Invesco panel addresses portfolio diversification and alternative investment strategies

Capitalizing on globalization and opportunities in Texas-based energy, real estate cited as key driver

Jun 05, 2014, 12:48 ET from Invesco

HOUSTON, June 5, 2014 /PRNewswire/ -- Texas-based financial advisors and institutional clients learned about a variety of ways to diversify client portfolios from some of Invesco's senior investment professionals during a panel discussion Wednesday at the firm's Houston office. 

Focusing on opportunities in alternative investing, the panel discussed a number of ways they are leveraging global market dynamics, including the burgeoning economic growth in Texas, through non-traditional stock/bond investments and investing strategies. Alternative investing is one way to broaden portfolio diversification to help reduce risk and potentially increase returns.

"Alternative investing has become quite topical. There's nothing new about it, but post financial crisis it seems to have taken on a new life," said Marty Flanagan, president and CEO of Invesco Ltd., who served as the panel's moderator. "So many of our clients are looking for ways to lower volatility, protect capital, while at the same time increase income." 

Also participating on the panel were David Millar, head of Multi Asset Investment for Invesco Perpetual; Scott Dennis, managing director and CEO of Dallas-based Invesco Real Estate; and Stephen Toy, senior managing director and co-head of WL Ross & Co. LLC, Invesco's private equity affiliate.

While all the panellists agreed opportunities abound in developing Asia and Europe, there's no mistaking Texas provides a key driver to alternative investing opportunities through real estate and energy.

"Economic fundamentals have a direct impact on real estate," Mr. Dennis said. "The Houston economy is benefitting from the boom in the energy sector, which is having a positive effect on real estate performance. Anecdotally, we manage $34 billion* in direct real estate worldwide and two of our top performing assets are in Houston, Texas."

Employment growth is one factor that drives real estate demand and, as such, is a component of how his teams devise investment strategies. Mr. Dennis again pointed to Houston as an example, namely its leadership position in energy as home or hub to several of the sector's largest companies.

Yet, the energy sector has more compelling investment attributes than simply through its influences on real estate, and encompasses more than just Houston.

"We're always looking for the most compelling risk/return profile," Mr. Toy said. "One of the largest opportunities we see, globally, is the energy space here in the US. We think it's a fantastic place to be now."

Among the key components of the energy sector, Mr. Toy is captivated by the advancement in shale, a type of fine-grained rock that can contain trapped oil and natural gas.

"When we think about energy, we think shale is here to stay," Mr. Toy said. "The shale revolution is really only 7-8 years old, even though the technology has been around a bit longer. As we think through that, there's been a tectonic change in terms of what natural gas has done. It's created a new paradigm in terms of manufacturing in the US. It's sprung a renaissance in terms of the chemicals industry. It's driving infrastructure spend.

"I think the impacts to ultimately come out of shale are still unforeseen. The parallel we draw to it at WL Ross is the Internet revolution. The analogy I like to use is, Who thought when you sent out your first email you would put Circuit City out of business? Now that's a bit of hyperbole in that they may not be directly related, but in essence they are in that you had one technology revolution create a whole new paradigm in terms of retailing and in terms of real estate. Big box real estate, strip malls, traditional malls all being transformed by the Internet. We think energy is going to do the same thing."

Like Invesco Real Estate, WL Ross & Co. has found attractive investments throughout Texas, including buying three building materials businesses benefiting from energy-related growth in the Permian Basin.

Mr. Millar and his team take a broad view of the investing landscape and input from the various investment teams around Invesco in an effort to generate positive returns for clients, regardless of the market or economic environment.

"We're looking across geographies, across asset classes, across currencies and across sectors for good, long-term investment ideas," Mr. Millar said.

About Invesco Ltd.
Invesco Ltd. is a leading independent global investment management firm, 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 clients around the world. Operating in more than 20 countries, the firm is listed on the New York Stock Exchange under the symbol IVZ. Additional information is available at

Invesco Perpetual and WL Ross & Co. LLC are indirect, wholly owned subsidiaries of Invesco Ltd.


About Risk

Alternative products typically hold more non-traditional investments and employ more complex trading strategies, including hedging and leveraging through derivatives, short selling and opportunistic strategies that change with market conditions. Investors considering alternatives should be aware of their unique characteristics and additional risks from the strategies they use. Like all investments, performance will fluctuate. You can lose money.

Businesses in the energy sector may be adversely affected by foreign, federal or state regulations governing energy production, distribution and sale as well as supply-and-demand for energy resources. Short-term fluctuations in energy prices may cause price fluctuations in an energy fund's shares.

Investments in real estate related instruments may be affected by economic, legal, or environmental factors that affect property values, rents or occupancies of real estate. Real estate companies, including REITs or similar structures, tend to be small and mid-cap companies and their shares may be more volatile and less liquid.

Investments concentrated in a comparatively narrow segment of the economy may be more volatile than non-concentrated investments.

Note: Diversification does not guarantee a profit or eliminate the loss of risk.

*As of March 31, 2014

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SOURCE Invesco