while drawing on the extensive resources of the European and UK equity investment teams in Henley. 16 Invesco s European Strategies

17 Positioning versus index Invesco Pan European Equity Fund Micro Small Mid Large Giant Deep-Value Core-Value Core Core-Growth High-Growth Source: Morningstar Direct as of Indexed performance Invesco Pan European Equity Fund Indexed, 31 March 2013 = /13 03/14 03/15 03/16 03/17 03/18 Cumulative performance (%) 1 year 3 years 5 years Fund Index Quartile ranking Fund facts Fund name Invesco Pan European Equity Fund Fund volume EUR 3.34 bn Launch date 2 January 1991 Reference index Base currency EUR Annual management fee 1.5% ISIN code A Shares (EUR, acc) LU Morningstar Rating TM : Calendar year performance(%) Fund Index Rolling 12-month returns (%) Fund Index year risk-return statistics Fund Peer group percentile Sharpe Ratio (arith) Information Ratio (arith) Past performance is not a guide to future returns. The performance data shown does not take account of the commissions and costs incurred on the issue and redemption of units. Source: 2018 Morningstar. Indexed performance: Performance of an investment of 100 in share class currency. Gross income re-invested to 31 March 2018 unless otherwise stated. The figures do not reflect the entry charge payable by individual investors. Invesco s European Strategies 17

18 Invesco Pan European Equity Income Fund Focus on income and capital appreciation With many asset classes and regions generating low levels of income in the current climate, the valuation case for European Equity Income remains compelling. Stephanie Butcher The fund managers Stephanie Butcher and James Goldstone believe markets are inefficient and provide opportunities to buy stocks below their intrinsic value. They are convinced that valuation is the key determinant of future returns. The fund managers are style-agnostic but try to avoid momentum strategies. At any particular point in time, the fund managers target the most appropriate combination of absolute equity income, the potential for growth in equity income, and capital appreciation. Rolling 3 year performance, 1 month shift (%) Fund outperforms 56 times (91.60%). Invesco Pan European Equity Income Fund A EUR Acc James Goldstone Past performance is not a guide to future returns. The performance data shown does not take account of the commissions and costs incurred on the issue and redemption of units. Gross income re-invested to 31 March 2018 unless otherwise stated. The figures do not reflect the entry charge payable by individual investors Source: Morningstar Direct as of Time Period: Fund profile Focus on income and growth By focusing on valuation, Stephanie Butcher and James Goldstone aim to outperform in most market conditions whilst delivering income and growth. This flexible approach allows them to take advantage of the best bottom-up opportunities wherever they are to be found. Income expertise The fund brings together the extensive income capabilities of the Henley-based European and UK Equities teams. Stephanie Butcher has a wealth of income experience, managing various European income funds whilst also providing regional expertise to the Global Equity Income Group. Content and context Recognising the importance of not always following the crowd, of independent thinking, and of ideas, the investment professionals at Henley spend a great deal of time assessing companies as well as the wider environment in which they operate. This provides an ideal platform in order to understand drivers of the share price at both a micro and macro level. 18 Invesco s European Strategies

19 Positioning versus index Invesco Pan European Equity Income Fund Micro Small Mid Large Giant Deep-Value Core-Value Core Core-Growth High-Growth Source: Morningstar Direct as of Indexed performance Invesco Pan European Equity Income Fund Indexed, 31 March 2013 = /13 03/14 03/15 03/16 03/17 03/18 Cumulative performance (%) 1 year 3 years 5 years Fund Index Quartile ranking Fund facts Fund name Invesco Pan European Equity Income Fund Fund volume EUR mn Launch date 31 October 2006 Reference index Base currency EUR Annual management fee 1.5% ISIN code A Shares (EUR, acc) LU Morningstar Rating TM : Calendar year performance(%) Fund Index Rolling 12-month returns (%) Fund Index year risk-return statistics Fund Peer group percentile Sharpe Ratio (arith) Information Ratio (arith) Past performance is not a guide to future returns. The performance data shown does not take account of the commissions and costs incurred on the issue and redemption of units. Source: 2018 Morningstar. Indexed performance: Performance of an investment of 100 in share class currency. Gross income re-invested to 31 December 2017 unless otherwise stated. The figures do not reflect the entry charge payable by individual investors. Invesco s European Strategies 19

20 Contact Amsterdam Brussels Frankfurt Madrid Milan Paris Stockholm Vienna Zurich Telephone calls may be recorded. Risk Warnings 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. Invesco Pan European Equity Long/Short 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. There is no guarantee that the long and short positions will succeed in achieving the fund s objective. Important information This marketing document is exclusively for use by Professional Clients and Financial Advisers in Continental Europe (as defined below), and Qualified Investors in Switzerland. By accepting this document, you consent to communicate with us in English, unless you inform us otherwise. This document is not for consumer use, please do not redistribute. Data as at , unless otherwise stated. This document is marketing material and is not intended as a recommendation to invest in 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. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities. 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 more information on our funds, please refer to the most up to date relevant fund and share class-specific Key Investor Information Documents, the latest Annual or Interim Reports and the latest Prospectus, and constituent documents. This information is available using the contact details of the issuer and is without charge. Further information on our products is available using the contact details shown. This marketing document is not an invitation to subscribe for shares in the fund and is by way of information only, it should not be considered financial advice. This does not constitute an offer or solicitation by anyone in any jurisdiction in which such an offer is not authorised or to any person to whom it is unlawful to make such an offer or solicitation. Persons interested in acquiring the fund should inform themselves as to (i) the legal requirements in the countries of their nationality, residence, ordinary residence or domicile; (ii) any foreign exchange controls and (iii) any relevant tax consequences. As with all investments, there are associated risks. This document is by way of information only. Asset management services are provided by Invesco in accordance with appropriate local legislation and regulations. The fund is available only in jurisdictions where its promotion and sale is permitted. 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. Fee structure and minimum investment levels may vary dependent on share class chosen. Please check the most recent version of the fund prospectus in relation to the criteria for the individual share classes and contact your local Invesco office for full details of the fund registration status in your jurisdiction.please be advised that the information provided in this document is referring to Class A ( accumulation - EUR) exclusively. The funds are domiciled in Luxembourg. For the distribution of this document, Continental Europe is defined as Belgium, Finland, France, Italy, Luxembourg, Netherlands, Norway, Spain, Sweden. Germany, Austria and Switzerland: This document is issued in Germany by Invesco Asset Management Deutschland GmbH. This document is issued in Austria by Invesco Asset Management Österreich Zweigniederlassung der Invesco Asset Management Deutschland GmbH and in Switzerland by Invesco Asset Management (Schweiz) AG. Subscriptions of shares are only accepted on the basis of the most up to date legal offering documents. The legal offering documents (fund & share class specific Key Investor Information Document, prospectus, annual & semi-annual reports, articles and trustee deed) are available free of charge at our website and in hardcopy and local language from the issuers: Invesco Asset Management Deutschland GmbH, An der Welle 5, D Frankfurt am Main, Invesco Asset Management Österreich Zweigniederlassung der Invesco Asset Management Deutschland GmbH, Rotenturmstrasse 16-18, A-1010 Wien, and Invesco Asset Management (Schweiz) AG, Talacker 34, CH-8001 Zurich, who acts as a representative for the funds distributed in Switzerland. Paying agent for the fund distributed in Switzerland: BNP PARIBAS SECURITIES SERVICES, Paris, succursale de Zurich, Selnaustrasse 16, CH-8002 Zürich. Belgium, Finland, France, Luxembourg, Netherlands, Norway, Spain and Sweden: This document is issued by Invesco Asset ManagementS.A., rue de Londres, Paris, France. EMEA831/2018