S&P placed the fund ‘On Hold’ on September 1, 2011 following notification by the manager that it would move to an Asian consumer demand themed strategy from a broad-based Asian equities strategy.

By focusing on internally generated consumer demand, Invesco seeks to take advantage of the increasing consumerism of Asian economies, and to minimise the cyclical effects associated with companies predominantly exposed to non-Asia related activities. The change in strategy coincided with a move to a new benchmark, from the MSCI All Countries Far East Free ex Japan Index which excluded India, to the MSCI All Countries Asia ex Japan index. 

S&P holds an increasingly favourable view of the investment credentials held by Invesco’s Hong Kong-based Asian investment team. The pairing of well-credentialled lead and support portfolio managers is well considered. Furthermore, the average team tenure of over seven years speaks to a strong culture and team dynamic, factors which S&P believes are conducive to ongoing team stability and cohesiveness. 

“The fund represents a unique, and in our opinion, compelling offering within its peer group. However we will be looking for greater stability in fund structure, and a longer and more consistent performance track record, before gaining a higher-level of conviction in the fund and its ability to regularly outperform,” said Nathan Bode, S&P fund analyst.

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“Invesco’s Hong Kong-based Asian investment team has managed the Asian consumer demand strategy for over three years. Investing to this strategy, the restructured Asian share fund will seek exposure to those businesses likely to benefit from growth in domestic consumption in Asia (ex Japan) economies,” said S&P Fund Services analyst Nathan Bode.

According to Invesco, the Asian consumer demand strategy is well placed to capture the investment opportunities provided by positive demographics, rising incomes, strong consumer balance sheets, and a cultural shift in attitudes toward spending and consumer credit within the region.

The change in strategy will coincide with a change in fund name to the Invesco Wholesale Asian Consumer Demand Fund, and a move to a new benchmark. From Oct. 1, 2011, the fund’s reference benchmark will be the MSCI All Countries Asia ex Japan index. The fund was formerly benchmarked against the MSCI All Countries Far East Free ex Japan Index, which excluded India.

“We will formally review the fund as part of our sector review starting in September, when we will seek to resolve the ‘On Hold’ status,” said Mr. Bode.

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