The fund will be multi-asset in nature, drawing on the ideas of lead manager David Millar and co-managers Dave Jubb and Richard Batty. The trio, who have 60 years of experience between them, were on the GARS team prior to their appointment to Invesco Perpetual earlier this year.
Like the Standard Life fund, Invesco Perpetual Global Targeted Returns will sit in the IMA Targeted Absolute Return sector and will attempt to deliver a positive return over a rolling three-year period by investing in a number of asset classes.
Millar (pictured) says the team currently has "22 ideas" that it is investing in, which are expressed in a number of different ways: some are pure long plays, others market-neutral plays and some directional plays.
It will target a gross return of 5 per cent a year above UK 3month LIBOR with less than half the volatility of global equities. GARS has an almost identical objective, though its volatility target is more precise.
Working alongside Millar, Jubb and Batty will be product director Georgina Taylor, as well as risk manager Gwilym Satchell who will be responsible for ensuring the team's ideas do not expose investors to too much of one asset class. Satchell was also on the team at GARS.
Invesco Perpetual Global Targeted Returns will have ongoing charges of 1.6 per cent, which compares with GARS’ figure of 1.59 per cent. It requires a minimum lump sum of £500 and will be available across all major platforms.
Speaking exclusively to FE Trustnet, Millar said that the team will draw on the skillsets it learned during its time at Standard Life, though insists there are major differences between the two products.
"We believe that the way to achieve true diversification is to break away from the constraint of asset class labels and bring good investment ideas," he said. "We have 22 ideas at the moment, which can be expressed in a number of different ways."
"We will be drawing on the skills and techniques we learnt at Standard Life, but will be researching and sourcing them in a very different way."
Unlike the Standard Life fund, the team’s ideas will not be categorised, and will not go through a vigorous and rigid three-step process. Millar says that investment risk will be considered throughout the entire process rather than being considered at a set time, which is currently the case in GARS.
"We’ve trying to avoid labels," he continued. "We want to convey to clients a portfolio of good ideas, which when brought together become a good fund."
"Will there be directional and market-neutral trades in there? Yes. For example, we have an idea called ‘good tech, bad tech’, which consists of us buying the NASDAQ and selling the Taiwan index."
"However, we don’t want labels. I think you need to be as unconstrained as possible when running something like this."
"The same goes with risk – I don’t see it as a separate thing. It has to be embedded in the whole process."
To see exactly how Standard Life GARS operates, click here.
Again, unlike GARS, Invesco Perpetual Global Targeted Returns will use Invesco Perpetual to express its numerous ideas. At the moment it will use the OEICs available to the public, although Millar says when the fund gets bigger it may have to invest in segregated mandates.
He says the team’s ability to access the thoughts and ideas of Invesco Perpetual’s stable of highly rated fund managers, including FE Alpha Managers Neil Woodford, Mark Barnett and Paul Chesson, will be a major advantage.
"Part of the reason we came here was because we could access some of the foremost investment thinkers in the UK, and draw on their expertise," he said. "Having diversified alpha within the portfolio is an incredibly powerful thing, and gives it an added dimension of diversification."
"It will look, feel and smell like an Invesco Perpetual fund. For example, I’ve been using Stuart Parks’ [Invesco Asian Equity fund], and taking out a lot of the market exposure with futures."
"It was more index-based at Standard Life."
Invesco’s team of five is much smaller than GARS’, which totals well over 20 altogether. However, Millar does not see this as a problem.
"We are absolutely dedicated to the product – some multi-asset funds such as this are born out of a legacy insurance company and often teams have responsibilities for other things, but we are completely dedicated to this fund and nothing else," he said.
"One of the big reasons for coming here was the research capabilities and our ability to get ideas from some of the leading minds in the industry. But why add more people to the team? It’s crucial that we all understand what each other are thinking, which you can’t always get with a big team."
"I don’t think you can do this with 25 people and of course you can’t do it with one," he added.
Standard Life GARS has developed into one of the largest funds in the entire IMA unit trust and OEIC universe since it was launched into the UK retail market in May 2008.
It had a tough start, losing more than 10 per cent in the aftermath of the financial crisis, and has had a poor run of late, notably losing more than 5 per cent in the early summer equity/bond sell-off.
However, the fund is viewed as a success by the vast majority of industry commentators: FE data shows it has returned 37.92 per cent since May 2008, beating its benchmark, sector average and the global equity market. It has outperformed the MSCI AC World index with significantly less volatility over the period.
Performance of fund, sector and indices since launch
Source: FE Analytics
FE Research analyst Charles Younes confirmed the Invesco fund is a similar product to GARS and welcomes the added competition to the industry leader.
"It has the same return target and a very similar volatility target – GARS looks for a volatility of 4 to 8 per cent while the Invesco fund targets half of global equities, which is broadly the same thing."
"It will use different combinations in the same way that they use them at Standard Life, including market-neutral plays, directional plays and long plays as well. Obviously there will be differences, but it’s got a very similar style and aim."
"Of course we need to see a track record for the fund, but it’s good to see Invesco providing Standard Life with some competition. They’re under pressure at the moment what with the exit of [former head of multi-asset and macro investing] Euan Munro, and their difficult period during the sell-off in May and June."
Younes says one of Standard Life GARS’ biggest strengths is its dedicated risk team. For the Invesco product to compete, he says it will have to manage risk as effectively.
"Getting the themes and ideas is of course a challenge, but it’s putting them together which is the real challenge," he said. "This is where the risk team is all important."
Tim Cockerill, recently appointed investment director at Rowan Dartington, agrees with Younes and sees it as a good opportunity for Invesco Perpetual.
"Competition is always a good thing," he said. "I’ve never really used the GARS fund because I don’t think it’s entirely clear how it works and what the managers are buying."
He says that he hopes the fund is entirely transparent with what it is holding, which could give it an edge over its rival.
"The more transparency and education, the better," he said.
Cockerill agrees that investors should wait for the fund to have a track record before investing in it: "I’m never one for jumping in to a fund. I need to see how it works and performs before I invest."
Millar is confident the fund will be a huge success, however.
"I can’t show you all the various back-testing we’ve done, but I wish I could," he said.
Commenting on the launch, Nick Mustoe, chief investment officer at Invesco Perpetual, said: "As investors in the UK seek to grow their money without taking excessive levels of risk, there has been consistent demand for multi asset investing, but there are very few managers doing it well."
"At Invesco Perpetual, we have waited to find the right people, with the ability to create a market-leading product in response to this demand."
Ian Trevers, head of distribution at Invesco Perpetual, added: "These talented managers have a proven track record and capability in building risk-managed portfolios that deliver for clients."
"The fund will appeal to a broad range of investors; it could fit into an existing portfolio, where its broad diversification can dampen risk elsewhere, or form the core holding in a new one."
