Invesco Corporate Bond (UK)
Invesco Corporate Bond fund offers investors access to Invesco's renowned and well-resourced fixed interest team. The managers use the flexibility within the fund's sector guidelines to full effect and run the portfolio with a pragmatic and proactive style. Over the years, their process has resulted in strong returns for investors.
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Our Opinion
This fund’s experienced managers make the most of the considerable analyst resource at their disposal to build an unconstrained fund, which has the flexibility to navigate its way through the large sterling corporate bond sector. For investors who are proponents of actively-managed funds, Invesco Corporate Bond makes for a compelling choice within its sector.
Fund Managers
Michael Matthews, Co-Manager
Michael is co-Head of the Invesco Fixed Income team in Europe, where he oversees team management and manages several corporate bond portfolios. He began his investment career in 1994 and joined the team when it was founded in 1995. Initially, he specialized in money and foreign exchange markets before shifting focus to government and investment-grade credit markets. Michael has been a fund manager since 2006 and has passed the associate examinations of the Association for Investment Management and Research (AIMR).
Tom Hemmant, Co-Managers
Tom is a fund manager for the IFI Europe team at Invesco, based in the Henley office. He began his career at PricewaterhouseCoopers in 2002 and later joined the Corporate Finance team at International Power plc, focusing on acquisitions, project financing, and corporate funding. In 2011, Tom became a credit analyst at Invesco's Henley Fixed Income team and advanced to fund manager in 2020. He now manages the team’s climate bond funds and other credit funds. Tom holds a BSc in Economics from the University of Southampton and is an ACA-qualified chartered accountant.
Risk
The managers are allowed to hold illiquid bonds if they foresee an opportunity to hold to maturity, and there is significant upside compensation for doing so.
Company Description
Founded in 1969, Invesco forms part of Invesco Ltd, a global independent investment management company with more than 7,000 employees in more than 25 countries. Its focus is on equities, but it also invests in fixed interest and other asset types. In October 2018, Invesco Perpetual dropped its Perpetual branding and is now simply known as Invesco.
Investment process
Invesco Corporate Bond fund has an unconstrained approach, with a minimum of 80% invested in sterling-based investment grade bonds. The managers aim to identify opportunities missed by the market in order to generate both income and some capital growth, over the long term. They will look to exploit various market inefficiencies by using fundamental analysis and by having a laser focus on valuation.
In order to identify these opportunities, Michael and Tom have a five-stage process. This starts with a macro analysis. The bond market is quite reliant on the wider economic picture and therefore the managers believe it is important to frame their investment selections with this in mind. Invesco doesn’t have a house view, but the wider team will debate ideas built from multiple inputs in order to create a challenge. They will use multiple macro sources to establish factors such as inflation and interest rate expectations. The managers’ interpretation of the economic picture will feed into asset allocation decisions.
Once this is established, the managers will study the credit market to start identifying individual ideas and analysts will perform proprietary research across the bond market. There are no index considerations, meaning the managers have the flexibility to pick the ideas they like the best, not just because they are large constituents. Finally, the managers will go about constructing the portfolio, as well as managing risk.
Risk
The managers are allowed to hold illiquid bonds if they foresee an opportunity to hold to maturity, and there is significant upside compensation for doing so.
ESG
ESG is built into the credit analysis element of this fund’s investment process. The team uses the data from Invesco’s own in-house platform, ESGIntel, which is available to all Invesco managers, as well as some external inputs for cross-referencing the analysis. This work helps the managers understand how an issuer behaves in absolute terms, as well as compared to its peers. It is useful for the managers to understand how the ESG picture is likely to change for a firm, such as if it has policies to improve its credentials, or whether this is not a focus of the business. As well as analysing and incorporating these factors, the team will also engage with company management on issues identified within the preliminary analysis. The aim of this is to understand how material the issues are, how they are changing, and whether this dynamic is reflected in the price of the bond. Team has introduced a review process, which looks at the overall profile of the fund on both absolute and relative levels to ensure the portfolio as a whole is not taking any undue ESG risk.
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