Invesco’s global asset allocation group has been awarded mandates to fund Premia Plus strategy, a risk premium capture strategy that uses a risk management approach designed to generate
Invesco’s global asset allocation group has been awarded mandates to fund Premia Plus strategy, a risk premium capture strategy that uses a risk management approach designed to generate consistent returns in any economic environment.
The strategy seeks to accomplish this goal by investing in a balanced set of asset classes: equities, government bonds and commodities.
The weights of the asset classes are set such that each contributes a similar amount of risk to the overall portfolio, thereby seeking to defend against negative economic outcomes.
Premia Plus targets a return of cash plus six per cent with total volatility of eight per cent. The strategy employs a long-only implementation that can be used as a standalone investment or combined with other alpha or beta strategies, similar to fund of hedge funds.
‘The essence of the product is efficiently capturing risk premia, the excess return that investors receive for owning risky assets, above the cash return,’ says Scott Wolle, chief investment officer of Invesco’s global asset allocation group.
‘Unlike many other products that target a similar return profile, Premia Plus is very competitively priced, has daily valuation, no lock-up, and high transparency.’
Premia Plus is designed to take advantage of what investment markets offer – risk premia and diversification – by raising the average excess return above cash and reducing the range of outcomes.
The strategy relies on the efficient capture of risk premia from various asset classes and uses proprietary risk management and re-balancing techniques to generate equity-like returns with bond-like risk.
