Invesco Balanced-Risk Allocation Fund Reaches Risk-Parity Milestone

Mar 22, 2011, 09:35 ET from Invesco

HOUSTON, March 22, 2011 /PRNewswire/ -- As advisors look for prudent ways to manage risk in their clients' portfolios, Invesco announced today that assets in Invesco Balanced-Risk Allocation Fund (Ticker: ABRZX) have reached $1 billion.

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Relative to traditional balanced portfolios, the Invesco Balanced-Risk Allocation Fund seeks to provide greater capital loss protection during down markets through its proprietary long-only, investment process. The fund invests in derivatives and other financially linked instruments to provide leveraged exposure to certain U.S. and international equity, fixed-income and commodity markets.

"Reaching this milestone speaks to how our clients are embracing this innovative and workable solution for providing investors the potential for greater risk management in their portfolios," said Philip Taylor, Senior Managing Director of Invesco and Head of Invesco's North American Retail business.

Lead manager Scott Wolle, CIO of Invesco Global Asset Allocation, and his team provide low-cost access to strategic asset allocation as they manage the risk-parity fund so shareholders own assets that Invesco believes cover all three major types of economic environments – recessionary, non-inflationary growth, and inflationary growth. The ultimate goal of this approach is to provide total return with a low to moderate correlation to traditional financial market indices.

"As we carefully analyze the economy, we actively adjust portfolio positions to reflect the near-term market environment while remaining consistent with the optimized long-term portfolio structure described in the fund prospectus," Wolle said. "At this time, the portfolio is overweight equities and commodities with a neutral bond allocation. This positioning reflects a constructive economic outlook, along with the recognition of further upside price risk for commodities."

The management team balances these two competing ideas – opportunity for excess return from active positioning and the need to maintain asset class exposure set forth in the optimized portfolio structure – by setting controlled tactical ranges around the long-term asset allocation. The tactical ranges differ for each asset based on the management team's estimates of volatility.

Risks of Investing in Invesco Balanced-Risk Allocation Fund

Derivatives – The fund may use derivatives as a substitute for purchasing the underlying asset or as a hedge in an effort to reduce exposure to risks. Use of derivatives involves risks similar to, as well as risks different from, and possibly greater than, the risks associated with investing directly in securities or more traditional instruments. Derivatives may also be more difficult to purchase or sell or value than other investments and is subject to counterparty risk – the risk that the other party will not complete the transaction with the fund. A fund investing in a derivative could lose more than the cash amount invested.

Leverage – The fund may use enhanced investment techniques such as leverage.  Leveraging entail risks such as magnifying changes in the value (both positive and negative) of the portfolio's securities.

Interest Rate Risk – Interest rate risk refers to the risk that bond prices generally fall as interest rate rise and vice versa.

Credit Risk – Credit risk is the risk of loss on an investment due to the deterioration of an issuer's financial health. Such deterioration may lead to the issuer's inability to honor its contractual obligation, include timely payments of interest and principal.

Foreign & Developing Markets Securities Risk – Foreign and Developing Markets securities have additional risks, including exchange rate changes, political and economic upheaval, relative lack of information, relatively low market liquidity, and the potential lack of strict financial and accounting controls and standards.

Commodity Risk – The fund or the Subsidiary may invest in commodity-linked derivative instruments that may be subject to greater volatility than investments in traditional securities.

Subsidiary Risk – The fund is indirectly exposed to the risks associated with the Subsidiary's investments. The Subsidiary is not registered under the 1940 Act is may not be subject to all the investor protections under the Act. Accordingly, the fund will not have all the protections offered to investors in registered investment companies.

Currency/Exchange Rate Risk – The fund is subject to currency/exchange rate risk because it may buy or sell currencies other than the U.S. dollar.

Limited Number of Holdings/Non-Diversification Risk – The value of the fund's shares may be subject to greater volatility, market, and credit risk. Because a large percentage of the fund's assets may be invested in a limited number of holdings, a change in value of these holdings could significantly affect the value of your investments in the fund.

Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the fund(s), investors should ask their advisers for a prospectus/summary prospectus.

About Invesco

Invesco is a leading independent global investment manager, dedicated to helping investors worldwide achieve their financial objectives. By delivering the combined power of our distinctive investment management capabilities, Invesco provides a wide range of investment strategies and vehicles to our retail, institutional and high net worth clients around the world. Operating in more than 20 countries, the company is listed on the New York Stock Exchange under the symbol IVZ. Additional information is available at

Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the U.S. distributor for Invesco Ltd.'s retail mutual funds, exchange-traded funds and institutional money market funds and the subdistributor for its STIC Global Funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.

Invesco Distributors, Inc.

SOURCE Invesco