The opinions referenced above are those of Richard Golod as of October 24, 2013, and are subject to change at any time due to changes in market or economic conditions and may not necessarily come to pass. These comments are not necessarily representative of the opinions and views of other Invesco investment professionals. The comments should not be construed as recommendations, but as an illustration of broader themes. Past performance is no guarantee of future results.
An investment cannot be made directly into an index.
A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other debts. Ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest); ratings are subject to change without notice. For more information on rating methodologies, please visit the following NRSRO websites: www.standardandpoors.com and select "Understanding Ratings" under Rating Resources on the homepage; www.moodys.com and select "Rating Methodologies" under Research and Ratings on the homepage; www.fitchratings.com and select "Ratings Definitions" on the homepage.
All investing involves risk including the risk of loss. Diversification does not eliminate this risk.
Fixed-income investments are subject to credit risk of the issuer and the effects of changing interest rates. Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. An issuer may be unable to meet interest and/or principal payments, thereby causing its instruments to decrease in value and lowering the issuer's credit rating.
Treasury securities are backed by the full faith and credit of the US government as to the timely payment of principal and interest.
The risks of investing in securities of foreign issuers, including emerging market issuers, can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues.
In general, stock and other equity securities values fluctuate in response to activities specific to the company as well as general market, economic and political conditions.
Most senior loans are made to corporations with below investment-grade credit ratings and are subject to significant credit, valuation and liquidity risk. The value of the collateral securing a loan may not be sufficient to cover the amount owed, may be found invalid or may be used to pay other outstanding obligations of the borrower under applicable law. There is also the risk that the collateral may be difficult to liquidate, or that a majority of the collateral may be illiquid.
Investments in convertible securities are subject to the risks associated with both fixed-income securities, including credit risk and interest rate risk, and common stocks. Convertible securities may have lower yields because they offer the opportunity to be converted into stock and if the stock is underperforming and the bond does not convert then the bond may have a lower return than a non-convertible bond.
Municipal securities are subject to the risk that legislative or economic conditions could affect an issuer's ability to make payments of principal and/ or interest.
Businesses in the energy sector may be adversely affected by foreign, federal or state regulations governing energy production, distribution and sale as well as supply-and-demand for energy resources. Short-term fluctuations in energy prices may cause price fluctuations in an energy fund's shares.
Leverage created from borrowing or certain types of transactions or instruments may impair the fund's liquidity, cause it to liquidate positions at an unfavorable time, lose more than it invested, increase volatility or otherwise not achieve its intended objective.
Junk bonds involve a greater risk of default or price changes due to changes in the issuer's credit quality. The values of junk bonds fluctuate more than those of high quality bonds and can decline significantly over short time periods.
Stocks of small and mid-sized companies tend to be more vulnerable to adverse developments, may be more volatile, and may be illiquid or restricted as to resale.
Common stocks do not assure dividend payments. Dividends are paid only when declared by an issuer's board of directors and the amount of any dividend may vary over time based on the business prospects of the company. Securities that pay high dividends as a group can fall out of favor with the market, causing such companies to underperform companies that do not pay high dividends. Also changes in the dividend policies of the companies and the capital resources available for such companies' dividend payments may affect the securities.
Value, blend and growth are types of investment styles. Growth investing generally seeks stocks that offer the potential for greater-than- average earnings growth, and may entail greater risk than value or blend investing. Value investing generally seeks stocks that may be sound investments but are temporarily out of favor in the marketplace, and may entail less risk than growth investing. A blend investment combines the two styles
The performance of an investment concentrated in issuers of a certain region or country is expected to be closely tied to conditions within that region and to be more volatile than more geographically diversified funds.
Many countries in the European Union are susceptible to high economic risks associated with high levels of debt, notably due to investments in sovereign debts of European countries such as Greece, Italy and Spain.
China remains a totalitarian country with the following risks: nationalization, expropriation, or confiscation of property, difficulty in obtaining and/or enforcing judgments, alteration or discontinuation of economic reforms, military conflicts, and China's dependency on the economies of other Asian countries, many of which are developing countries.
Commodities may subject an investor to greater volatility than traditional securities such as stocks and bonds and can fluctuate significantly based on weather, political, tax, and other regulatory and market developments.
A natural or other disaster could occur in a geographic region, which could adversely impact the fund's investments in the affected region.
The Chicago Fed National Activity Index is a monthly measure of overall economic activity and related inflationary pressure.
PMI (formerly Purchasing Managers Index) is a commonly cited indicator of the manufacturing sector's economic health.
The OECD composite leading indicator (CLI) is designed to provide early signals of turning points (peaks and troughs) between expansions and slowdowns of economic activity.
The Conference Board Leading Economic Index (LEI) is an economic indicator used to forecast changes in the business cycle based on a composite of 10 underlying components (including data on employment, manufacturing, consumer expectations, stock prices, money supply, and interest rates, among others).
Economic Cycle Research Institute (ECRI) Weekly Leading Index is an economic indicator used to forecast turning points in the economic cycle, similar to LEI but updated more frequently.
The Institute for Supply Management (ISM) Manufacturing New Orders Index measures the level of new manufacturing orders from customers, which gauges whether business purchases are expanding or contracting, based on surveys of more than 300 manufacturing firms conducted by the ISM.
The Bloomberg Financial Conditions Index in an indicator of stress in the financial markets based on money market rates, government and corporate bond yields, and equity market volatility.
The S&P 500® Index is an unmanaged index considered representative of the US stock market.
The National Association of Home Builders/Wells Fargo Housing Market Index measures home builders' sentiment about the sales conditions for single-family homes, based on surveys conducted by the National Association of Home Builders.
Modified LEI measures the Conference Board Leading Economic Index (LEI) without money supply and the yield curve factored in.
The Institute for Supply Management (ISM) Manufacturing Index is a commonly cited gauge of manufacturing conditions based on surveys of more than 300 manufacturing firms conducted by the ISM.
The S&P 500 Growth Index is a capitalization-weighted index of all stocks in the S&P 500 Index that have higher price-to-book ratios.
The S&P 500 Value Index is a capitalization-weighted index of all stocks in the S&P 500 Index that have lower price-to-book ratios.
The Russell 1000 Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe.
The Russell 1000 Value Index measures the performance of the large-cap value segment of the U.S. equity universe.
The Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity universe.
The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe.
The MSCI Europe Index is a free-float-adjusted market-capitalization-weighted index designed to measure the equity market performance of the developed markets in Europe.
The Citi Economic Surprise Index measures how a variety of macro indicators "surprise" relative to expectations.
The Nikkei 225 Index (or Nikkei Index) is a price-weighted index measuring the top 225 blue chip companies on the Tokyo Stock Exchange and is commonly considered representative of Japan's stock market.
The MSCI Emerging Markets Index is a free-float-adjusted market-capitalization index designed to measure equity market performance of emerging markets.
Commodity Research Bureau (CRB) Raw Industrials Spot Price Index measures the commodity price movements of raw materials.