FOCUS FUND
Invesco Global Investment Grade Corporate Bond Fund
A unique thematic approach to invest in high quality fixed income.
Important information
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- The Fund invests primarily in investment grade corporate bonds and intends to achieve, in the medium to long term, a competitive overall investment return with relative security of capital in comparison to equities.
- Investors should note the liquidity risk, concentration risk of investing in investment grade corporate bonds, volatility risk, risk associated with investments in debt instruments with loss-absorption features including senior non-preferred debts, contingent convertible bonds which are subject to the risk of being written down or converted to ordinary shares upon the occurrence of pre-defined trigger events and may result in a significant or total reduction in the value of such instruments, currency exchange risk, RMB currency and conversion risks of RMB hedged share classes, credit rating risk, general investment risk.
- Investment in bonds or other fixed income securities is subject to (a) interest rate risk and (b) credit risk (including default risk, downgrading risk and liquidity risk).
- Financial derivative instruments (FDI) may be used for efficient portfolio management and hedging purpose and for investment purposes. Risks associated with FDI include counterparty/credit risk liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk. As a result of the use of FDI for investment purposes, investors should note the additional/high leverage risk. Also, the active FDI positions implemented by the Fund may not be correlated with its underlying securities positions held by the Fund which may lead to a significant or total loss to the Fund.
- For certain share class(es), the Fund may at discretion pay dividend out of the capital and/or effectively out of capital amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment. Any such distributions may result in an immediate reduction of the net asset value per share in respect of such share class after the monthly distribution date. (Note 1)
- In addition, investors of Monthly Distribution-1 share class that are currency hedged (MD-1 hedged) should be aware of the uncertainty of relative interest rates. The net asset value of the MD-1 hedged may fluctuate and may significantly differ from other unit class due to fluctuation of the interest rate differential between the currency in which the MD-1 hedged is denominated and the base currency of the Fund and may result in a greater erosion of capital than other non-hedged unit class. (Note 2)
- The value of the Fund can be volatile and could go down substantially.
- Investors should not base their investment decision on this material alone.
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Why Global Investment Grade Corporate Bond Now?
Lower correlation with other asset classes
Attractive yield levels
Invest in high quality assets
Investment-grade corporate bonds are issued by companies that are highly solvent and have relatively stronger balance sheets.
IG corporate bonds have historically proven very resilient to volatile markets.
Asset class performance in previous major market events
Source: Bloomberg
Global Equities – MSCI AC World Index
Global High Yield Corp Bonds – Bloomberg Barclays Global High Yield Corporate Total Return Index (Hedged USD)
Global IG Corp Bonds – Bloomberg Barclays Global Aggregate Corporate Total Return Index (Hedged USD)
2015 Oil Slump and Chinese Currency Devaluation – Period: May 18, 2015 – Sep 29, 2015
2018 US-China Trade Tension – Period: Sep 21, 2018 – Dec 24, 2018
2020 COVID-19 – Period: Feb 19, 2020 – Mar 23, 2020
Lower correlation with other asset classes
Generally, investment-grade bonds have lower correlation with other asset classes (especially risky assets), so they may diversify risks in an investor's portfolio.
Correlation between IG bonds and other asset classes in the past 5 years
Source: Bloomberg, as of September 30, 2024. IG Bonds = Bloomberg Barclays Global Aggregate Corporate Index (Hedged USD); US Equities = S&P 500 Index; Global Equities = MSCI World Index; Asia (ex-Japan) Equities = MSCI AC Asia (ex-Japan) Index; HK Equities = Hang Seng Index; High Yield Bonds = Bloomberg Barclays Global High Yield Corporate Index (Hedged USD)
Attractive yield levels
Global investment grade corporate bonds yield close to 5% (on an index level*), which is higher than the pandemic level in 1H 2020 and the last tightening cycle level in 2018.
Currently, corporate fundamentals in IG are in good shape because:
- refinancing needs are low.
- default risks are low given conservative balance sheets.
Global investment grade corporate yields remain in attractive territory
Source: BlackRock Aladdin, as of 30 September 2024
*Bloomberg Global Aggregate Corporate USD Hedged Total Return Index, as of August 31, 2024
Key Highlights of the Fund
A high quality & diversified portfolio
Unique thematic ideas to add quality to the portfolio
Opportunities for regular income: MD1 share classes with fixed monthly distribution#
#Aims to pay dividend on monthly basis.
A high quality & diversified portfolio
Current Exposure**
- Allocations to IG Corps: ~94%
- Average credit rating: A-
- Yield to Worst (%)^: 5.3% (with reference to Reference Benchmark: 5.1%)
- Gross Current Yield#: 4.58%
** Source: Invesco, as of October 31, 2024
^ Yield to worst is a measure of the lowest possible yield that can be received on a bond that fully operates within the terms of its contract without defaulting.
Calendar year performance – Fund: 2023: 9.45%; 2022: -16.57%, 2021: -0.84%; 2020: 7.39%; 2019: 14.51%; Benchmark: 2023: 9.10%; 2022: -14.11%, 2021: -0.79%; 2020: 8.26%; 2019: 12.51%. Reference benchmark: Bloomberg Barclays Global Aggregate Corporate Index (Hedged USD)
#The current yield of a bond fund is the weighted average current yield of underlying bonds in gross in the portfolio. Current yield of an individual bond refers to the annual interest divided by the market price of a bond. The figure is not the dividend yield received by the investors and is subject to change from time to time.
Source: Invesco, as of October 31, 2024. Portfolio weightings and allocations are subject to change. The weightings for each breakdown are rounded to the nearest tenth or hundredth of a percent; therefore, the aggregate weights for each breakdown may not equal 100%.
Unique thematic ideas to add quality to the portfolio
The Fund uses a thematic approach to identify opportunities to generate alpha.
| Key Themes | Portfolio Implications |
|---|---|
| Transition from stagflation into stagnation | Focus on subordinated debt over senior Falling rate environment should be supportive of callable securities |
| Credit Cycle Differentiation | Preference for Europe, UK and Asia over US |
Financial deleveraging |
European capital regulations promote balance sheet strength Target high quality core European banks |
For illustrative purposes only. There is no guarantee that the securities/industries/regions mentioned above are currently held or will be held by Invesco funds in the future. It does not represent a recommendation to buy/hold/ =sell the securities/industries/regions.
Opportunities for regular income: MD1 share classes with fixed monthly distribution#
Share classes with monthly distribution^^^ (Aims to pay dividend on monthly basis. Dividend is not guaranteed. Dividend may be paid out of the capital. Refer to Note 1 and/or Note 2 of the above Important Information)
| Class of Units | Record date | Amount per month (in fixed cents) |
Annualized dividend (%) |
ISIN |
|---|---|---|---|---|
| A(USD)-MD1 | 31/10/24 | USD 0.0510 | 8.01% | LU2110299513 |
| A(HKD)-MD1 | 31/10/24 | HKD 0.5030 | 7.99% | LU2110299786 |
| A(AUD Hgd)-MD1 | 31/10/24 | AUD 0.0490 | 7.03% | LU2139469782 |
| A(RMB Hgd)-MD1 | 31/10/24 | RMB 0.3650 | 6.04% | LU2110299943 |
| A(EUR Hgd)-MD1 | 31/10/24 | EUR 0.0550 | 6.50% | LU2658256727 |
| A(GBP Hgd)-MD1 | 31/10/24 | GBP 0.0680 | 8.00% | LU2658256990 |
#Aims to pay dividend on monthly basis.
^^^Source: Invesco as at October 31, 2024. Past Performance is not a guide to future returns.
Annualized dividend (%) = (Amount/Share X Frequency) ÷ Price on record date. Upon dividend distribution, the Fund's net asset value may fall on the ex-dividend date. For Frequency, Monthly = 12; Quarterly = 4; Semi-Annually = 2; Annually =1. All distributions below USD 50/AUD 50/HKD 400/RMB 400 will be automatically applied in the purchase of further shares of the same class. Positive distribution yield does not imply a positive return.
The launch date of A (EUR Hgd)-MD1 and A (GBP Hgd)-MD1 Shares class was 30/08/2023.
