HEAD-TO-HEAD: Axa versus Invesco

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The Axa and the Invesco funds’ three-year performance. Source: FE Analytics. Note: In British pounds. The Axa product does not have a benchmark index, while Invesco’s benchmark is the ICE Bank of America Merill Lynch Sterling Broad Market Index.

Performance

The Axa and the Invesco funds’ three-year performance. Source: FE Analytics. Note: In British pounds. The Axa product does not have a benchmark index, while Invesco’s benchmark is the ICE Bank of America Merill Lynch Sterling Broad Market Index.

Since the Axa fund invests in short duration bonds, the fund has been resilient during periods of rising interest rates, according to McDermott.

“The fund has traditionally performed better than its peers when interest rates rise. Historically, the fund has also been better at protecting investors when markets fall,” he said.

The opposite is true for the Invesco fund, which is expected to outperform the Axa fund during bull markets but underperform when markets fall, according to McDermott.

For example, the Invesco fund’s performance was strong in both 2014 and 2016 when the UK bond market was up, but massively underperformed last year, he said.

Discreet annual performance (%)

Source: FE Analytics. In British pounds.

In terms of volatility, McDermott expects the Axa product to be significantly less volatile than the Invesco fund, given its focus on shorter-dated bonds.

Three-year annualised volatility

Source: FE Analytics

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