Fund of the Fortnight – Invesco Perpetual Global Targeted Returns
David Millar and his team joined Invesco Perpetual from Standard Life in 2013 with the aim of recreating the success of the Standard Life’s Global Absolute Return Strategy (SLIM GARS) mandate. The new team brought sufficient risk and fund management expertise to enable them to effectively implement the strategy from day one. Not surprisingly many aspects of this new vehicle are identical to the original SLIM product: it aims to generate a positive return of 5 per cent above cash (before fees) over the medium term and irrespective of market conditions. To achieve this, the investment team identifies a number of discrete strategies reflecting a specific investment idea that are intended to provide small, incremental returns to generate the positive overall return, with less than half the volatility of global equities.
GTR now has about 18 months’ worth of track record data and results so far have been impressive. Total returns over the period have just been just under 14 per cent for a realised volatility of about 4 per cent, compared to 11 per cent for global equities (the fund targets a volatility of less than half that of global equities over a 3 year rolling period). We believe there is a high probability the team will be able to replicate the success they enjoyed at their previous employer and have awarded the fund our top rating. Like its predecessor, the fund is daily dealt and competitively priced, with no performance fee. While there is always the risk of some overlap in trade ideas with SLIM GARS, a simple study of the correlation of returns between the two suggests that this risk is low; we believe clients could comfortably hold both vehicles as a part of a diversified exposure to the absolute return sector. The fund seems to have already caught the eye of some investors, with AUM surging to almost £4bn. The SLIM GARS product remains one of the greatest success stories of recent years with AUM now topping £40bn.