Invesco launches US market neutral fund
Invesco has launched its second hedge fund, the Invesco US Equity Market
The new Irish-domiciled and listed fund is an extension of an investment
capability which Invesco has offered in the United States for more than eleven
Brett Bastin, Head of Product Development for Absolute Return Strategies at
Invesco, and a member of Invesco's Global Structured Products Group (GSPG),
said: "This strategy, which is a modification of one of the elements of the
Invesco Absolute Return Fund, seeks to deliver returns independent of equity
Bastin said: "The Invesco Absolute Return Fund was launched outside the US
in October 2002 and returned 10.1% net of all fees to 31 December 2003. The
new fund will implement our longstanding market neutral capability with a
somewhat different approach which will allow it to target higher returns."
The Invesco US Equity Market Neutral Fund aims to provide an annualised
return above US T-Bills of approximately 8% (gross of management and
performance fees), with an annual volatility of about 10%.
It applies a fundamental stock selection approach to investing systematically in
large and mid-cap US equities, combined with rigorous risk control and cost-
Two models are used to construct portfolios:
* the Invesco Stock Selection Model, which uses four fundamental
concepts to rank US stocks in terms of expected return within industries.
In general, highly rated stocks are purchased, and poorly rated stocks are
borrowed and sold short.
* the Barra US equity risk model, which is used to forecast the risk of each
stock in multiple dimensions.
The return and risk estimates from these two models are used to construct
portfolios which are designed to achieve our return and risk objectives while
maintaining a high degree of neutrality between the long and short portfolios in
terms of beta, style and industry risk.
The Fund will be managed by the Invesco GSPG, a team of 56 professionals
based in New York, Boston, Frankfurt, and London, who are organised into
functional teams which are focused on research, portfolio construction, product
management and investment technology. The GSPG is lead by Don Young,
Head of the Invesco Global Structured Products Group.
Bastin said: "Whilst there has been a pick up in the equity market, many
investors recognize the convergence between traditional long-only investing
and investing in absolute return strategies. Launching a pure equity market
neutral fund is well-timed to meet demand from investors who seek the benefits
of an absolute return strategy which offers low drawdown and low correlation to
traditional asset classes, or from investors who seek an alpha which can be
ported to the index or benchmark of their choice."
Background Note: Invesco forms part of the Amvescap Group, one of the world's
largest independent investment management organisations, which has
approximately 7,100 employees, offices in 21 countries, and USD 345.2 billion
(GBP 208 billion) of funds under management. Amvescap has a significant
presence in the institutional, retail, and defined contribution markets in North
America, Europe and Asia. Amvescap services clients in more than 100
countries. Invesco UK offers clients a wide range of ICVC sub funds,
investment trusts, private client portfolio, UK Institutional and Defined
Contribution fund management with assets under management of GBP 21.1
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