Invesco Global Equity – too many cooks?
Jonathon Curtis | Thu 21 February 2019
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- Nick Mustoe leads a team of six experienced managers who run the fund together
- Investing less in the US and technology companies than the broader market hurt recent performance
- They're more confident about the fund's future performance
Our view
Nick Mustoe, Invesco's Chief Investment Officer, and six other managers run the Invesco Global Equity Fund. They combine their favourite investment ideas from across the globe, which they think could grow over the long term. They keep an open mind to investing, and don't restrict themselves to certain companies or industries.
We think the managers invest sensibly. They like companies whose growth potential they think is overlooked by other investors. Many of these are ones that’ve temporarily fallen on hard times or are in unfashionable sectors. They haven’t strayed from their approach when times have been tough, which is a quality we admire.
Usually though, we prefer funds with just one or two managers making the investment decisions, and who are accountable for performance. We also don't think the fund's performance has been good enough for us to consider the fund for the
How's the fund performed?
The fund’s not done as well as the broader global stock market over the long run. The fund's grown 100.1%* since Mustoe and his team took over in December 2010. The FTSE All World index rose 128.4% over the same period. This isn’t an indication of how they’ll perform in the future.
Recent performance has been particularly disappointing. Investments in the UK didn’t do well. The managers' style of investing in unloved companies they think will later recover also worked against them. So did investing less in the US and technology companies than the broader global stock market, because these areas performed better than others.
Invesco Global Equity Performance
Past performance is not a guide to the future. Source: Lipper IM* 31/1/2019
| Annual percentage growth | |||||
|---|---|---|---|---|---|
| Jan 14 -
Jan 15 |
Jan 15 -
Jan 16 |
Jan 16 -
Jan 17 |
Jan 17 -
Jan 18 |
Jan 18 -
Jan 19 |
|
| Invesco Global Equity | 7.3% | -5.5% | 35.6% | 14.0% | -9.0% |
| FTSE All World | 17.7% | -0.7% | 33.9% | 13.4% | 0.3% |
Past performance is not a guide to the future. Source: Lipper IM 31/1/2019
How does the team invest?
Each member of the team focuses on a specific region of the world. They choose their best ideas, which get added to the fund if the rest of the team agree with their choices. They tend to focus on the merits of individual companies rather than what’s going on in the global economy.
They prefer large companies they think are attractively priced. This means they usually only invest in a company if its share price doesn't currently reflect its growth potential.
They’ve found lots of companies they like in the energy and financial sectors. The managers have also recently increased investments in domestic UK companies like M&S and Sainsbury. They think they’re attractively priced and, despite some mixed recent performance, expect them to improve.
US companies make up roughly a third of the fund, although this is less than the broader global stock market. The rest of the fund is mostly made up of companies from other developed countries like the UK, France and Japan. The fund can include companies from emerging markets, which are higher risk. The managers can also use derivatives to help them invest, which if used also adds risk.
Managers' outlook
Global stock markets have been awash with money for many years. A long period of low interest rates encouraged many people to invest in shares for better returns on their cash. Central banks around the world also pumped money into the financial markets to support them after the 2008 crisis. The managers think all this extra money pushed many share prices higher than they should be.
Now interest rates are rising again , and many central banks are starting to reign the money back in. If this reversal continues, the managers think many share prices will come back down. They only invest in shares where the price doesn’t exceed the company’s true worth. So the managers think the fund will hold up well if many share prices do come down as they expect.