OAAAX
Invesco Active Allocation-A
Strategic Asset Allocation for Growth and Income
The Invesco Active Allocation-A fund (OAAAX) is designed to achieve long-term capital growth with a secondary focus on current income. This balanced aggressive fund strategically allocates its assets across various classes, with a significant emphasis on U.S. equities, which constitute 40% of the portfolio. Additionally, the fund dedicates 20% to fixed income and another 20% to tactical allocation components, allowing for flexibility in response to market conditions. This diversified approach aims to balance risk and reward, making it suitable for investors seeking both growth and income. The fund’s asset allocation strategy is particularly appealing to those looking to capitalize on U.S. market opportunities while maintaining a degree of income stability.
At A Glance
Executive Summary
OAAAX offers a balanced aggressive strategy with a 0.98% expense ratio, focusing on U.S. equities and tactical allocations for growth and income.
Pros:
- Balanced aggressive strategy for growth and income; Diversified asset allocation; Strong U.S. equity focus.
Cons:
- Higher expense ratio compared to peers; Negative alpha and Sharpe ratio; Recent underperformance against benchmark.
Performance Analysis: Navigating Market Volatility
OAAAX has demonstrated a mixed performance over recent years, with a notable 21.80% return over the past year, yet it trails its benchmark, the S&P 500 Total Return Index, which posted a 37.62% return. The fund’s annualized returns over five and ten years stand at 6.46% and 6.16%, respectively, indicating moderate long-term growth. However, the fund’s negative alpha of -15.86% and Sharpe ratio of -1.60 suggest challenges in risk-adjusted performance. Despite these metrics, the fund’s beta of 0.71 indicates lower volatility compared to the market, which may appeal to investors seeking a less volatile investment option in a balanced aggressive category.
Portfolio Composition: A Diverse Mix of Holdings
The fund’s portfolio is a well-rounded mix of equities and bonds, with top holdings including the Invesco Russell 1000® Dynamic Mltfct ETF (OMFL) and Invesco NASDAQ 100 ETF (QQQM), which together account for over 24% of the portfolio. The fund also holds significant positions in the Invesco Core Bond R6 (OPBIX) and Invesco S&P 500® Pure Value ETF (RPV), reflecting its balanced approach. Sector-wise, technology leads with a 24.13% allocation, followed by financials and industrials. This diverse sector allocation supports the fund’s strategy of capturing growth across various economic segments, providing a robust foundation for potential capital appreciation.
Comparative Analysis: Standing Among Peers
When compared to similar funds, OAAAX presents a competitive profile with its balanced aggressive strategy. While its expense ratio of 0.98% is higher than some peers like BlackRock 60/40 Target Allocation-InvA (BAGPX) at 0.63%, it offers a unique asset allocation that may justify the cost for certain investors. The fund’s yield of 1.56% is competitive, though slightly lower than some peers like Pioneer Balanced ESG-A (AOBLX) at 1.99%. Despite its recent underperformance relative to the benchmark, OAAAX’s strategic focus on U.S. equities and tactical allocations provides a distinct investment proposition for those seeking a blend of growth and income.
Risk Metrics: Understanding the Fund’s Volatility
OAAAX’s risk metrics reveal a nuanced picture of its volatility and performance potential. With a beta of 0.71, the fund exhibits lower volatility compared to the broader market, which can be attractive to investors wary of market swings. However, the negative alpha of -15.86% and a Treynor ratio of -22.48 highlight challenges in delivering risk-adjusted returns. The fund’s standard deviation of 2.86% and downside risk of 1.63% suggest moderate risk levels, while the max drawdown of -5.8% indicates resilience during market downturns. These metrics are crucial for investors to consider when evaluating the fund’s suitability for their risk tolerance and investment goals.
Sector and Market Cap Allocation: Targeting Growth Opportunities
The fund’s sector allocation is heavily weighted towards technology, which comprises 24.13% of the portfolio, reflecting a strategic focus on growth sectors. Financials and industrials also feature prominently, indicating a balanced approach to sector exposure. In terms of market capitalization, the fund favors extra-large and medium-cap stocks, which together account for over 44% of the portfolio. This allocation strategy aims to capture growth opportunities across different market segments, providing a diversified exposure that can enhance the fund’s potential for capital appreciation. Investors interested in technology and large-cap growth may find this fund particularly appealing.
Expense Ratio and Yield: Balancing Costs and Returns
OAAAX’s expense ratio of 0.98% is a critical consideration for investors, as it is higher than some of its peers. This cost may be offset by the fund’s strategic asset allocation and potential for growth, but it remains a factor for cost-conscious investors. The fund’s yield of 1.56% offers a modest income stream, which can be attractive for those seeking regular income alongside capital growth. While the yield is competitive, investors should weigh it against the fund’s overall performance and expense ratio to determine its value proposition. For those prioritizing income, comparing the yield with similar funds may provide additional insights.
Conclusion: Is OAAAX the Right Fit for Your Portfolio?
Invesco Active Allocation-A (OAAAX) stands out with its balanced aggressive strategy, offering a blend of growth and income through diversified asset allocation. While the fund has faced challenges in risk-adjusted performance, its strategic focus on U.S. equities and tactical allocations provides a unique investment opportunity. The fund’s higher expense ratio and recent underperformance against the benchmark may deter some investors, but its lower volatility and sector diversification could appeal to those seeking a balanced approach. Ultimately, OAAAX is well-suited for investors looking for a diversified growth fund with a focus on U.S. market opportunities and a moderate income stream.
Similar Securities
TRSGX: TRPrice Spectrum Moderate Growth | Balanced Aggressive Fund
TRSGX offers a balanced aggressive approach with 80% equity, 20% bonds, and a 0.78% expense ratio, ideal for growth-focused investors.
PAEAX: Putnam Dynamic AssetAlloc Growth-A | Balanced Aggressive Growth Fund
PAEAX offers a balanced aggressive growth strategy with a 1.05% expense ratio and 30.73% 1-year return, focusing on equities and fixed income.
SCGRX: Franklin Multi-Asset Moderate Growth-A | Balanced Aggressive Growth Fund
SCGRX offers a balanced aggressive strategy with a focus on large-cap funds, providing diversified growth potential with a 1.12% expense ratio.
OAAAX: Invesco Active Allocation-A | Balanced Aggressive Growth Fund
OAAAX offers a balanced aggressive strategy with a 0.98% expense ratio, focusing on U.S. equities and tactical allocations for growth and income.
BAAPX: BlackRock 80/20 Target Allocation-A | Aggressive Growth Fund
BAAPX offers aggressive growth with a 0.65% expense ratio, focusing on equity securities for high-risk investors.
Futher Reading
https://finance.yahoo.com/quote/OAAAX/”>Yahoo: Invesco Active Allocation-A
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