LCEAX
Invesco Diversified Dividend-A
Introduction to Invesco Diversified Dividend-A
The Invesco Diversified Dividend-A (LCEAX) is a mutual fund designed to provide long-term growth of capital by investing primarily in equity securities. These securities are selected from companies with market capitalizations within the range of those represented in the Russell 1000 index. As a Large Cap Value fund, LCEAX focuses on equity-income, making it an attractive option for investors seeking conservative growth through dividends and capital appreciation. Managed by Invesco, a reputable name in the investment industry, this fund offers a diversified portfolio with a strategic emphasis on value stocks, aiming to deliver consistent returns over time.
At A Glance
Executive Summary
LCEAX offers a diversified large-cap value portfolio with a 1.48% yield and a focus on equity-income, suitable for conservative growth investors.
Focus on large-cap value stocks Equity-income objective Diversified sector allocation
Higher expense ratio than peers Negative alpha and Sharpe ratio Limited upside potential
Performance Analysis: A Year of Strong Returns
In the past year, LCEAX has delivered an impressive 28.66% return, showcasing its potential for strong performance in favorable market conditions. This is particularly notable when compared to its benchmark, the S&P 500 Total Return Index, which achieved a 37.62% return over the same period. While LCEAX’s performance slightly lags behind the benchmark, it remains competitive within its category, especially considering its focus on large-cap value stocks. The fund’s annualized returns over five and ten years stand at 9.13% and 8.25%, respectively, indicating a solid track record of growth. However, investors should be mindful of the fund’s negative alpha of -9.00%, which suggests that it has underperformed relative to its expected returns based on its beta.
Portfolio Composition: A Diverse Mix of Sectors
LCEAX boasts a well-diversified portfolio with significant allocations across various sectors. The fund’s largest sector allocation is in Financials, comprising 19.76% of the portfolio, followed by Health Care at 16.87% and Industrials at 14.06%. This diverse sector allocation helps mitigate risk and provides exposure to different areas of the economy, enhancing the fund’s potential for stable returns. Notably, the fund’s top holdings include prominent companies such as UnitedHealth Group Inc, Walmart Inc, and JPMorgan Chase & Co, each contributing to the fund’s overall stability and growth potential. The strategic selection of these holdings reflects the fund’s commitment to investing in high-quality, large-cap value stocks.
Risk Metrics: Understanding the Fund’s Volatility
LCEAX exhibits a relatively low beta of 0.69, indicating that it is less volatile than the broader market. This lower volatility can be appealing to risk-averse investors seeking stability in their portfolios. However, the fund’s Sharpe ratio of -0.89 and Treynor ratio of -12.97 highlight some concerns regarding its risk-adjusted returns. These negative ratios suggest that the fund has not been able to adequately compensate investors for the risks taken. Additionally, the fund’s standard deviation of 2.93% and downside risk of 1.58% further emphasize the need for investors to carefully consider their risk tolerance before investing in LCEAX.
Expense Ratio: A Consideration for Cost-Conscious Investors
With an expense ratio of 0.82%, LCEAX is positioned slightly higher than some of its peers in the Large Cap Value category. While this expense ratio is not exorbitant, cost-conscious investors may want to compare it with similar funds to ensure they are getting the best value for their investment. For instance, similar funds like Janus Henderson Growth & Income-A (JDNAX) and Bright Rock Quality LargeCap-Inst (BQLCX) offer lower expense ratios of 0.0101% and 0.0089%, respectively. Despite the higher expense ratio, LCEAX’s focus on equity-income and its diversified portfolio may justify the cost for investors seeking a balanced approach to growth and income.
Comparative Analysis: How LCEAX Stacks Up Against Peers
When compared to similar funds, LCEAX holds its ground with a strong 1-year return of 28.66%. However, it faces stiff competition from funds like Glenmede Strategic Equity (GTCEX), which posted a 28.43% return, and Bright Rock Quality LargeCap-Inst (BQLCX) with a 26.88% return. While LCEAX’s yield of 1.48% is higher than some peers, its expense ratio is also higher, which could be a deciding factor for some investors. Additionally, LCEAX’s beta of 0.69 is lower than that of its peers, indicating less volatility, which may appeal to conservative investors. Overall, LCEAX offers a competitive option for those prioritizing income and stability over aggressive growth.
Investor Suitability: Who Should Consider LCEAX?
LCEAX is particularly well-suited for investors seeking a combination of income and conservative growth. Its focus on large-cap value stocks and equity-income makes it an ideal choice for those looking to balance risk and reward in their portfolios. The fund’s diversified sector allocation and lower volatility appeal to risk-averse investors who prioritize stability. However, potential investors should be aware of the fund’s higher expense ratio and negative risk-adjusted return metrics, which may not align with all investment goals. Overall, LCEAX is a compelling option for those seeking a steady income stream and moderate capital appreciation.
Conclusion: The Value Proposition of LCEAX
In conclusion, the Invesco Diversified Dividend-A (LCEAX) offers a unique blend of income and growth through its focus on large-cap value stocks. With a diversified portfolio and a strategic emphasis on equity-income, the fund provides a stable investment option for conservative investors. While its expense ratio is higher than some peers, the fund’s lower volatility and competitive yield make it an attractive choice for those seeking a balanced approach to investing. Investors should carefully consider their risk tolerance and investment objectives when evaluating LCEAX, as it offers a compelling opportunity for those prioritizing income and stability in their portfolios.
Similar Securities
CFLGX: ClearBridge Tactical Dividend Income-A | High Income Large Cap Value Fund
CFLGX offers a 3.10% yield with a focus on large-cap value stocks, providing high current income and capital appreciation potential.
AMRMX: American Funds American Mutual-A | Growth and Income with Sustainable Dividends
AMRMX offers a balanced approach with a 0.59% expense ratio, focusing on sustainable dividends and large-cap value stocks for growth and income.
TQMVX: TRPrice Integrated US LgCap Value Eq-Inv | Value-Focused Growth Fund
TQMVX offers growth via undervalued large-cap stocks with a 0.72% expense ratio, focusing on U.S. equities for value-driven investors.
ACSTX: Invesco Comstock-A | Value Investing for Growth and Income
ACSTX offers value investing in large-cap stocks with a focus on growth and income, featuring a competitive expense ratio and diversified holdings.
JIDVX: Janus Henderson US Dividend Income-I | Dividend-Focused Equity Fund
JIDVX offers a 1.91% yield with a focus on U.S. dividend-paying equities, maintaining a competitive 0.79% expense ratio.
Futher Reading
https://finance.yahoo.com/quote/LCEAX/”>Yahoo: Invesco Diversified Dividend-A
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