Invesco Perpetual has launched three balanced funds managed by chief investment officer Scott Wolle.
The Invesco Perpetual balanced risk 6, 8 and 10 funds are launched this week and sit in the IMA specialist sector.
The funds’ individual exposure to equities, bonds or commodities can move from a maximum 50 per cent weighting to a minimum of 16 per cent. The relative weights are calculated so that an equal amount of risk is contributed to the portfolio.
The investment team aims to capture 15-20 per cent of the funds’ target return through the use of active positioning.
Wolle, the CIO of the Invesco global asset allocation team, commented on the funds’ diversification: “In a period of non- inflationary growth, developed equities are likely to perform well.
“In a recession the funds’ bond exposure is designed to preserve portfolio value. And during times of inflationary growth, commodities have traditionally performed well.”
Craig Newman, Invesco Perpetual’s sales director, explains that futures will be used to leverage the funds as a way of gaining increased economic exposure to get the higher standard deviations. (article continues below)
The 6 fund can be leveraged up to twice its size, the 8 fund up to three times the fund and the 10 fund 3.5 times.
As correlation between the asset classes is key to the funds’ performance, only sovereign debt is considered for the fixed income contribution.
“They only use sovereign exposure because of its correlation characteristics with equities”, explains Newman.
“Clearly, the further you move around the credit scale, the closer they become to equities in their behaviour and the less value they can extract in the lack of correlation.”
In terms of bonds, the investment strategy will be to focus on American treasuries, Canadian bonds, UK gilts, German bunds, Japanese government bonds and Australian bonds.
The equities exposure will be drawn from the S&P 500, Russell 2000, FTSE 100, Euro Stoxx 50, Topix and Hang Seng indices.
Crude oil, copper, gold and diversified agriculture will form the focus of the portfolios’ commodities exposure.
The funds’ annual management charge is 1.25 per cent, with a minimum investment of £500.