Protect wealth with Invesco Perpetual Global Targeted Returns

JPM Global Macro Opportunities Fund (GB00B4WKYF80) has largely delivered on these objectives but one of its managers, Talib Sheikh, is leaving (see funds news). While a manager leaving is not necessarily a reason to sell your existing holding in a fund, you may not want to put new money into a fund where manager changes are taking place. So a good alternative could be Invesco Perpetual Global Targeted Returns (GB00BJ04HL49).

This fund targets a 5 per cent gross return per year above UK three-month Libor over a rolling, three-year period. It looks to achieve this with a volatility less than half that of global equities over the same rolling, three-year period. The fund's annualised three-year volatility at the end of December 2017 was 3.37 per cent in contrast to 11.35 per cent for MSCI World index over the same period.

The fund made positive returns in 2014, 2015, 2016 and 2017. It also has a reasonable ongoing charge of 0.82 per cent and, unlike some wealth preservation funds, no performance fee.

Invesco Perpetual Global Targeted Returns' managers Dave Jubb, David Millar and Richard Batty are highly experienced – they were part of the team that used to run Standard Life Global Absolute Return Strategies (GB00B7K3T226) when that fund was doing well.

They use a similar investment strategy to the approach they developed while running Standard Life GARS. They believe broad diversification is the key to mitigating risk so Invesco Perpetual Global Targeted Returns has more than 1,000 underlying positions. The fund is invested across a range of asset classes including equities, bonds and currencies, and uses various financial instruments including derivatives.

Its managers take what they call an ideas-based approach whereby every position has to be justified by an economic theme that fits with their macroeconomic theories. The fund can have exposure to up to 50 ideas at any one time, although typically this is between 20 and 30. Every idea has to work alongside the other ideas the fund has exposure to, and offer a positive return on a two- to three-year basis.

Although derivatives can help to mitigate downside they also add another form of risk as they result in the fund being leveraged, and this could lead to large fluctuations in its value. And there is no guarantee that Invesco Perpetual Global Targeted Returns will achieve positive returns or its target level of volatility.

However, since launch the fund's managers have navigated markets well, producing consistent positive returns, something they also achieved while running Standard Life GARS.

And Jason Hollands, managing director at Tilney Group, says: "Targeted Absolute Return funds are not a panacea guaranteed to avoid losses. And their returns may be much more modest than what stock markets deliver in rising years. But Targeted Absolute Return funds should provide the scope for less erratic returns than traditional funds investing in the equity and bond markets."

So, if you are looking for steady returns and downside mitigation in volatile markets, then Invesco Perpetual Global Targeted Returns' performance to date, and its managers' record on their previous fund, means it is worth consideration. Buy. EA.

Source: Morningstar as at 19/02/18, *Invesco Perpetual as at 31/10/17