ACEHX
Invesco Exchange
Introduction to Invesco Exchange
Invesco Exchange (ACEHX) is a mutual fund designed to achieve long-term growth with a secondary focus on current income. As a Large Cap Value fund, it primarily invests in common stocks and convertible securities, targeting companies with strong fundamentals and potential for appreciation. Managed by Invesco, a reputable name in the investment industry, ACEHX aims to provide investors with exposure to large-cap stocks that are considered undervalued by the market. The fund’s strategy is to capitalize on the growth potential of these stocks while also generating income through dividends, making it an attractive option for investors seeking a blend of growth and income.
At A Glance
Executive Summary
ACEHX offers high yield but with extreme volatility and significant drawdowns, making it suitable for risk-tolerant investors.
High yield of 340.86%. Focus on large cap value stocks. Potential for growth with current income.
Extremely high volatility and risk. Significant historical drawdowns. Negative annualized returns.
High Yield Potential
One of the standout features of ACEHX is its exceptionally high yield of 340.86%, which is significantly above the average for its category. This high yield is a result of the fund’s strategic focus on dividend-paying stocks within the large-cap value segment. Investors looking for income generation will find this aspect particularly appealing, as it provides a substantial return on investment through dividends. However, it’s important to note that such high yields often come with increased risk, as evidenced by the fund’s volatility metrics. Therefore, while the yield is attractive, potential investors should weigh this against the associated risks.
Volatility and Risk Assessment
ACEHX exhibits a high level of volatility, as indicated by its risk metrics. With a standard deviation of 40.97% and a beta of -2.48, the fund is subject to significant price fluctuations, which can be unsettling for risk-averse investors. The negative alpha of -136.37% suggests that the fund has underperformed its benchmark, the S&P 500 Total Return Index, on a risk-adjusted basis. Additionally, the fund’s correlation with the benchmark is -21.55%, indicating a lack of alignment with broader market movements. These factors contribute to the fund’s high-risk profile, making it suitable only for investors with a high tolerance for risk.
Performance Challenges and Drawdowns
The performance of ACEHX has been challenging, with significant drawdowns impacting its returns. The fund’s max drawdown of -99.4% highlights the extent of its losses, with a peak date of October 3, 2024, and a valley date of November 12, 2024. This indicates a rapid decline in value over a short period, which can be concerning for investors. The fund’s annualized returns further reflect these challenges, with a one-year return of -98.71% and a five-year return of -57.34%. Such performance metrics underscore the importance of understanding the fund’s risk and volatility before investing.
Portfolio Composition and Sector Allocation
ACEHX’s portfolio is heavily weighted towards certain sectors, with a notable emphasis on Basic Materials (24.29%) and Energy (20.81%). This sector allocation reflects the fund’s strategy of investing in industries that are often considered undervalued but have the potential for growth. The top holdings include Air Products & Chemicals Inc and McCormick & Co Inc, which together account for a significant portion of the portfolio. The fund’s focus on large-cap stocks is evident, with 42.16% of its assets in large-cap companies. This strategic allocation aims to balance growth potential with income generation, although it also contributes to the fund’s volatility.
Comparison with Similar Funds
When compared to similar funds, ACEHX presents a unique profile. While its yield is significantly higher than peers like Fairholme (FAIRX) and Baron Partners-Retail (BPTRX), its performance metrics are less favorable. For instance, FAIRX has a one-year return of 6.94% with a much lower expense ratio of 0.01%, while BPTRX boasts a 30.54% return. These comparisons highlight ACEHX’s high-risk, high-reward nature. Investors considering ACEHX should weigh its high yield against the more stable returns and lower risk profiles of its peers, depending on their investment goals and risk tolerance.
Expense Ratio and Cost Considerations
ACEHX has an expense ratio of 0.57%, which is relatively moderate within its category. While not the lowest, it is competitive, especially given the fund’s high yield potential. Investors should consider this expense ratio in the context of the fund’s overall performance and risk profile. A higher expense ratio can erode returns over time, particularly if the fund’s performance does not meet expectations. Therefore, while the expense ratio is not prohibitive, it is an important factor for investors to consider, especially when comparing ACEHX to other funds with lower costs and potentially more stable returns.
Conclusion: Suitability for Investors
In conclusion, Invesco Exchange (ACEHX) offers a unique investment opportunity with its high yield and focus on large-cap value stocks. However, its high volatility and significant drawdowns make it suitable primarily for investors with a high risk tolerance. Those seeking income generation and potential growth may find the fund appealing, but should be prepared for the associated risks. Investors should carefully consider their investment objectives and risk appetite before committing to ACEHX, and may want to explore similar funds with more stable performance if they prefer a lower-risk investment.
Similar Securities
MADVX: BlackRock Equity Dividend-Inst | High-Yield Large Cap Value Fund
MADVX offers a 2.34% yield with a focus on dividend-paying large-cap stocks, underperforming its benchmark but providing stable income.
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.
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.
TILCX: TRPrice LargeCap Value-I | Undervalued Large-Cap Growth
TILCX offers undervalued large-cap exposure with a 0.57% expense ratio, focusing on growth and income.
LBISX: BrandywineGLOBAL Dvrsf US LargeCp Val-IS | Undervalued Large-Cap Growth
LBISX offers undervalued large-cap equity exposure with a competitive 0.71% expense ratio, focusing on growth potential in out-of-favor stocks.
Futher Reading
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