AEDAX: How Does Its Performance Rank in Its Peer Group?

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The Invesco European Growth Fund: Overview

We’ll be analyzing the Invesco European Growth Fund – Class A (AEDAX) in this article. The Invesco European Growth Fund (all asset classes) is the fifth largest among its peers, with assets worth $1.5 billion under management as of January 2016. The fund releases complete holding data quarterly. As of December 2015, its assets were spread across 70 holdings and included stocks of WPP (WPPGY), RELX (RELX), British American Tobacco (BTI), UBS Group (UBS), and Carlsberg (CABGY), which comprise 10.1% of the fund’s portfolio.

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The Invesco European Growth Fund’s performance

From a purely NAV (net asset value) return standpoint, the AEDAX was an above-average performer for both the one-year period ended February 16, 2016 and for 2015. It placed third for both of these periods among the group of 12 funds chosen for this review. For a returns comparison, we’ve chosen two ETFs: the ALPS STOXX Europe 600 ETF (STXX) and the SPDR EURO STOXX 50 ETF (FEZ).

Other metrics

The AEDAX’s standard deviation, or the volatility of returns, in the one-year period until February 16 was 15.9%. This is much lower than both the STOXX Europe 600 Index’s 18.7% and the peer group’s average of 18.0%.

The fund’s risk-adjusted returns, calculated by the Sharpe ratio, were -0.34, compared with the STOXX Europe 600’s -0.69 for the one-year period ended February 16. Rather than evaluating a negative Sharpe ratio, let’s look at its ratio for 2015. It stood at 0.48 against the index’s 0.02, indicating a superior performance. It had the third-highest Sharpe ratio among its peers for that year.

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The information ratio, calculated with the STOXX Europe 600 Index as the benchmark, was 1.6 for the one-year period ended February 16, the third best among all the funds in this review. The information ratio measures the fund manager’s consistency and ability to generate excess returns over a benchmark. The higher the reading, the better the consistency. Investors should remember that we can’t evaluate a negative information ratio.

A note to investors

Apart from risk-adjusted performance and consistency of returns, the fund’s alpha placed it as the third best among its peers for the aforementioned period. As well, for 2015, its alpha placed it among the top three. These quantitative metrics, coupled with low volatility, make the AEDAX look like a compelling choice for your shortlist of funds that invest in Europe. However, given your time horizon of investment, a longer period review may be required.

In the next article, we’ll look at the Columbia European Equity Fund – Class A (AXEAX).

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