Invesco launches new strategy

Invesco's Global Asset Allocation Group has launched the Premia Plus strategy, an alternative beta strategy that seeks to capture risk premia.

The company said it recently won new mandates to fund the strategy which will concentrate on generating returns in any economic environment. The key to the strategy is a proprietary risk management and re-balancing technique which Invesco said could generate equity-like returns with bond-like risk.

The strategy is being marketed to institutional investors as an alternative to certain traditional hedge fund and fund of hedge fund strategies. It is available as a separately managed account, with a minimum investment of $25 million, or as a traditional fund structure with a minimum subscription of $500,000.

The strategy invests in a balanced set of asset classes: equities, government bonds and commodities. The weights of the asset classes are set so each contributes a similar amount of risk to the overall portfolio. This helps to defend the whole portfolio against negative economic outcomes.

Premia Plus targets a return of cash plus 6% with total volatility of 8%. The strategy uses a long-only implementation that can be used as a stand-alone investment or combined with other alpha or beta strategies, similar to fund of hedge funds.

"The essence of the product is efficiently capturing risk premia, the excess return that investors receive for owning risky assets, above the cash return," said Scott Wolle, chief investment office of Invesco Global Asset Allocation.

"Unlike many other products that target a similar return profile, Premia Plus is very competitively priced, has daily valuation, no lock-up, and high transparency."

The strategy has about $275 million in assets under management.