Risk & Reward

Risk & Reward - 3rd issue 2023

Risk & Reward Q3 2023

Finance and investment are constantly evolving – and the latest advancements draw on the results achieved in the past. The new edition of Risk & Reward reflects this emergent continuum by reporting on our most recent progress in responsible investing while sharing memories about Nobel Laureate and father of modern finance, Harry M. Markowitz, who passed away on June 22nd at the age of 95.

We start with an ESG perspective on buy-and-maintain strategies in fixed income. As our experts demonstrate, even with ‘net zero committed’ issuers, the sustainability profile of a fixed income portfolio can be improved substantially without materially harming return expectations. This is certainly good news for everyone who, like us at Invesco, cares about the impact of the companies they invest in – without forgetting that healthy returns are what drive positive change.

Taking time to look back is equally important. Our Head of Research, Kenneth Blay, has contributed a special article, paying tribute to his friend, the legendary Harry M. Markowitz – with whom he had the privilege to work and even publish a book. The ‘Father of Modern Portfolio Theory’ gave us the insights needed for such tools as risk-return optimization, the Capital Asset Pricing Model, factor investing, fair value analysis, and many other central elements of modern finance.

As asset managers and investors move into new frontiers – including novel ESG approaches seeking to merge the desire for sustainability with the need for sufficient risk-adjusted returns – Markowitz and his work remain as relevant as ever.

Join us in celebrating his legacy in this edition of Risk & Reward.

Featured insights

Click below to read the featured articles within this edition of Risk & Reward.

  • Solving%20for%20sustainability

    Solving for sustainability

    By Matthew Chaldecott, CFA

    ESG continues to increase in importance for many investors. But what about the potential impacts of ESG approaches on return and risk? For buy-and-maintain strategies in fixed income, we find that the sustainability profile of a portfolio can be improved substantially without materially impacting return expectations. Furthermore, as many investors aim for net zero, we explore frameworks for monitoring and measuring decarbonization progress.

  • Harry%20M.%20Markowitz:%20Father%20of%20modern%20finance

    Harry M. Markowitz: Father of modern finance

    By Kenneth Blay

    Harry Markowitz, widely considered the ‘Father of Modern Portfolio Theory’, died on June 22nd, 2023, at the age of 95. Markowitz was a visionary, a philosopher, a brilliant researcher and scholar, a Nobel laureate, a mentor, and a friend. I had the privilege of working with Harry for over a decade and have the distinct honor of being the only person to co-author a book with him. Together we advanced the theory and practice of asset allocation and became close friends.

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.

Important Information

  • Data as of August 31, 2023 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, they are subject to change without notice and are not to be construed as investment advice.