Invesco today announces the launch of the Invesco Global Thematic Innovation Equity Fund. A Luxembourg-domiciled SICAV, the fund is available to both retail and institutional investors in the UK and across Europe and will be managed by Martin Kolrep and Georg Elsaesser, based in Frankfurt.1
The fund was previously named the Invesco US Equity Flexible Fund and has been renamed to better reflect the new investment objective. The new fund has been repositioned from a flexible allocation to US large cap equities to a diversified global equities strategy focused on innovative themes and companies. The re-positioned fund will continue to target long term capital growth, benefiting from a new quantitative investment methodology, a more diversified investment universe and in the context of thematic investments.
The new fund invests in companies that enable, drive or stand to benefit from innovations within three overarching ‘megatrends’: technological evolution, demographic and societal change, and the protection of the environment and resource scarcity.
The Invesco Quantitative Strategies (IQS) team, which manages the fund, selects companies using analytical tools it has developed through its research in machine learning and Natural language Processing (NLP). These tools analyse academic papers, news data, financial research and more, allowing the team to identify investment themes within these ‘megatrends’. Once these have been determined, NLP systems scan millions of news data to identify corresponding companies, allowing them to assemble a broadly diversified, multi-theme portfolio that captures ongoing innovations.
As one of the three key ‘megatrends’, sustainability is central to the fund, and its themes are positively linked to the UN’s Sustainable Development Goals. ESG considerations are embedded throughout the fund’s investment process, with each stock subject to ESG screenings and unsuitable companies excluded.
The IQS team has been simulating this investment approach for the past five years, and it has far outperformed its benchmark (MSCI ASCI IMI), delivering a 21.33% for the year ending 30 September 2020, an outperformance of 11.76%.2
“Our world is changing rapidly”, says Martin Kolrep, Senior Portfolio Manager, Invesco Quantitative Strategies Team. “And while innovation creates great opportunities for investors, the pace of it means that the winners will be those that can understand and identify innovations before everyone else.
“To that end, we aim to invest in new and attractive themes as soon as they emerge. The team uses sophisticated processes based on a huge data set to both uncover new ideas and continuously reassess existing ones. In a world in which most data is publicly-available, we look to process information as fast and efficiently as possible to gain a key advantage.”
The IQS team has been working with large amounts of data for more than 35 years and has a long track record of systematically translating large data sets into investable portfolios. The 60-strong team currently manages £17bn3 in assets.
The three overarching ‘megatrends’
Technological innovations
These will be the driving forces for growth in productivity. The interplay and increasing adoption of these technologies will help to generate innovation in other areas.
Changes to demographics and society
These will have a major impact on consumer dynamics. For example, in 2010, 8% of the world’s population was aged over 65; this is set to have doubled by 2050.
Protection of the environment and resource scarcity
Environmental considerations will have a significant impact on the future of mankind. For example, with 2.2bn people lacking easy access to clean water, innovations will be needed to close the gap.
