Customize Your Target Date Portfolios with Alternatives
More than 20% of plans with 5,000+ employees customize their TDFs.1
Your plan has unique needs. That's why we support a custom approach to target date portfolios. Customization offers plan sponsors flexibility and control over glide path construction to meet the unique demographics of your plan participants. It also allows you to enhance diversification and include alternative investment strategies.
We believe it's the right thing to do as a fiduciary.
According to a recent Invesco survey, managing risk and market volatility were the top concerns of investors.1 And plan sponsors are taking a more "outcomes-based" approach to asset allocation to address these and other concerns.
When thoughtfully applied to your portfolio, alternatives may help. As part of an overall asset allocation, alternatives may potentially:
- Increase absolute returns
- Lower portfolio volatility
- Improve risk-return measures
Alternatives span a diverse range of asset classes that may help you construct more diversified target date portfolios. Plus, the increased availability of liquid alternative investment vehicles means that you can easily access these strategies.
Partnering with Invesco as your alternatives provider gives you institutional-quality alternatives management in DC-suitable vehicles. Our expertise in alternatives can help DC plan sponsors identify the right investment strategies for your portfolio objectives. We are dedicated to helping you build better plans and fulfill your duty as a fiduciary.
Why plan sponsors implement custom TDFs
Source: SEI Defined Contribution Trends Survey 2014. Survey based on responses by 285 DC plan sponsor executives representing plans ranging in size from $25 million to over $5 billion.
1 PSCA's 56th Annual Survey of Profit Sharing and 401(k) Plans reflecting the 2012 plan experience.
- Global Macro
- Long/Short Equity
- Market Neutral
- Real Estate
- Risk Parity
- Senior Secured Loans
Diversification and Inflation Hedge
Commodities possess a number of unique properties that may create compelling alternative investment opportunities. Besides acting as an inflation hedge, commodities can add diversification benefits to portfolios due to their historically low correlations to both equities and bonds.
|Balanced-Risk Commodity||CTF||Invesco Balanced-Risk Commodity Trust|
|MF||Invesco Balanced-Risk Commodity Strategy Fund|
Seek equity-like returns with less volatility
Global macro strategies base their investment decisions on macro views of various markets around the world. They may take long and short positions within and across such asset classes as equities, fixed income and currencies. These strategies seek to provide consistent returns in all market environments and target equity-like returns with lower volatility.
Long/short equity typically takes both long and short positions in an effort to benefit from rising stock prices on the long side and declining stock prices on the short side. They seek to hedge against downside risk and often try to mitigate volatility by diversifying and/or hedging positions across sectors, industries, regions and/or market capitalizations.
Equity market neutral strategies use offsetting long and short stock positions in an attempt to limit non-stock-specific risk. They seek to provide positive returns above cash, regardless of market environment, and typically with lower volatility than the broad market.
|Equity Market Neutral|
|Equity Market Neutral||MF|
|ISA||U.S. Market Neutral Separate Account|
Real estate can provide diversification to a portfolio, with low correlation to other major asset classes as well as global property markets that have relatively low correlations with each other. Real estate can offer yields that have low correlation to corporate and government bonds. This asset class may also offer inflation-hedging characteristics.
|Total Return Real Estate|
|U.S. Real Estate Securities||CTF||Invesco Equity Real Estate Securities Trust|
|MF||Invesco Real Estate Fund|
|ISA||U.S. Real Estate Securities Separate Account|
|Global Real Estate Securities||MF||Invesco Global Real Estate Fund|
|CTF||Invesco Equity Global Real Estate Securities Trust|
|Global ex-U.S. Real Estate Securities||CTF||Invesco Equity Global ex-U.S. Real Estate Securities Trust|
|ISA||Global ex-U.S. Real Estate Securities Separate Account|
|Real Estate Securities Income|
|Global Real Estate Securities Income||MF||Invesco Global Real Estate Income Fund|
These portfolios are constructed so that each asset contributes a relatively equal amount of risk to the strategic allocation of the portfolio. These portfolios may also include a tactical overlay that allows managers to opportunistically adjust the strategic allocation. This approach seeks to limit the effect that one underperforming asset may have on overall strategy performance. The goal is to mitigate portfolio volatility and protect against downside risk.
|Balanced-Risk Allocation||MF||Invesco Balanced-Risk Allocation Fund|
|CTF||Invesco Balanced-Risk Allocation Trust|
Senior Secured Bank Loans
Bank loans' floating rates make them an attractive source of yield to consider in a rising rate environment. They also have historically low correlations to traditional bonds, making them a potential diversifier for a fixed income allocation.
|Opportunistic Bank Loans|
|Opportunistic Bank Loan Strategies||ISA||Opportunistic Bank Loan Strategies Separate Account|
|Structured Credit Bank Loans|
|ABS Opportunity Strategies||ISA||ABS Opportunity Strategies Separate Account|
|CMBS Opportunity Strategies||ISA||CMBS Opportunity Strategies Separate Account|
|MBS Opportunity Strategies||ISA||MBS Opportunity Strategies Separate Account|
|Senior Secured Corporate Loans|
|Senior loans||ETF||PowerShares Senior Loan Portfolio|
|Senior Secured Corporate Loans||MF|
|ISA||Senior Secured Loan Separate Account|
About Risk and Other Important Information
This information is provided for informational purposes only and is not to be construed as investment advice or a recommendation of a particular strategy or product. Nor should it be construed as an offer to buy or sell any financial instruments. As with all investments there are associated inherent risks. Please obtain and review all financial material carefully before investing.
Alternative products typically hold more non-traditional investments and employ more complex trading strategies, including hedging and leveraging through derivatives, short selling and opportunistic strategies that change with market conditions. Investors considering alternatives should be aware of their unique characteristics and additional risks from the strategies they use. Like all investments, performance will fluctuate. You can lose money.