Invesco Wholesale Global Opportunities Funds Monthly Report

Transcription

1 Invesco Wholesale Global Opportunities Funds Monthly Report 31 August 2018 Fund performance analysis - hedged - Class A (periods to 31 August 2018) Fund Managers Stephen Anness Fund Manager (Lead), Global Opportunities team Net performance Periods Fund % Benchmark % Value added % 1 month months months year years p.a years p.a years p.a years p.a Calendar year to date Financial year to date Since inception p.a The Fund returns are shown after ongoing fees and assumes reinvestment of income. Past returns are not a reliable indicator of future returns. Future returns may be affected by a range of factors including economic and market influences. Benchmark history: From inception to 30/09/02 = MSCI World Index (net dividends reinvested) - unhedged in $A From 01/10/02 = MSCI World ex Australia Index (net dividends reinvested) - hedged in A$ From 1/4/03 = MSCI World Index (net dividends reinvested) - hedged in A$ Current from 5/5/16 = MSCI All Country World Net TR Index - hedged in A$m Andrew Hall Fund Manager, Global Opportunities team Fund performance analysis - unhedged Fund (periods to 31 August 2018) Net performance Periods Fund % Benchmark % Value added % 1 month months months year years p.a years p.a years p.a years p.a Calendar year to date Financial year to date Since inception p.a The Fund returns are shown after ongoing fees and assumes reinvestment of income. Past returns are not a reliable indicator of future returns. Future returns may be affected by a range of factors including economic and market influences. Benchmark history - Unhedged From inception to 30/09/02 = MSCI World Index (gross dividends reinvested) - unhedged in $A From 01/10/02 = MSCI World Index (net dividends reinvested) - unhedged in A$ Current from 5/5/16 = MSCI All Country World Net TR Index - unhedged in A$ Note: The Funds strategy changed from a quantitative global equity strategy to a fundamental, high conviction global equity strategy, effective from 5th May Shaded areas in the tables above show the returns prior to the change in strategy. 1 Invesco Wholesale Global Opportunities Funds Monthly report

2 Fund facts at a glance Asset class Global equities Management style Fundamental, bottom-up approach driven by valuation. Objective 1 To provide long-term capital growth through a portfolio of global equities. Benchmark Hedged - Class A MSCI All Country World Net TR Index - hedged in A$ Unhedged MSCI All Country World Net TR Index - unhedged in A$ Risk profile Very high Time horizon 7 years Distribution frequency Half-yearly Fund inception date Hedged - Class A: 31/8/94 Unhedged: 31/8/99 Strategy inception date 31/12/12 Minimum investment $20,000 Invesco Global Opportunities Strategy (periods to 31 August 2018) In the table below we show the full performance history (gross of fees) of the underlying Invesco Global Opportunities Strategy since inception (31/12/12). Gross performance Periods Strategy % Benchmark % Value added % 1 month months months year years p.a years p.a years p.a Calendar year to date Financial year to date Since inception p.a Returns can go up and down. Past returns are not a reliable indicator of future returns. Future returns may be affected by a range of factors including economic and market influences. The Strategy returns shown in the table above are for representation purposes only and show the performance (unhedged return in AUD, before fees) since the Strategy s inception (31/12/12) versus the representative benchmark MSCI All Country World Index (the Strategy is managed on a benchmark-unaware basis). Invesco Global Opportunities Strategy (periods to 31 August 2018) The chart below shows the monthly and cumulative alpha of the underlying Invesco Global Opportunities Strategy since inception (31/12/12). Performance since inception (AUD gross) MER/ICR 0.95% (both Funds) Buy/Sell Spread 0.30%/0.30% 6.0% 4.8% 3.6% 2.4% 1.2% 75% 55% 35% APIR code Hedged - Class A: GTU0008AU Unhedged: GTU0102AU 0.0% -1.2% -2.4% -3.6% 15% -5% 1 Invesco does not guarantee that the Fund will achieve its objective. -4.8% -6.0% -7.2% -8.4% Monthly Alpha (LHS) Cumulative Alpha (RHS) -25% -45% Note: Strategy returns are those of the underlying composite which includes various funds with different currencies, converted into AUD. Returns can go up and down. Past returns are not a reliable indication of future returns. Future returns can be affected by a range of factors including economic and market influences. 2 Invesco Wholesale Global Opportunities Funds Monthly report

3 Fund analysis (as at 31 August 2018) Assets under management A$m Fund AUM: Strategy AUM: 1, Region allocation Country Fund % Benchmark % Active weight % Africa Asia Ex Japan Australia Europe - Emu Europe - Non-Emu Japan Latin America North America Other South America [Cash] Sector allocation Sector Fund % Benchmark % Active weight % Consumer Discretionary Consumer Staples Energy Financials Future Health Care Industrials Information Technology Materials Real Estate Telecommunication Services Utilities [Cash] Five largest overweight positions Security Fund % Benchmark % Active weight % Rolls-Royce Holdings plc Bayer AG National Oilwell Varco, Inc Standard Chartered PLC Volkswagen AG Pref Five largest underweight positions Security Fund % Benchmark % Active weight % Apple Inc Amazon.com, Inc Microsoft Corporation Facebook, Inc. Class A Alphabet Inc. Class C Invesco Wholesale Global Opportunities Funds Monthly report

4 10 largest holdings Security Fund % Benchmark % Active weight % Rolls-Royce Holdings plc Bayer AG National Oilwell Varco, Inc Standard Chartered PLC Volkswagen AG Pref Banco Santander S.A Canadian Natural Resources Limited Baker Hughes, a GE Company Class A Royal Dutch Shell Plc Class A Autoliv Inc Market capitalisation allocation Ranges Fund % Benchmark % Active weight % $250M - $500M $500M - $1B $1B - $2B $2B - $5B $5B-$10B $10B - $25B $25B - 50B $50B - 100B > $100B [Cash] The data in the fund analysis tables above (not including the AUM table) is based on the underlying portfolio, i.e. the unhedged fund (Fund), into which the hedged fund directly invests. Note: Security selection will change. You should not rely on this statement in making an investment decision about any security, but should make your own independent enquiries. 4 Invesco Wholesale Global Opportunities Funds Monthly report

5 Monthly commentary Market review Global equity markets ended August in positive territory on the back of a de-escalation of risk to the global economy. Chinese policy makers have moved to push back against a potential disorderly depreciation of the yuan, Mexico and the US have made progress on trade negotiations, and speculation mounted that the Trump administration would continue to de-escalate global trade skirmishes. In the US, the S&P 500 index continued its record-setting run in August to reach twin landmarks: an all-time high and the longest bull run in history. Contributors to performance The fund underperformed its benchmark MSCI AC World index in August. Some of this performance has been driven by individual stocks, such as Bayer. Bayer shares fell due to a court case in the US which they lost. We have lived through litigation in various sectors over the years, the market hates uncertainty and currently there is a degree of uncertainty. However, we believe the reaction in the share price is far too aggressive and we have added to the holding to maintain our overall portfolio weight. More broadly, performance was driven by emerging market weakness and by concerns around Brazil specifically, accentuated by political uncertainties and currency depreciation. Activity In August we introduced a new position in Tencent - a market-leading tech business with exposure to: online gaming, social media, music / video streaming, and payment services, amongst others. Shares have underperformed this year after softer profit margins, trade concerns and government crackdowns on game licensing. Its profit margin is down due to internal investment in their business. Government crackdowns have happened before and we believe this will be resolved. It s trading on market multiples, but we believe that it offers superior growth. Meanwhile in China the middle class has been growing rapidly and spending more money on digital entertainment. Tencent has further to go monetise its assets, as revenue from advertising continues to grow. We also sold our position in Union Pacific this month on valuation grounds. Market outlook and portfolio strategy The combination of virtually zero interest rates, abundant liquidity and accelerating economic growth is a phenomenon that is evident in virtually every major region of the world right now. It is a potent mix which is powering global markets to new highs. Meanwhile, the economic recovery looks to become one of the longest expansions in history. While Europe and Japan are some way behind the US, they are also showing much healthier signs of economic growth. This combination of synchronised global economic expansion and abundant liquidity explains why it has been such a lucrative time to own stocks. The question is what happens next? We have been in a very powerful up-cycle for assets of virtually all varieties. We have also been through a slow but prolonged up-cycle in the economy. It seems prudent to assume that both will come to an end at some point. Unfortunately we can t offer any clear view on when or how this cycle will come to an end but we can tell you how we see the risks and opportunity that is present today. The primary risk in our minds is valuation. Back in 2008, when uncertainty was high and investors were fearful, valuations were low. Now we find ourselves in a much more favourable economic situation but one where valuations are much less compelling than they were. We believe that the abundance of liquidity caused by QE has driven asset prices in some areas to elevated levels. We also see clear evidence that low interest rates have driven aggressive debt accumulation in certain areas. In 2018 we are faced with the prospect of a gradual tightening of liquidity. We don t have a clear view on how things will turn out. We can envisage a situation where the current economic expansion manages to absorb the effects of a tightening in liquidity. This seems especially feasible given the banking system looks to be functioning much more effectively now, especially in the US. On the other hand we see the risk that inflationary forces become more pronounced which could force central banks to tighten more rapidly than currently anticipated. This could have a very detrimental impact on fixed income and equity valuations and cause the current business expansion to end more suddenly. Clearly there is a wide range of potential outcomes for the economy and for markets. We don t seek to position the Invesco Wholesale Global Opportunities Fund for any particular scenario. We aim to position the fund where we think risk and reward is most favourable based on a range of potential outcomes. The fund is entirely driven by high conviction, unconstrained bottom-up stock selection. We seek what we believe to be the best investment ideas from anywhere in the world, building an occasionally concentrated portfolio of stocks that we believe has the potential to deliver attractive returns over the long term. 5 Invesco Wholesale Global Opportunities Funds Monthly report

6 Contact Website: Tel: Important Information This document has been prepared by Invesco Australia Ltd (Invesco) ABN , Australian Financial Services Licence number , who can be contacted on freecall , by to or by writing to GPO Box 231, Melbourne, Victoria, You can also visit our website at This document contains general information only and does not take into account your individual objectives, taxation position, financial situation or needs. You should assess whether the information is appropriate for you and consider obtaining independent taxation, legal, financial or other professional advice before making an investment decision. A Product Disclosure Statement (PDS) for any Invesco fund referred to in this document is available from Invesco. You should read the PDS and consider whether a fund is appropriate for you before making a decision to invest. Invesco is authorised under its licence to provide financial product advice, deal in financial products and operate registered managed investment schemes. If you invest in an Invesco Fund, Invesco may receive fees in relation to that investment. Details are in the PDS. Invesco s employees and directors do not receive commissions but are remunerated on a salary basis. Neither Invesco nor any related corporation has any relationship with other product issuers that could influence us in providing the information contained in this document. Investments in the Invesco funds are subject to investment risks including possible delays in repayment and loss of income and principal invested. Neither Invesco nor any other member of the Invesco Ltd Group guarantee the return of capital, distribution of income, or the performance of any of the Funds. Any investments in the Funds do not represent deposits in, or other liabilities of, any other member of the Invesco Ltd Group. Invesco has taken all due care in the preparation of this document. To the maximum extent permitted by law, Invesco, its related bodies corporate, directors or employees are not liable and take no responsibility for the accuracy or completeness of this document and disclaim all liability for any loss or damage of any kind (whether foreseeable or not) that may arise from any person acting on any statements contained in this document. This document has been prepared only for those persons to whom Invesco has provided it. It should not be relied upon by anyone else. Copyright of this document is owned by Invesco. You may only reproduce, circulate and use this document (or any part of it) with the consent of Invesco.