SCAUX
Invesco Income Advantage US-A
Balancing Growth and Income with SCAUX
The Invesco Income Advantage US-A (SCAUX) fund is designed to provide investors with a blend of income and long-term capital growth. This fund primarily invests in equity securities and derivatives, ensuring that at least 80% of its net assets are allocated to these instruments. With a focus on both growth and income, SCAUX is particularly appealing to investors seeking a balanced approach to their portfolio. The fund’s strategy is to leverage the potential of equity markets while also providing a steady income stream, making it suitable for those who want to benefit from market upswings without sacrificing income potential.
At A Glance
Executive Summary
SCAUX offers a 6.11% yield with a focus on equity and derivatives, providing growth and income. Its 1-year return of 25.92% is competitive.
High yield of 6.11% for income-focused investors. Strong 1-year return of 25.92%. Diverse sector allocation with tech focus.
Higher expense ratio of 1.16% compared to peers. Negative alpha indicating underperformance. High correlation with benchmark limits diversification.
Performance Metrics: A Closer Look at Returns
SCAUX has demonstrated a strong performance over the past year, with a 1-year return of 25.92%. This is particularly impressive when compared to its benchmark, the S&P 500 Total Return Index, which posted a 1-year return of 37.62%. While the fund’s return is slightly lower than the benchmark, it still represents a robust performance in the context of its dual objective of growth and income. Over longer periods, the fund has maintained steady returns, with a 5-year annualized return of 8.06% and a 10-year return of 5.55%. These figures suggest that SCAUX is capable of delivering consistent returns over time, making it a viable option for long-term investors.
Sector Allocation: A Technology-Driven Portfolio
The sector allocation of SCAUX reveals a significant emphasis on technology, which constitutes 26.47% of the portfolio. This focus on technology is complemented by substantial investments in financials (16.01%) and healthcare (12.88%). Such a diversified sector allocation allows the fund to capitalize on growth opportunities across various industries while mitigating risks associated with sector-specific downturns. The inclusion of high-performing tech giants like Microsoft, NVIDIA, and Apple further underscores the fund’s commitment to leveraging technology’s growth potential. This strategic allocation is designed to enhance the fund’s growth prospects while maintaining a balanced risk profile.
Risk and Volatility: Understanding the Metrics
SCAUX exhibits a relatively low beta of 0.68, indicating that it is less volatile than the broader market. However, the fund’s negative alpha of -11.74% suggests that it has underperformed relative to its benchmark, the S&P 500 Total Return Index. The Sharpe Ratio of -1.37 further highlights the fund’s risk-adjusted performance challenges. Despite these metrics, the fund’s standard deviation of 2.47% indicates a moderate level of volatility, which may appeal to investors seeking a less volatile investment option. The fund’s downside risk, measured by a downside risk (UI) of 1.27, suggests that it has managed to limit losses during market downturns, providing a degree of stability for risk-averse investors.
Comparative Analysis: How SCAUX Stacks Up
When compared to similar funds, SCAUX offers a competitive yield of 6.11%, which is attractive for income-focused investors. However, its expense ratio of 1.16% is higher than some of its peers, such as Shelton Equity Income-Direct (EQTIX) with an expense ratio of 0.69%. In terms of performance, SCAUX’s 1-year return of 25.92% is commendable, though it falls short of Goldman Sachs US Equity Div & Prem-A (GSPAX), which achieved a 1-year return of 30.28%. Despite these differences, SCAUX’s focus on a balanced approach to growth and income, along with its diverse sector allocation, makes it a strong contender in the derivative income category.
Top Holdings: A Strategic Selection of Assets
The top holdings of SCAUX include a mix of short-term investment vehicles and leading technology companies. Invesco Shrt-Trm Inv Treasury Instl (TRPXX) and Invesco Shrt-Trm Inv Gov&Agcy Instl (AGPXX) are among the largest holdings, providing liquidity and stability to the portfolio. Additionally, the fund’s significant investments in Microsoft, NVIDIA, and Meta Platforms highlight its strategic focus on high-growth technology stocks. This combination of short-term investments and tech giants is designed to balance the fund’s growth and income objectives, offering investors a well-rounded portfolio that can adapt to changing market conditions.
Expense Considerations: Evaluating Cost Efficiency
The expense ratio of SCAUX stands at 1.16%, which is relatively high compared to some of its peers. This higher expense ratio may be a consideration for cost-conscious investors, as it can impact the net returns of the fund. However, the fund’s strong yield of 6.11% and its focus on both growth and income may justify the higher costs for some investors. It’s important for potential investors to weigh the benefits of the fund’s strategy and performance against the cost of investing, ensuring that it aligns with their financial goals and risk tolerance.
Conclusion: Is SCAUX the Right Fit for You?
In conclusion, the Invesco Income Advantage US-A (SCAUX) fund offers a compelling blend of growth and income, making it an attractive option for investors seeking a balanced approach. With a strong yield of 6.11% and a diverse sector allocation, the fund is well-positioned to capitalize on growth opportunities while providing a steady income stream. However, potential investors should consider the fund’s higher expense ratio and its performance relative to the benchmark. Overall, SCAUX is best suited for investors who prioritize income and are comfortable with the fund’s risk profile and cost structure.
Similar Securities
SCAUX: Invesco Income Advantage US-A | Growth and Income Fund
SCAUX offers a 6.11% yield with a focus on equity and derivatives, providing growth and income. Its 1-year return of 25.92% is competitive.
GTNDX: Invesco Income Advantage International-A | High Yield Global Exposure
GTNDX offers high yield and global diversification with a focus on derivative income, suitable for risk-tolerant investors.
BMECX: BlackRock High Equity Income-InvC | High-Yield U.S. Equity Fund
BMECX offers a 6.11% yield with a focus on U.S. emerging companies, providing high income potential despite a higher expense ratio.
Futher Reading
https://finance.yahoo.com/quote/SCAUX/”>Yahoo: Invesco Income Advantage US-A
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