OACIX
Invesco Select Risk Conservative Inv-A
Strategic Asset Allocation for Stability
The Invesco Select Risk Conservative Inv-A (OACIX) is designed to provide current income with a secondary focus on long-term capital growth. This fund strategically allocates its assets to underlying funds with a target weighting of 70% in fixed income, 15% in U.S. equity, 5% in international equity, and 10% in other asset classes. This conservative allocation is aimed at minimizing risk while ensuring a steady income stream, making it an attractive option for risk-averse investors seeking stability in their portfolios. The fund’s emphasis on fixed income securities is particularly beneficial in volatile market conditions, providing a buffer against market fluctuations.
At A Glance
Executive Summary
OACIX offers a conservative approach with 70% fixed income allocation, a 2.98% yield, and a 0.89% expense ratio, ideal for income-focused investors.
High fixed income allocation for stability Competitive yield of 2.98% Low beta of 0.28 for reduced volatility
Negative alpha indicating underperformance Higher expense ratio compared to peers Limited growth potential with conservative strategy
Performance Analysis: A Conservative Approach
OACIX has demonstrated a conservative performance profile, with a one-year return of 11.42%, which is modest compared to its benchmark, the S&P 500 Total Return Index, which posted a 37.62% return over the same period. The fund’s annualized returns since inception stand at 2.28%, reflecting its focus on income generation rather than aggressive growth. The fund’s low beta of 0.28 indicates reduced volatility, aligning with its conservative investment strategy. However, the negative alpha of -26.25% suggests that the fund has underperformed relative to its benchmark, a factor that potential investors should consider when evaluating its suitability for their investment goals.
Portfolio Composition: A Focus on Fixed Income
The portfolio of OACIX is heavily weighted towards fixed income, with bonds comprising 84.74% of its asset allocation. This includes significant holdings in Invesco Core Bond R6 (33.98%) and Invesco Core Plus Bond R6 (16.73%), which are designed to provide stable returns through interest income. The fund also includes a small allocation to U.S. equity (13.48%) and international equity (5.60%), offering some exposure to potential growth opportunities. The remaining 10% is diversified across other asset classes, including cash and non-U.S. equity, to enhance the fund’s overall risk-adjusted returns. This composition underscores the fund’s commitment to income generation and capital preservation.
Risk Metrics: Understanding Volatility and Drawdown
OACIX exhibits a low-risk profile, as evidenced by its beta of 0.28 and a standard deviation of 1.45%, indicating limited volatility compared to the broader market. The fund’s downside risk, measured by a downside risk (UI) of 0.99, is relatively low, suggesting that it is less susceptible to significant losses during market downturns. The maximum drawdown of -2.9% further highlights the fund’s resilience in adverse market conditions. However, the negative Sharpe ratio of -5.24 and Treynor ratio of -93.07 indicate that the fund has not effectively compensated investors for the risk taken, which may be a concern for those seeking risk-adjusted returns.
Comparative Analysis: Expense and Yield Considerations
When compared to similar conservative funds, OACIX’s expense ratio of 0.89% is higher than some of its peers, such as Fidelity Adv Asset Manager 20-A (FTAWX) with an expense ratio of 0.78%. Despite this, OACIX offers a competitive yield of 2.98%, which is slightly higher than the yield of GuideStone Conservative Allocation-Inv (GFIZX) at 2.83%. This makes OACIX an appealing choice for investors prioritizing income over cost. However, potential investors should weigh the higher expense ratio against the fund’s income potential and overall performance when making investment decisions.
Sector Allocation: Diversification Across Industries
OACIX’s sector allocation is diversified across various industries, with a notable emphasis on technology (21.21%), financials (12.70%), and industrials (11.82%). This diversification helps mitigate sector-specific risks and provides exposure to different economic segments. The fund’s allocation to defensive sectors such as utilities (3.89%) and healthcare (10.58%) further enhances its stability, making it well-suited for conservative investors. The inclusion of cyclical sectors like real estate (10.34%) and communications (7.34%) offers potential for moderate growth, aligning with the fund’s secondary objective of long-term capital appreciation.
Market Cap and Bond Sector Allocation
OACIX’s market cap allocation is skewed towards medium and extra-large cap companies, with 5.53% each, providing a balance between stability and growth potential. The bond sector allocation is predominantly in corporate (31.46%) and government bonds (31.11%), which are typically less volatile and offer reliable income streams. The fund’s allocation to securitized bonds (25.21%) adds an additional layer of diversification, potentially enhancing returns while maintaining a conservative risk profile. This strategic allocation underscores the fund’s focus on income generation and capital preservation, appealing to investors seeking a stable investment vehicle.
Conclusion: Suitability for Conservative Investors
In conclusion, the Invesco Select Risk Conservative Inv-A (OACIX) stands out as a suitable option for conservative investors seeking a stable income stream with limited exposure to market volatility. Its high allocation to fixed income securities, competitive yield, and diversified sector exposure make it an attractive choice for those prioritizing income and capital preservation. However, potential investors should be mindful of the fund’s higher expense ratio and underperformance relative to its benchmark. Overall, OACIX offers a balanced approach to conservative investing, aligning with the needs of risk-averse individuals looking for steady returns.
Similar Securities
CAAMX: Invesco Select Risk Mod Conserv Inv-A | Balanced Conservative Investment
CAAMX offers a conservative mix of 60% bonds and 40% equities, with a 0.94% expense ratio and 2.26% yield, ideal for risk-averse investors.
CSTAX: 2027 American Funds College-529F1 | Conservative Growth & Income Fund
CSTAX offers a balanced approach with a 0.70% expense ratio, focusing on growth, income, and capital preservation, suitable for conservative investors.
BAMPX: BlackRock 40/60 Target Allocation-InvA | Balanced Conservative Investment
BAMPX offers a balanced approach with 60% equity and 40% fixed income, ideal for conservative investors. Notable for its diversified holdings and moderate expense ratio.
BLADX: BlackRock Managed Income-InvA | Balanced Conservative Income Fund
BLADX offers a 5.30% yield with a conservative balanced approach, featuring a low max drawdown of -2.5% and a strong Sharpe ratio of 0.97.
PACAX: Putnam Dynamic AssetAlloc Conservative-A | Balanced Conservative Fund
PACAX offers a conservative asset allocation with a focus on capital preservation, featuring a 1.03% expense ratio and a 2.36% yield.
Futher Reading
https://www.morningstar.com/funds/xnas/OACIX/quote
https://finance.yahoo.com/quote/OACIX/”>Yahoo: Invesco Select Risk Conservative Inv-A
https://ftcloud.fasttrack.net/web/chart/OACIX
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.