We continue to view high-quality corporate bonds as an attractive asset class. Corporate fundamentals remain broadly supportive, with company balance sheets generally healthy, cash generation resilient and primary market issuance continuing to be well absorbed by investors. While credit spreads remain close to multi-year lows, all-in yields on investment grade corporate bonds remain compelling relative to historical levels, supported by higher underlying government bond yields. As a result, we remain focused on maintaining exposure to capture attractive income opportunities.
This is an investment grade credit portfolio, but we have the flexibility to allocate up to 30% to high yield securities and government bonds.
Without duration restrictions, we can mitigate risk or take advantage of opportunities.
With the majority of portfolio holdings denominated in EUR, there is little or no currency risk for EUR-based investors.
Our experienced investment team combines extensive research and analysis to identify attractive bond opportunities. We focus on high-quality issuers and seek to maximise returns by taking measured and well-understood credit risk. Each investment is carefully evaluated to ensure it offers compelling value relative to other opportunities across the fixed income market.
We focus on delivering attractive risk-adjusted returns through an active and flexible investment approach. Unconstrained by an index, we can position the portfolio to take advantage of market opportunities while adjusting risk levels as conditions evolve. This allows us to remain focused on protecting capital and generating long-term value for investors.
Our time-tested approach is based on fundamental analysis, with a strong emphasis on valuation. Our fund managers are supported by a well-resourced team of analysts.
The investment concerns the acquisition of units in an actively managed fund and not in a given underlying asset.
Julien Eberhardt and Tom Hemmant are responsible for managing the fund, supported by the rest of Invesco’s Fixed Income Team. Together, the two fund managers have a combined 45 years of industry experience.
Because of the flexibility we have in our mandate and the credit research resources in the team, we believe the fund can deliver attractive risk-adjusted returns from this vital income asset class.
Julien Eberhardt
Fund manager
Diversification – Bonds have played an essential role in diversifying investor portfolios and helping to mitigate portfolio losses during periods of negative equity returns.
Income generation – bonds can provide a fixed amount of income at regular intervals in the form of coupon payments.
Corporate bond is debt issued by a company in order for it to raise capital. An investor who buys a corporate bond is effectively lending money to the company in return for a series of interest payments, but these bonds may also actively trade on the secondary market.
A government bond represents debt issued by a government and sold to investors to support spending. Government bonds are considered low-risk investments since the government backs them. Because of their relatively low risk, government bonds typically pay low interest rates.
High-yield bonds tend to have lower credit ratings of below BBB- from Standard & Poor’s and Fitch, or below Baa3 from Moody’s. High-yield bonds are more likely to default and have higher price volatility. They therefore pay higher interest rates than investment-grade bonds.
Duration measures the sensitivity of a bond to changes in interest rates. Time to maturity and a bond’s coupon rate are two factors that affect a bond’s duration. Generally, the higher a bond’s duration is, the more its price will increase when interest rates fall and vice-versa.
A fixed-income portfolio’s duration is computed as the weighted average of individual bond durations held in the portfolio – portfolio duration can therefore be actively managed by fund managers to reduce or increase portfolio risk as they see fit.
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