Fixed income

Total Return

Our Total Return strategies are designed to offer you a more flexible approach to investing in bonds compared to traditional fixed income strategies. This flexibility allows us to take advantage of opportunities to effectively address your Total Return ambitions.

forest peaking through clouds - total return

About our total return strategy

Our strategies aim to help you maximise total returns, primarily through investment in a flexible allocation of debt securities and cash. We are free from benchmark constraints, and can actively allocate to corporate bonds, government debt, high yield bonds, developed and emerging market, and cash across fixed income markets globally.  

Flexibility is the cornerstone of our philosophy. We only invest when we believe the return potential is sufficient to compensate for the risk and adjust our asset allocation in response to market changes. This means that we sometimes reduce the market risk in our portfolios significantly, when we feel the reward is insufficient. This flexibility also allows us to actively manage various risks such as duration, credit, yield curve and currency risk, on both a short-term tactical and long-term strategic basis. 

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FAQs

The total return on an investment includes interest, capital gains, dividends, and distributions realised over a given period of time. Therefore, Total Return strategies may be appropriate for investors seeking both current income and capital appreciation, through investment growth.

Yield is defined as the income return provided by the bond, which is the interest or dividends received, usually expressed annually as a percentage of the price of the bond.

Traditional bond strategies, such as high yield and investment grade, typically focus more on yield and seeking to generate an income while preserving the initial investment. 

Total Return includes both income and appreciation of capital. Total Return investors typically focus more on the growth in their portfolio over time than on the yield in a given period. They will take distributions as needed from a combination of the income generated from the yield on various holdings and the price appreciation of securities. 

 Investors should understand the key  differences between yield and total return so their portfolios are constructed to meet income-generating needs while providing a level of growth.  

Duration is one of the fundamental characteristics of a bond, used to assess the sensitivity of a bond’s price to changes in interest rates.

A yield curve is a line that plots the yields or interest rates of bonds that have equal credit quality but different maturity dates

It can be used as a benchmark for other interest rates in the market, such as mortgage rates and bank lending rates, and investors can use the yield curve to make investment decisions that factor in the likely direction of the economy.

Currency risk is the risk that investment performance may be adversely affected by variations in the exchange rates between the base currency of a portfolio and the currencies in which the investments are made.

Investments in Total Return strategies can be made by either investing in actively managed mutual funds or exchange traded funds (ETFs). Invesco offers a broad range of actively managed Total Return funds and ETFs. 

  • Investment risks

    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.

    The strategy will invest in derivatives (complex instruments) which will result in leverage and may result in large fluctuations in value.

    Debt instruments are exposed to credit risk which is the ability of the borrower to repay the interest and capital on the redemption date.

    Investments in debt instruments which are of lower credit quality may result in large fluctuations in value.

    Changes in interest rates will result in fluctuations in value.

    The strategy may invest in contingent convertible bonds which may result in significant risk of capital loss based on certain trigger events.

    The strategy may invest in distressed securities which carry a significant risk of capital loss.

    The strategy may invest in a dynamic way across assets/asset classes, which may result in periodic changes in the risk profile, underperformance and/or higher transaction costs.’


    Important Information

    All information is provided as at 31 March 2024, sourced from Invesco unless otherwise stated.

    This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell 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. Views and opinions are based on current market conditions and are subject to change.

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