Invesco Global Emerging Markets

Invesco Global Emerging Markets is a highly active fund that consists of around 50 best ideas across emerging markets. The management team has a tight focus on valuation and contrarianism that is aided by its genuinely unconstrained investment approach.

Our opinion

The high esteem in which we hold this fund has been backed up by its outstanding long-term track record. The fund benefits from an adaptable investment style that allows it to exploit changing market conditions and inefficiencies effectively. The robustness of the investment process, combined with the diversity of experience amongst the management team, has also helped deliver strong returns.

Company description

Founded in 1969, Invesco forms part of Invesco Ltd, a global independent investment management company with more than 8,600 employees in more than 25 countries. Invesco offers diversified investment strategies spanning all major equity, fixed income, asset allocation and alternative asset classes. In October 2018, Invesco Perpetual dropped its Perpetual branding and is now simply known as Invesco.

Fund manager

There are three named managers on this fund. The first is William Lam who is co-head of the Henley Asian & emerging market equities team and is responsible for the management of a number of Asian and global emerging market equity mandates. He holds an MA in Psychology and Philosophy from Oxford University, an MSc in Music Technology from York University and is a CFA charterholder.

Ian Hargeaves is another co-head on this strategy and is responsible for the management of a number of Pan Asian and global emerging market equity mandates. Ian started his investment career with Invesco Asia Pacific in Hong Kong in 1994 as an investment analyst. In January 2005, he decided to return to the UK to join the Henley Asian equities team. Ian holds a BA (Honours) in Chinese Studies from Durham University and is a CFA charterholder.

The last manager is Charles Bond. Charles joined Invesco in April 2012, having started his investment career within the fund research team at Chelsea Financial Services in January 2011. He holds a BSc (Honours) in International Relations from the University of Manchester and the Investment Management Certificate from the CFA Society of the UK.

William Lam, Ian Hargreaves, Charles BondFund manager

Investment process

At the core of this fund’s philosophy and approach to investing is the view that valuation is paramount. The team seeks to invest in companies that are trading a significant discount to its estimate of fair value and looks for ideas in unloved areas.

Investment decisions are made to try exploit market inefficiencies caused by investor behavioural biases. These biases include things like market overreaction to short-term issues and trend extrapolation. While the fund doesn’t have a specific style bias, it does have a slight value tilt.

The majority of the team's research is focused on analysing individual stocks, including evaluating a company's competitive advantages, management quality, balance sheet strength, and identifying key factors that drive earnings.
The team has established an investable universe of approximately 1,000 stocks, extensively researched over a significant period. The team aims to further narrow down the investable universe into a dynamic buy-list called the ‘Company Shortlist’, comprising around 100 stocks. Some of these stocks are already held in the portfolio, while others are potential candidates for inclusion. The Company Shortlist is continuously evaluated and ranked based on changing share prices and fundamentals.
Conducting company meetings is an essential stage in the fund managers’ process, as it helps solidify their comprehension of the business's characteristics, key drivers, competitive standing, and the management's potential to achieve their objectives.
The portfolio construction process comes next where the managers aim to optimise exposure to the most appealing stocks, sectors, and themes by creating a concentrated portfolio consisting of around 50 stocks. The weightings assigned to each stock reflect the team's assessment of its attractiveness and the level of conviction.

ESG

The team takes a comprehensive approach by examining a company's ESG credentials alongside traditional financial and qualitative factors to establish a fair value. It particularly emphasises the concept of ESG materiality (the impact of ESG factors on fair value) and ESG momentum (the potential for ESG improvement over time), as both factors can influence a stock's potential returns and the team's level of conviction in an investment.

Risk

Risk management is embedded in the process. Multiple groups also oversee and support the investment team throughout the process, including risk committees, global compliance, and the investment risk team. Investment in emerging markets tends to be more volatile than in developed markets. There are also currency risks to consider.

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