Taking a high-conviction approach to volatile markets

Investors around the world are watching as global stocks continue their slide into the New Year. In the U.S., the S&P 500 Index and the Nasdaq Composite Index entered correction territory (a fall of at least 10% from a recent peak), and when the markets closed on January 13, the Dow Jones Industrial Average was extremely close to joining them, down 9.9% from its recent high in November.¹ Stocks in Europe and Asia responded with further losses as markets opened January 14.

While such volatility can be unsettling, I believe it reveals the strength of high-conviction managers who are skillfully navigating the market, as well as the importance of disciplined risk management. In my view, both are vital to the success of long-term investors.

Our high-conviction approach

Adhering to consistent, transparent processes across our active and index-based strategies is critical to our goal of providing repeatable results that are aligned with client expectations and that help investors meet their long-term objectives.

• Our fundamental active portfolio management teams operate under a disciplined philosophy and process that is based on their beliefs – not benchmarks
• Those processes don’t change when the markets react to events. In other words, our portfolio managers assess companies by the same set of standards whether the markets are in turmoil or not
• In fact, turmoil often means that quality opportunities may be had for attractive prices
• Similarly, our factor-based (smart beta) strategies operate under rules-based methodologies that do not waiver in the face of global events

Our disciplined risk-management approach

At Invesco, risk management is embedded into every layer of our organization.

• It starts at the strategy level, as each investment team builds its portfolios with strong risk and quality controls
• It rises to the firm level, with dedicated groups monitoring investment, operational and business risks worldwide
• It includes oversight and governance from the Invesco corporate board and independent fund boards

Invesco’s 700-plus investment professionals around the globe are actively monitoring this situation. As events continue to evolve, we will keep you updated.