ABRCX
Invesco Balanced-Risk Allocation-C
Strategic Diversification Across Asset Classes
The Invesco Balanced-Risk Allocation-C fund (ABRCX) is designed to provide total return with a low to moderate correlation to traditional financial market indices. This tactical fund invests in a diverse range of asset classes, including U.S. and international fixed income, equity, and commodity markets. The fund’s strategic diversification is evident in its asset class allocation, which includes 125.52% in bonds, 20.12% in non-U.S. equity, and 13.13% in U.S. equity. This broad exposure aims to mitigate risk and enhance returns by capitalizing on various market opportunities. The fund’s unique approach to asset allocation makes it an attractive option for investors seeking a balanced risk-return profile.
At A Glance
Executive Summary
ABRCX offers tactical growth and income with a diverse asset mix, but high expense ratio and negative alpha may concern some investors.
Diverse asset exposure across equities, bonds, and commodities. Tactical allocation strategy for growth and income. Suitable for risk-tolerant investors.
High expense ratio of 2.13%. Negative alpha indicating underperformance. High downside risk with a Sharpe Ratio of -2.28.
Performance Analysis: A Mixed Bag
ABRCX has shown a mixed performance over different time horizons. The fund’s one-year return stands at 9.73%, which is commendable given the volatile market conditions. However, its three-year annualized return is -3.22%, indicating challenges in maintaining consistent performance. Over a five-year period, the fund has achieved a modest return of 2.01%, while its inception return is 4.72%. Despite these figures, the fund’s performance lags behind its benchmark, the MSCI ACWI DivAdj Index, which posted a one-year return of 30.11%. This discrepancy highlights the fund’s struggle to outperform its benchmark, raising questions about its tactical allocation strategy’s effectiveness.
Risk Metrics: Navigating Volatility
The risk metrics for ABRCX reveal a complex picture. The fund has a beta of 0.67, indicating lower volatility compared to the market. However, its alpha is -20.42%, suggesting significant underperformance relative to its benchmark. The Sharpe Ratio of -2.28 and Treynor Ratio of -30.58 further underscore the fund’s challenges in delivering risk-adjusted returns. The standard deviation of 2.58% reflects moderate volatility, while the downside risk (UI) is 2.00, indicating potential losses in adverse market conditions. These metrics suggest that while the fund aims to manage risk through diversification, it faces difficulties in achieving positive risk-adjusted returns.
Expense Ratio: A Considerable Cost
One of the notable aspects of ABRCX is its high expense ratio of 2.13%. This is significantly higher than many of its peers, which could be a deterrent for cost-conscious investors. The high expense ratio can erode returns over time, especially in a low-return environment. Investors should weigh the potential benefits of the fund’s tactical allocation strategy against the cost of investing in it. While the fund offers a unique approach to diversification and risk management, the high expenses may offset some of the advantages, making it crucial for investors to consider whether the potential returns justify the costs.
Comparative Analysis: Standing Among Peers
When compared to similar funds, ABRCX presents a mixed competitive position. For instance, North Square Tactical Defensive-A (ETFRX) and Dunham Dynamic Macro-C (DCAVX) have lower expense ratios of 0.0205 and 0.0281, respectively, and offer competitive one-year returns of 16.04% and 15.40%. In contrast, ABRCX’s one-year return of 9.73% is lower, and its expense ratio is significantly higher. Additionally, ABRCX’s beta of 0.67 is higher than some peers, indicating relatively higher volatility. These comparisons suggest that while ABRCX offers a unique tactical approach, investors may find more cost-effective and better-performing alternatives in the market.
Sector and Geographic Allocation: A Global Perspective
ABRCX’s sector and geographic allocation reflect its global investment strategy. The fund has significant exposure to the financial (19.59%) and technology (19.32%) sectors, which are pivotal in driving growth. Additionally, the fund’s bond sector allocation is heavily weighted towards government bonds (64.02%), providing stability and income. The geographic diversification includes investments in Australian, Japanese, Canadian, and European bonds, as well as emerging markets equities. This global perspective allows the fund to tap into diverse economic cycles and growth opportunities, enhancing its potential for total return. However, investors should be aware of the geopolitical and currency risks associated with international investments.
Max Drawdown and Recovery: Resilience in Adversity
The fund’s max drawdown of -5.9% highlights its resilience during market downturns. The drawdown length and recovery length of just one month each indicate the fund’s ability to quickly rebound from losses. This resilience is a testament to the fund’s tactical allocation strategy, which aims to minimize losses during adverse market conditions. By investing in a mix of equities, bonds, and commodities, the fund can adjust its exposure based on market trends, potentially reducing the impact of market volatility. This feature may appeal to investors seeking a fund that can withstand market fluctuations while pursuing growth and income.
Conclusion: A Tactical Choice for Risk-Tolerant Investors
In conclusion, the Invesco Balanced-Risk Allocation-C fund (ABRCX) offers a unique tactical approach to growth and income through its diversified asset allocation. While the fund provides exposure to a wide range of asset classes and markets, its high expense ratio and negative alpha may concern some investors. The fund’s performance has been inconsistent, and it faces challenges in delivering positive risk-adjusted returns. However, its resilience during market downturns and global investment strategy make it a suitable choice for risk-tolerant investors seeking diversification and potential growth. Investors should carefully consider their risk tolerance and investment goals before adding ABRCX to their portfolio.
Similar Securities
ABRCX: Invesco Balanced-Risk Allocation-C | Tactical Growth and Income Fund
ABRCX offers tactical growth and income with a diverse asset mix, but high expense ratio and negative alpha may concern some investors.
Futher Reading
https://finance.yahoo.com/quote/ABRCX/”>Yahoo: Invesco Balanced-Risk Allocation-C
https://ftcloud.fasttrack.net/web/chart/ABRCX
Disclaimer: The information provided on this website is for informational purposes only and should not be construed as financial, investment, or other professional advice. PeepFinance does not endorse or recommend any specific securities, investments, or strategies. The opinions expressed are solely those of the authors and are not intended to be used as the basis for any investment decisions. All investments carry risks, and readers are encouraged to conduct their own research or consult with a financial professional before making any financial decisions. PeepFinance and its authors are not responsible for any losses or damages arising from the use of this information.