Posted inHead To Head, News, Research

HEAD-TO-HEAD: Invesco vs Schroders

FSA compares the Invesco Euro Corporate Bond Fund with the Schroder ISF Euro Corporate Bond Fund.
by Fund Selector Asia

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Performance

The Invesco fund underperformed the Schroders fund significantly over the past one- and three-year periods.

Dash attributes the fund’s underperformance to an underweight in duration in 2015 and 2016, which he said was three years lower than that of the reference index. With interest rates stabilising and bond spreads tightening, the fund missed out on price gains. Earlier, in 2011 and 2012, when rates were falling, the fund was overweight in financials, which also detracted from performance.

“The Schroders fund definitely has done well over the last five years,” Dash noted, attributing the outperformance to its thematic approach and biases in the portfolio. In particular, the fund was underweight cyclicals, such as energy, capital goods and basic materials in 2015 and 2016. “It was a good call”, he added.

While the Schroders fund remains close to its benchmark, the ICE BofAML Euro Corporate Bond Index, in terms of overall exposure, it has managed to outperform it over the past three years.

Dash attributes this to security selection. “You can have the overall exposure close to the benchmark, but the individual bonds could be very different,” he said. “There are many bonds from each issuer, and they could behave quite differently, but the allocation will be quite similar to the index.”

Invesco Euro Corporate Bond Fund

Schroder ISF Euro Corporate Bond Fund

ICE BofAML Euro Corporate Bond Index
3-year return (cumulative)

1.67%

8.45%

5.57%
1-year return

-0.12%

0.69%

0.54%
3-year Alpha

0.59

2.81
3-year Beta

0.51

0.59
3-year Information Ratio

0.22

1.33
3-year Volatility

2.64

2.52

2.27
Data: FE, returns in euros, as of 31 May 2018.

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