Invesco Global Investment Grade Corporate Bond Fund:

10 years of truly global credit

Combining thematic investing with a global approach: the Invesco Global Investment Grade Corporate Bond Fund reflects the investors’ recognition that diversification and alpha potential can be greater from a wider opportunity set. We are also convinced that a thematic approach could result in better risk-adjusted returns when compared to more traditional approaches:

Potential outperformance if correctly identifying investment themes and constructing these around the benchmark accordingly.

Potential high participation in up markets while mitigating negative returns in down markets using macro overlays.

Attractive risk-adjusted returns would be a by-product of achieving these two points.

Performance:

84% of times the fund outperformed the benchmark on a 3 year rolling period over the last 5 years*

Asymmetric profile:

Attractive combination of highest up capture ratio and moderate down capture ratio resulted in 1st quartile overall capture ratio over the last 5 years

Enhancements:

Very strong performance and risk/return positioning since platform enhancements and PM change

 

*Source: Morningstar. Data as at 31 August 2019. A-Ann USD. Gross income re-invested to 31 August 2019 unless otherwise stated. The figures do not reflect the entry charge payable by individual investors. Inception date: 1 September 2009. Past performance is not a guide to future returns.
Benchmark: Bloomberg Barclays Global Agg Corporate Index USD-Hedged

Key themes of the fund

Theme 1:
Japanification of Europe

Drivers
The eurozone is beginning to resemble Japan with its low-growth and low-inflation environment coupled with still very loose monetary policy. This is due to secular factors such as demographics which are having a negative impact on growth.

Investment opportunities
This environment should be conducive for corporate bonds in Europe as the hunt for yield will likely result in high-quality bond spreads converging with government bonds.

Secular factors such as demographics
are having a negative impact
on growth in Europe.

Median age in Europe

28.9years1195042.5years12020

1 Source: United Nations, Department of Economic and Social Affairs, Population Division (2019). World Population Prospects 2019, Online Edition, Retrieved on 22 July 2019.

“Specific opportunities we see here are corporate hybrids and bank subordinated debts, in particular in the short end of the curve.”

Lyndon Man
Co-Head of Global Investment Grade, Invesco Fixed Income

Populist and protectionist policies
are growing in popularity

as people get more dissatisfied with the status quo.

Theme 2:
Global disruptions with a trend towards populism & protectionism

Drivers
The growing dissatisfaction with the status quo and wealth distribution favours populist and protectionist policies. The trend manifests in various ways, including Trump's trade policy, Brexit and the latest European parliamentary elections.

Investment opportunities
Bonds issued by corporates domiciled in countries with more stable growth and political prospects. In addition, in the run up to political events, we adopt a "buy the rumour & sell the facts" strategy whilst also implementing cheap tail risk hedges.

“We take two approaches to tackling geopolitical disruption: 1. Focus on not just corporates but the sovereigns in which these companies are domiciled. 2. We adopt a ‘buy the rumour and sell the facts’ strategy.”

Lyndon Man
Co-Head of Global Investment Grade, Invesco Fixed Income

Theme 3:
Chinese transition from an investment to a consumption ­driven economy

Drivers
The Chinese government supports quality growth with its central bank bills swaps (CBS) and targeted fiscal spending, for example. The middle classes are rising and their spending power is increasing.

Investment opportunities
Select the bonds of the companies that are likely to benefit the most from this transition, such as large technology and media companies and key state owned enterprises.

Chinese middle classes
are rising and

their spending power is increasing.

“We believe that rising consumerism from a growing middle class, urbanisation and significant e-commerce trends will see a stable growth picture and a growth outlook focused on quality rather than quantity.”

Lyndon Man
Co-Head of Global Investment Grade, Invesco Fixed Income

Europe is currently mid-cycle

while the US is late-cycle.

Theme 4:
Credit cycle differentiation between Europe and the US

Drivers
Europe is currently mid-cycle while the US is late-cycle. This broader macro environment also plays a key note in determining how attractive the credit fundamentals of a company are.

Investment opportunities
Europe is exhibiting more bond-holder-friendly behaviour. The preference of European Credit over US Credit is a given, with a need to differentiate regionally in light of the degree of fragmentation.

“The credit cycle looks at default rates, profitability, leverage and discretionary cash flow behaviour. In our analysis, we apply this framework to sectors, asset classes as well as regions to determine where to allocate our risk capital.”

Lyndon Man
Co-Head of Global Investment Grade, Invesco Fixed Income

Investment focus of the fund

At least 70% of the fund’s total assets are investment grade corporate bonds

Up to 30% may be invested in cash, cash equivalent securities and other debt securities2

2 For the full objectives and investment policy please consult the current prospectus. Internal guidelines and subject to change without notice.

The fund managers aim for better risk-adjusted returns compared to more traditional approaches3. Three key points illustrate their philosophy and their approach to global corporate bond management: The team …


  • … implements strategic (medium- to long-term) macro-driven investment themes which are populated using security selection

  • … constructs these investment themes using a relative value approach

  • … uses highly liquid derivatives that aim to reduce downside capture during periods of corporate bond weakness

3 Internal guideline. For full fund objective please refer to the fund prospectus.

Performance

Calendar year performance: 2014: 10.12%, 2015: 1.04%, 2016: 6.07%, 2017: 6.62%, 2018: -3.34%.
Standardised rolling 12 month performance: 31.08.14 - 31.08.15: 2.07%, 31.08.15 - 31.08.16: 10.40%, 31.08.16 - 31.08.17: 2.68%, 31.08.17 - 31.08.18: -1.04%, 31.08.18 - 31.08.19: 12.09%.*


*Source: Morningstar. Data as at 31 August 2019. A-Ann USD. Gross income re-invested to 31 August 2019 unless otherwise stated. The figures do not reflect the entry charge payable by individual investors. Inception date: 1 September 2009. Past performance is not a guide to future returns.
Benchmark: Bloomberg Barclays Global Agg Corporate Index USD-Hedged

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. Debt instruments are exposed to credit risk which is the ability of the borrower to repay the interest and capital on the redemption date. Changes in interest rates will result in fluctuations in the value of the 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. Investments in debt instruments which are of lower credit quality may result in large fluctuations in the value of the Fund. The fund may invest in contingent convertible bonds which may result in significant risk of capital loss based on certain trigger events.

Important information

This marketing document is exclusively for use by Professional Clients and Financial Advisers in Continental Europe (as defined below), Qualified Investors in Switzerland and Professional Clients in Cyprus, Dubai, Jersey, Guernsey, Ireland, Isle of Man and the UK. 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 31.08.2019, 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 in English 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 ( annual distribution - USD) exclusively. This fund is domiciled in Luxembourg.

For the distribution of this document, Continental Europe is defined as Austria, Belgium, Croatia, Finland, France, Germany, Italy, Liechtenstein, Luxembourg, Netherlands, Norway, Spain and Sweden.

Germany, Austria, Switzerland and Liechtenstein: 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 as well as Liechtenstein 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-60322 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. In Liechtenstein the KIID and Prospectus are available in German and English on www.fundinfo.com, respectively. Paying agent in Switzerland: BNP PARIBAS SECURITIES SERVICES, Paris, succursale de Zurich, Selnaustrasse 16, CH-8002 Zürich. Paying agent in Liechtenstein: LGT Bank AG, Herrengasse 12, FL-9490 Vaduz. Belgium, Finland, France, Italy, Luxembourg, Netherlands, Norway, Spain, Sweden: This document is issued by Invesco Asset Management S.A., 18 rue de Londres, 75009 Paris, France. Authorised and regulated by the Autorité des marchés financiers in France. Ireland: Issued by Invesco Management S.A. 37A Avenue JF Kennedy, L-1855 Luxembourg. www.invesco.eu

Cyprus: Issued by Invesco Asset Management S.A., 18 rue de Londres, F-75009 Paris. Authorised and regulated by the Autorité des marchés financiers in France. Any scheme provided by the Cyprus regulatory system, for the protection of retail clients, does not apply to offshore investments. Compensation under any such scheme will not be available. The Invesco Global Investment Grade Corporate Bond Fund is subject to the provisions of the European Directive 2009/65/EC. Dubai: Issued by Invesco Asset Management Limited, Po Box 506599, DIFC Precinct Building No 4, Level 3, Office 305, Dubai, United Arab Emirates. Regulated by the Dubai Financial Services Authority. Jersey and Guernsey: Issued by Invesco International Limited, 2nd Floor, Orviss House, 17a Queen Street, St Helier, Jersey, JE2 4WD. Regulated by the Jersey Financial Services Commission. In Guernsey, the fund can only be promoted to Professional Clients. Isle of Man: Issued by Invesco Management S.A. 37A Avenue JF Kennedy, L-1855 Luxembourg. The Invesco Global Investment Grade Corporate Bond Fund is an unregulated scheme that cannot be promoted to retail clients in the Isle of Man. The participants in the scheme will not be protected by any statutory compensation scheme. UK: Issued by Invesco Fund Managers Limited, Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire RG9 1HH, UK. Authorised and regulated by the Financial Conduct Authority. For the purposes of UK law, the fund is a recognised scheme under section 264 of the Financial Services & Markets Act 2000. The protections provided by the UK regulatory system, for the protection of Retail Clients, do not apply to offshore investments.

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