Objective & Strategy
The Fund seeks total return. The strategy primarily invests globally across equity, fixed income and alternative strategies.
Management team
Top Equity Holdings | View all
% of Total Assets | |
---|---|
Invesco Core Bond Fund | 16.27 |
Invesco Russell 1000 Dynamic Multifactor ETF | 11.02 |
Invesco Core Plus Bond Fund | 8.07 |
Invesco Nasdaq 100 ETF | 7.85 |
Invesco S&P 500 Pure Value ETF | 7.30 |
Invesco Global Fund | 5.85 |
Invesco Discovery Mid Cap Growth Fund | 4.85 |
Invesco Main Street Small Cap Fund | 4.64 |
Invesco Exchange-Traded Fund Trust II Invesco Equal Weight 0-30 Year Treasury ETF | 4.25 |
Invesco Value Opportunities Fund | 3.86 |
May not equal 100% due to rounding.
Holdings are subject to change and are not buy/sell recommendations.
Average Annual Returns (%)
Incept. Date |
Max Load (%) |
Since Incept. (%) |
YTD (%) | 1Y (%) | 3Y (%) | 5Y (%) | 10Y (%) | |
---|---|---|---|---|---|---|---|---|
Performance quoted is past performance and cannot guarantee comparable future results; current performance may be lower or higher. Investment return and principal value will vary so that you may have a gain or a loss when you sell shares.
Annualized Benchmark Returns
Index Name | 1 Mo (%) | 3 Mo (%) | 1Y (%) | 3Y (%) | 5Y (%) | 10Y (%) |
---|---|---|---|---|---|---|
Custom Invesco Select Risk: Moderate Investor Index | 2.72 | 2.67 | 18.48 | 4.61 | 7.31 | 6.65 |
MSCI ACWI Net Return Index (USD) | 3.74 | 3.77 | 26.12 | 7.68 | 11.36 | 9.28 |
Custom Invesco Select Risk: Moderate Investor Index | 1.87 | 5.73 | 23.03 | 4.94 | 7.78 | 6.79 |
MSCI ACWI Net Return Index (USD) | 2.32 | 6.61 | 31.76 | 8.09 | 12.19 | 9.39 |
Source: RIMES Technologies Corp.
An investment cannot be made directly in an index.
Expense Ratio per Prospectus
Management Fee | 0.00 |
12b-1 Fee | 0.24 |
Other Expenses | 0.13 |
Interest/Dividend Exp | N/A |
Total Other Expenses | 0.13 |
Acquired Fund Fees and Expenses (Underlying Fund Fees & Expenses) | 0.51 |
Total Annual Fund Operating Expenses | 0.88 |
Contractual Waivers/Reimbursements | N/A |
Net Expenses - PER PROSPECTUS | 0.88 |
Additional Waivers/Reimbursements | N/A |
Net Expenses - With Additional Fee Reduction | 0.88 |
Distributions
Capital Gains | Reinvestment Price ($) |
|||
---|---|---|---|---|
Ex-Date | Income | Short Term | Long Term | |
Fund Characteristics
3-Year Alpha | -3.36% |
3-Year Beta | 1.05 |
3-Year R-Squared | 0.98 |
3-Year Sharpe Ratio | -0.32 |
3-Year Standard Deviation | 12.56 |
Number of Securities | 23 |
Total Assets | $1,797,356,382.00 |
Source: RIMES Technologies Corp.,StyleADVISOR
Benchmark: Custom Invesco Select Risk: Moderate Investor Index
Top Equity Holdings | View all
% of Total Assets | |
---|---|
Invesco Core Bond Fund | 16.27 |
Invesco Russell 1000 Dynamic Multifactor ETF | 11.02 |
Invesco Core Plus Bond Fund | 8.07 |
Invesco Nasdaq 100 ETF | 7.85 |
Invesco S&P 500 Pure Value ETF | 7.30 |
Invesco Global Fund | 5.85 |
Invesco Discovery Mid Cap Growth Fund | 4.85 |
Invesco Main Street Small Cap Fund | 4.64 |
Invesco Exchange-Traded Fund Trust II Invesco Equal Weight 0-30 Year Treasury ETF | 4.25 |
Invesco Value Opportunities Fund | 3.86 |
May not equal 100% due to rounding.
Holdings are subject to change and are not buy/sell recommendations.
Fund Documents
About risk
As with any mutual fund investment, loss of money is a risk of investing. An
investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency. The risks associated with an investment in the Fund
can increase during times of significant market volatility. Because the Fund
is a fund of funds, the Fund is subject to the risks associated with the
underlying funds in which it invests. The principal risks of investing in the
Fund and the underlying funds are:
Market Risk. The market values of an underlying fund’s investments,
and therefore the value of an underlying fund’s shares, will go up and down,
sometimes rapidly or unpredictably. Market risk may affect a single issuer,
industry or section of the economy, or it may affect the market as a whole.
The value of an underlying fund’s investments may go up or down due to
general market conditions that are not specifically related to the particular
issuer, such as real or perceived adverse economic conditions, changes in
the general outlook for revenues or corporate earnings, changes in interest
or currency rates, regional or global instability, natural or environmental
disasters, widespread disease or other public health issues, war, military
conflict, acts of terrorism, economic crisis or adverse investor sentiment
generally. During a general downturn in the financial markets, multiple asset
classes may decline in value. When markets perform well, there can be no
assurance that specific investments held by an underlying fund will rise in
value.
Fund of Funds Risk. The Fund’s performance depends on that of the
underlying funds in which it invests. Accordingly, the risks associated with
an investment in the Fund include the risks associated with investments in
the underlying funds. The Fund will indirectly pay a proportional share of the
fees and expenses of the underlying funds in which it invests. There are
risks that the Fund will vary from its target weightings (if any) in the
underlying funds, that the underlying funds will not achieve their investment
objectives, that the underlying funds’ performance may be lower than their
represented asset classes, and that the Fund may withdraw its investments
in an underlying fund at a disadvantageous time.
Exchange–Traded Funds Risk. In addition to the risks associated
with the underlying assets held by the exchange–traded fund, investments in
exchange–traded funds are subject to the following additional risks: (1) an
exchange–traded fund’s shares may trade above or below its net asset
value; (2) an active trading market for the exchange–traded fund’s shares
may not develop or be maintained; (3) trading an exchange–traded fund’s
shares may be halted by the listing exchange; (4) a passively–managed
exchange–traded fund may not track the performance of the reference
asset; and (5) a passively–managed exchange–traded fund may hold
troubled securities. Investment in exchange–traded funds may involve
duplication of management fees and certain other expenses, as the Fund or
an underlying fund indirectly bears its proportionate share of any expenses
paid by the exchange–traded funds in which it invests. Further, certain
exchange–traded funds in which the Fund or an underlying fund may invest
are leveraged, which may result in economic leverage, permitting the Fund
or an underlying fund to gain exposure that is greater than would be the
case in an unlevered instrument, and potentially resulting in greater
volatility.
Allocation Risk. The Fund’s investment performance depends, in part,
on how its assets are allocated among the underlying funds or asset
classes. The Adviser’s evaluations and assumptions regarding the asset
classes or the underlying funds in which the Fund invests may be incorrect,
causing the Fund to be invested (or not invested) in one or more asset
classes or underlying funds at an inopportune time, which could negatively
affect the Fund’s performance.
Investing in Stocks Risk. The value of an underlying fund’s portfolio
may be affected by changes in the stock markets. Stock markets may
experience significant short–term volatility and may fall or rise sharply at
times. Adverse events in any part of the equity or fixed–income markets may
have unexpected negative effects on other market segments. Different stock
markets may behave differently from each other and U.S. stock markets
may move in the opposite direction from one or more foreign stock markets.
The prices of individual stocks generally do not all move in the same
direction at the same time. However, individual stock prices tend to go up
and down more dramatically than those of certain other types of
investments, such as bonds. A variety of factors can negatively affect the
price of a particular company’s stock. These factors may include, but are not
limited to: poor earnings reports, a loss of customers, litigation against the
company, general unfavorable performance of the company’s sector or
industry, or changes in government regulations affecting the company or its
industry. To the extent that securities of a particular type are emphasized (for
example foreign stocks, stocks of small– or mid–cap companies, growth or
value stocks, or stocks of companies in a particular industry), fund share
values may fluctuate more in response to events affecting the market for
those types of securities.
Index Risk. Unlike many investment companies that are “actively
managed,” certain underlying funds are “passive” investors and therefore do
not utilize investing strategies that seek returns in excess of their respective
Underlying Index. Therefore, an underlying fund would not necessarily buy or
sell a security unless that security is added or removed, respectively, from
its respective Underlying Index, even if that security generally is
underperforming. If a specific security is removed from an Underlying Index,
certain underlying funds may be forced to sell shares of the security at an
inopportune time or for a price lower than the security’s current market
value. An Underlying Index may not contain the appropriate mix of securities
for any particular economic cycle. Unlike with an actively managed fund, the
Adviser does not use techniques or defensive strategies designed to lessen
the impact of periods of market volatility or market decline. This means that,
based on certain market and economic conditions, an underlying fund’s
performance could be lower than other types of mutual funds with
investment advisers that actively manage their portfolio assets to take
advantage of market opportunities.
Preferred Securities Risk. Preferred securities are subject to
issuer–specific and market risks applicable generally to equity securities.
Preferred securities also may be subordinated to bonds or other debt
instruments, subjecting them to a greater risk of non–payment, may be less liquid than many other securities, such as common stocks, and generally
offer no voting rights with respect to the issuer.
Foreign Securities Risk. An underlying fund’s foreign investments
may be adversely affected by political and social instability, changes in
economic or taxation policies, difficulty in enforcing obligations, decreased
liquidity or increased volatility. Foreign investments also involve the risk of
the possible seizure, nationalization or expropriation of the issuer or foreign
deposits (in which an underlying fund could lose its entire investments in a
certain market) and the possible adoption of foreign governmental
restrictions such as exchange controls. Foreign companies generally may be
subject to less stringent regulations than U.S. companies, including financial
reporting requirements and auditing and accounting controls, and may
therefore be more susceptible to fraud or corruption. There may be less
public information available about foreign companies than U.S. companies,
making it difficult to evaluate those foreign companies. Unless an underlying
fund has hedged its foreign currency exposure, foreign securities risk also
involves the risk of negative foreign currency rate fluctuations, which may
cause the value of securities denominated in such foreign currency (or other
instruments through which an underlying fund has exposure to foreign
currencies) to decline in value. Currency exchange rates may fluctuate
significantly over short periods of time. Currency hedging strategies, if used,
are not always successful.
Foreign Government Debt Risk. Investments in foreign government
debt securities (sometimes referred to as sovereign debt securities) involve
certain risks in addition to those relating to foreign securities or debt
securities generally. The issuer of the debt or the governmental authorities
that control the repayment of the debt may be unable or unwilling to repay
principal or interest when due in accordance with the terms of such debt,
and an underlying fund may have limited recourse in the event of a default
against the defaulting government. Without the approval of debt holders,
some governmental debtors have in the past been able to reschedule or
restructure their debt payments or declare moratoria on payments.
Emerging Market Securities Risk. Emerging markets (also referred
to as developing markets) are generally subject to greater market volatility,
political, social and economic instability, uncertain trading markets and more
governmental limitations on foreign investment than more developed
markets. In addition, companies operating in emerging markets may be
subject to lower trading volume and greater price fluctuations than
companies in more developed markets. Such countries’ economies may be
more dependent on relatively few industries or investors that may be highly
vulnerable to local and global changes. Companies in emerging market
countries generally may be subject to less stringent regulatory, disclosure,
financial reporting, accounting, auditing and recordkeeping standards than
companies in more developed countries. As a result, information, including
financial information, about such companies may be less available and
reliable, which can impede an underlying fund’s ability to evaluate such
companies. Securities law and the enforcement of systems of taxation in
many emerging market countries may change quickly and unpredictably,
and the ability to bring and enforce actions (including bankruptcy,
confiscatory taxation, expropriation, nationalization of a company’s assets,
restrictions on foreign ownership of local companies, restrictions on
withdrawing assets from the country, protectionist measures and practices
such as share blocking), or to obtain information needed to pursue or
enforce such actions, may be limited. In addition, the ability of foreign
entities to participate in privatization programs of certain developing or
emerging market countries may be limited by local law. Investments in
emerging market securities may be subject to additional transaction costs,
delays in settlement procedures, unexpected market closures, and lack of
timely information.
Geographic Focus Risk. An underlying fund may from time to time
have a substantial amount of its assets invested in securities of issuers
located in a single country or a limited number of countries. Adverse
economic, political or social conditions in those countries may therefore
have a significant negative impact on an underlying fund’s investment
performance.
Momentum Investing Risk. In general, momentum is the tendency
of an investment to exhibit persistence in its relative performance; a
“momentum” style of investing emphasizes investing in securities that have
had better recent performance compared to other securities, on the theory
that these securities will continue to increase in value. Momentum investing
is subject to the risk that the securities may be more volatile than the
market as a whole. High momentum may also be a sign that the securities’
prices have peaked, and therefore the returns on securities that previously
have exhibited price momentum may be less than returns on other styles of
investing. Momentum can turn quickly, and stocks that previously have
exhibited high momentum may not experience continued positive
momentum. An underlying fund may experience significant losses if
momentum stops, reverses or otherwise behaves differently than predicted.
In addition, there may be periods when the momentum style of investing is
out of favor and therefore, the investment performance of an underlying
fund may suffer.
Value Investing Risk. Value investing entails the risk that if the
market does not recognize that a selected security is undervalued, the
prices of that security might not appreciate as anticipated. A value approach
could also result in fewer investments that increase rapidly during times of
market gains and could cause an underlying fund to underperform funds
that use a growth or non–value approach to investing. Value investing has
gone in and out of favor during past market cycles and when value investing
is out of favor or when markets are unstable, the securities of value
companies may underperform the securities of growth companies or the
overall stock market.
Growth Investing Risk. If a growth company’s earnings or stock price
fails to increase as anticipated, or if its business plans do not produce the
expected results, the value of its securities may decline sharply. Growth
companies may be newer or smaller companies that may experience
greater stock price fluctuations and risks of loss than larger, more
established companies. Newer growth companies tend to retain a large part
of their earnings for research, development or investments in capital assets.
Therefore, they may not pay any dividends for some time. Growth investing
has gone in and out of favor during past market cycles and is likely to
continue to do so. During periods when growth investing is out of favor or
when markets are unstable, it may be more difficult to sell growth company
securities at an acceptable price and the securities of growth companies
may underperform the securities of value companies or the overall stock
market. Growth stocks may also be more volatile than other securities
because of investor speculation.
Small– and Mid–Capitalization Companies Risk. Investing in
securities of small– and mid–capitalization companies involves greater risk
than customarily is associated with investing in larger, more established
companies. Stocks of small– and mid–capitalization companies tend to be
more vulnerable to changing market conditions, may have little or no
operating history or track record of success, and may have more limited
product lines and markets, less experienced management and fewer
financial resources than larger companies. These companies’ securities may
be more volatile and less liquid than those of more established companies.
They may be more sensitive to changes in a company’s earnings
expectations and may experience more abrupt and erratic price movements.
Smaller companies’ securities often trade in lower volumes and in many
instances, are traded over–the–counter or on a regional securities exchange,
where the frequency and volume of trading is substantially less than is
typical for securities of larger companies traded on national securities
exchanges. Therefore, the securities of smaller companies may be subject
to wider price fluctuations and it might be harder for an underlying fund to
dispose of its holdings at an acceptable price when it wants to sell them.
Since small– and mid–cap companies typically reinvest a high proportion of
their earnings in their business, they may not pay dividends for some time,
particularly if they are newer companies. It may take a substantial period of time to realize a gain on an investment in a small– or mid–cap company, if
any gain is realized at all.
Issuer–Specific Changes Risk. The performance of an underlying
fund depends on the performance of individual securities to which an
underlying fund has exposure. The value of an individual security or
particular type of security may be more volatile than the market as a whole
and may perform worse than the market as a whole, causing the value of its
securities to decline. Poor performance may be caused by poor
management decisions, competitive pressures, changes in technology,
expiration of patent protection, disruptions in supply, labor problems or
shortages, corporate restructurings, fraudulent disclosures or other factors.
Issuers may, in times of distress or at their own discretion, decide to reduce
or eliminate dividends, which may also cause their stock prices to decline.
Debt Securities Risk. The prices of debt securities held by an
underlying fund will be affected by changes in interest rates, the
creditworthiness of the issuer and other factors. An increase in prevailing
interest rates typically causes the value of existing debt securities to fall and
often has a greater impact on longer–duration debt securities and higher
quality debt securities. Falling interest rates will cause an underlying fund to
reinvest the proceeds of debt securities that have been repaid by the issuer
at lower interest rates. Falling interest rates may also reduce an underlying
fund’s distributable income because interest payments on floating rate debt
instruments held by an underlying fund will decline. An underlying fund
could lose money on investments in debt securities if the issuer or borrower
fails to meet its obligations to make interest payments and/or to repay
principal in a timely manner. Changes in an issuer’s financial strength, the
market’s perception of such strength or in the credit rating of the issuer or
the security may affect the value of debt securities. An underlying fund’s
adviser’s credit analysis may fail to anticipate such changes, which could
result in buying a debt security at an inopportune time or failing to sell a
debt security in advance of a price decline or other credit event.
Changing Fixed Income Market Conditions Risk. Increases in the
federal funds and equivalent foreign rates or other changes to monetary
policy or regulatory actions may expose fixed income markets to heightened
volatility and reduced liquidity for certain fixed income investments,
particularly those with longer maturities. It is difficult to predict the impact of
interest rate changes on various markets. In addition, decreases in fixed
income dealer market–making capacity may also potentially lead to
heightened volatility and reduced liquidity in the fixed income markets. As a
result, the value of an underlying fund’s investments and share price may
decline. Changes in central bank policies could also result in higher than
normal redemptions by shareholders, which could potentially increase an
underlying fund’s portfolio turnover rate and transaction costs.
Rule 144A Securities and Other Exempt Securities Risk. The
market for Rule 144A and other securities exempt from certain registration
requirements typically is less active than the market for publicly–traded
securities. Rule 144A and other exempt securities, which are also known as
privately issued securities, carry the risk that their liquidity may become
impaired and an underlying fund may be unable to dispose of the securities
at a desirable time or price.
Restricted Securities Risk. Limitations on the resale of restricted
securities may have an adverse effect on their marketability, and may
prevent an underlying fund from disposing of them promptly at reasonable
prices. There can be no assurance that a trading market will exist at any
time for any particular restricted security. Transaction costs may be higher
for restricted securities and such securities may be difficult to value and
may have significant volatility.
Municipal Securities Risk. The risk of a municipal obligation
generally depends on the financial and credit status of the issuer.
Constitutional amendments, legislative enactments, executive orders,
administrative regulations, voter initiatives, and the issuer’s regional
economic conditions may affect the municipal security’s value, interest
payments, repayment of principal and an underlying fund’s ability to sell the
security. Failure of a municipal security issuer to comply with applicable tax
requirements may make income paid thereon taxable, resulting in a decline
in the security’s value. In addition, there could be changes in applicable tax
laws or tax treatments that reduce or eliminate the current federal income
tax exemption on municipal securities or otherwise adversely affect the
current federal or state tax status of municipal securities.
High Yield Debt Securities (Junk Bond) Risk. Investments in high
yield debt securities (“junk bonds”) and other lower–rated securities will
subject an underlying fund to substantial risk of loss. These securities are
considered to be speculative with respect to the issuer’s ability to pay
interest and principal when due, are more susceptible to default or decline
in market value and are less liquid than investment grade debt securities.
Prices of high yield debt securities tend to be very volatile.
REIT Risk/Real Estate Risk. Investments in real estate related
instruments may be adversely affected by economic, legal, cultural,
environmental or technological factors that affect property values, rents or
occupancies. Shares of real estate related companies, which tend to be
small– and mid–cap companies, may be more volatile and less liquid than
larger companies. If a real estate related company defaults on certain types
of debt obligations, held by an underlying fund, an underlying fund may
acquire real estate directly, which involves additional risks such as
environmental liabilities; difficulty in valuing and selling the real estate; and
economic or regulatory changes.
Commodity Risk. An underlying fund may have investment exposure
to the commodities markets and/or a particular sector of the commodities
markets, which may subject an underlying fund to greater volatility than
investments in traditional securities, such as stocks and bonds. Volatility in
the commodities markets may be caused by changes in overall market
movements, domestic and foreign political and economic events and
policies, war, acts of terrorism, changes in domestic or foreign interest rates
and/or investor expectations concerning interest rates, domestic and foreign
inflation rates, investment and trading activities of mutual funds, hedge
funds and commodities funds, and factors such as drought, floods, weather,
livestock disease, embargoes, tariffs and other regulatory developments, or
supply and demand disruptions. Because an underlying fund’s performance
may be linked to the performance of volatile commodities, investors should
be willing to assume the risks of potentially significant fluctuations in the
value of underlying fund’s shares.
Inflation–Indexed Securities Risk. The values of inflation–indexed
securities generally fluctuate in response to changes in real interest rates.
Because of the inflation–adjustment feature, these securities typically have
lower yields than traditional fixed–rate securities with similar maturities.
Normally inflation–indexed securities will decline in price when real interest
rates rise which could cause losses for the Fund or an underlying fund. As a
result, an underlying fund’s income from its investments in these securities
is likely to fluctuate considerably more than the income distributions of its
investments in more traditional fixed income securities.
U.S. Government Obligations Risk. Obligations of U.S. Government
agencies and authorities receive varying levels of support and may not be
backed by the full faith and credit of the U.S. Government, which could
affect an underlying fund’s ability to recover should they default. No
assurance can be given that the U.S. Government will provide financial
support to its agencies and authorities if it is not obligated by law to do so.
Mortgage– and Asset–Backed Securities Risk. Mortgage– and
asset–backed securities are subject to prepayment or call risk, which is the
risk that a borrower’s payments may be received earlier or later than
expected due to changes in prepayment rates on underlying loans. This
could result in an underlying fund reinvesting these early payments at lower
interest rates, thereby reducing an underlying fund’s income. Mortgage– and
asset–backed securities also are subject to extension risk, which is the risk
that an unexpected rise in interest rates could reduce the rate of
prepayments, causing the price of the mortgage– and asset–backed
securities and an underlying fund’s share price to fall. An unexpectedly high
rate of defaults on the mortgages held by a mortgage pool will adversely
affect the value of mortgage–backed securities and will result in losses to an underlying fund. Privately–issued mortgage–backed securities and
asset–backed securities may be less liquid than other types of securities and
an underlying fund may be unable to sell these securities at the time or
price it desires. During periods of market stress or high redemptions, an
underlying fund may be forced to sell these securities at significantly
reduced prices, resulting in losses. Liquid privately–issued mortgage–backed
securities and asset–backed securities can become illiquid during periods of
market stress. Privately issued mortgage–related securities are not subject
to the same underwriting requirements as those with government or
government–sponsored entity guarantees and, therefore, mortgage loans
underlying privately issued mortgage–related securities may have less
favorable collateral, credit risk, liquidity risk or other underwriting
characteristics, and wider variances in interest rate, term, size, purpose and
borrower characteristics. An underlying fund may invest in mortgage pools
that include subprime mortgages, which are loans made to borrowers with
weakened credit histories or with lower capacity to make timely payments
on their mortgages. Liquidity risk is even greater for mortgage pools that
include subprime mortgages.
Collateralized Loan Obligations Risk. CLOs are subject to the
risks of substantial losses due to actual defaults by underlying borrowers,
which will be greater during periods of economic or financial stress. CLOs
may also lose value due to collateral defaults and disappearance of
subordinate tranches, market anticipation of defaults, and investor aversion
to CLO securities as a class. The risks of CLOs will be greater if an
underlying fund invests in CLOs that hold loans of uncreditworthy borrowers
or if an underlying fund holds subordinate tranches of the CLO that absorb
losses from the defaults before senior tranches. In addition, CLOs carry risks
including interest rate risk and credit risk.
Variable or Floating Rate Instruments. Variable or floating rate
instruments are securities that provide for a periodic adjustment in the
interest rate paid on the obligation. The interest rates for securities with
variable interest rates are readjusted on set dates (such as the last day of
the month or calendar quarter) and the interest rates for securities with
floating rates are reset whenever a specified interest rate change occurs.
Variable or floating interest rates generally reduce changes in the market
price of securities from their original purchase price because, upon
readjustment, such rates approximate market rates. Accordingly, as market
interest rates decrease or increase, the potential for capital appreciation or
depreciation is less for variable or floating rate securities than for fixed rate
obligations.
LIBOR Transition Risk. An underlying fund may have investments in
financial instruments that utilize the London Interbank Offered Rate
(“LIBOR”) as the reference or benchmark rate for variable interest rate
calculations. LIBOR is intended to measure the rate generally at which
banks can lend and borrow from one another in the relevant currency on an
unsecured basis. Regulators and financial industry working groups in
several jurisdictions have worked over the past several years to identify
alternative reference rates (“ARRs”) to replace LIBOR and to assist with the
transition to the new ARRs. For example, the Federal Reserve Bank of New
York has identified the Secured Overnight Financing Rate (“SOFR”) as the
intended replacement to USD LIBOR and foreign regulators have proposed
other interbank offered rates, such as the Sterling Overnight Index Average
(“SONIA”) and other replacement rates, which could also be adopted.
Consequently, the publication of most LIBOR rates ceased at the end of
2021, but a selection of widely used USD LIBOR rates continues to be
published until June 2023 to allow for an orderly transition away from these
rates. Additionally, key regulators have instructed banking institutions to
cease entering into new contracts that reference these USD LIBOR settings
after December 31, 2021, subject to certain limited exceptions.
There remains uncertainty and risks relating to the continuing LIBOR
transition and its effects on an underlying fund and the instruments in which
an underlying fund invests. For example, there can be no assurance that the
composition or characteristics of any ARRs or financial instruments in which
underlying fund invests that utilize ARRs will be similar to or produce the
same value or economic equivalence as LIBOR or that these instruments will
have the same volume or liquidity. Additionally, although regulators have
generally prohibited banking institutions from entering into new contracts
that reference those USD LIBOR settings that continue to exist, there
remains uncertainty and risks relating to certain “legacy” USD LIBOR
instruments that were issued or entered into before December 31, 2021
and the process by which a replacement interest rate will be identified and
implemented into these instruments when USD LIBOR is ultimately
discontinued. The effects of such uncertainty and risks in “legacy” USD
LIBOR instruments held by an underlying fund could result in losses to an
underlying fund.
Sector Focus Risk. An underlying fund may from time to time have a
significant amount of its assets invested in one market sector or group of
related industries. In this event, an underlying fund’s performance will
depend to a greater extent on the overall condition of the sector or group of
industries and there is increased risk that an underlying fund will lose
significant value if conditions adversely affect that sector or group of
industries.
Liquidity Risk. An underlying fund may be unable to sell illiquid
investments at the time or price it desires and, as a result, could lose its
entire investment in such investments. Liquid securities can become illiquid
during periods of market stress. If a significant amount of an underlying
fund’s securities become illiquid, an underlying fund may not be able to
timely pay redemption proceeds and may need to sell securities at
significantly reduced prices.
Alternative Investment Strategies Risk. An underlying fund utilizes
alternative investment strategies, which are strategies that the portfolio
manager expects to result in investment performance that does not
correlate with the performance of traditional asset classes, such as equity
and fixed–income investments. An underlying fund also seeks to utilize a
diverse mix of alternative investment strategies, in the hope that individual
strategies yield low performance correlation to other alternative investment
strategies used by an underlying fund. However, alternative investments may
be more volatile or illiquid, particularly during periods of market instability,
and an underlying fund cannot guarantee that diverse alternative investment
strategies will yield uncorrelated performance under all market conditions. In
addition, the particular mix of alternative investments in an underlying fund’s
portfolio may not be sufficiently diversified. An underlying fund is subject to
the risk that its alternative investments may undergo a correlation shift,
resulting in returns that are correlated with the broader market and/or with
an underlying fund’s other alternative investments.
Rights and Warrants Risk. Warrants may be significantly less
valuable or worthless on their expiration date and may also be postponed or
terminated early, resulting in a partial or total loss. Rights are similar to
warrants, but normally have a short duration and are distributed directly by
the issuer to its shareholders. Rights and warrants have no voting rights,
receive no dividends and have no rights with respect to the assets of the
issuer. Warrants and rights are highly volatile and, therefore, more
susceptible to sharp declines in value than the underlying security might be.
The market for rights or warrants may be very limited and it may be difficult
to sell them promptly at an acceptable price.
Convertible Securities Risk. The market values of convertible
securities are affected by market interest rates, the risk of actual issuer
default on interest or principal payments and the value of the underlying
common stock into which the convertible security may be converted.
Additionally, a convertible security is subject to the same types of market
and issuer risks that apply to the underlying common stock. In addition,
certain convertible securities are subject to involuntary conversions and may
undergo principal write–downs upon the occurrence of certain triggering
events, and, as a result, are subject to an increased risk of loss. Convertible
securities may be rated below investment grade and therefore considered to
have more speculative characteristics and greater susceptibility to default or
decline in market value than investment grade securities.
Derivatives Risk. The value of a derivative instrument depends largely
on (and is derived from) the value of an underlying security, currency,
commodity, interest rate, index or other asset (each referred to as an
underlying asset). In addition to risks relating to the underlying assets, the
use of derivatives may include other, possibly greater, risks, including
counterparty, leverage and liquidity risks. Counterparty risk is the risk that
the counterparty to the derivative contract will default on its obligation to pay
an underlying fund or the Fund the amount owed or otherwise perform
under the derivative contract. Derivatives create leverage risk because they
do not require payment up front equal to the economic exposure created by
holding a position in the derivative. As a result, an adverse change in the
value of the underlying asset could result in an underlying fund or the Fund
sustaining a loss that is substantially greater than the amount invested in
the derivative or the anticipated value of the underlying asset, which may
make the underlying fund’s or the Fund’s returns more volatile and increase
the risk of loss. Derivative instruments may also be less liquid than more
traditional investments and the underlying fund or the Fund may be unable
to sell or close out its derivative positions at a desirable time or price. This
risk may be more acute under adverse market conditions, during which the
underlying fund or the Fund may be most in need of liquidating its derivative
positions. Derivatives may also be harder to value, less tax efficient and
subject to changing government regulation that could impact the underlying
fund’s or the Fund’s ability to use certain derivatives or their cost.
Derivatives strategies may not always be successful. For example,
derivatives used for hedging or to gain or limit exposure to a particular
market segment may not provide the expected benefits, particularly during
adverse market conditions.
Financial Markets Regulatory Risk. Policy changes by the U.S.
government or its regulatory agencies and political events within the U.S.
and abroad may, among other things, affect investor and consumer
confidence and increase volatility in the financial markets, perhaps suddenly
and to a significant degree, which may adversely impact an underlying
fund’s operations, universe of potential investment options, and return
potential.
Management Risk. The Fund is actively managed and depends
heavily on its Adviser’s judgment about markets, interest rates or the
attractiveness, relative values, liquidity, or potential appreciation of particular
investments made for the Fund’s portfolio. Similarly, certain underlying funds
are actively managed and depend heavily on their advisers’ judgments
about markets, interest rates or the attractiveness, relative values, liquidity,
or potential appreciation of particular investments made for their portfolios.
The Fund and certain underlying funds could experience losses if these
judgments prove to be incorrect. Because the investment process of the
Fund relies heavily on its asset allocation process, market movements that
are counter to the portfolio managers’ expectations may have a significant
adverse effect on the Fund’s net asset value. Similarly, because the
investment processes of certain underlying funds rely heavily on their
security selection processes, market movements that are counter to the
portfolio managers’ expectations may have a significant adverse effect on
certain underlying funds’ net asset values. Additionally, legislative,
regulatory, or tax developments may adversely affect management of the
Fund and underlying funds and, therefore, their abilities to achieve their
investment objectives.