This Sector Bumped Consumer Discretionary from AEDAX’s Top Spot



Invesco European Growth Fund overview

The Invesco European Growth Fund Class A (AEDAX) “seeks long-term growth of capital by investing in reasonably priced, quality companies in the European region, with strong fundamentals and/or accelerating earnings growth.”

The fund’s managers invest across market capitalizations, but investors should note that the small- and mid-cap spaces are their primary focus areas. Management emphasizes fundamental research when choosing securities for the portfolio. Sector and country trends are of secondary importance.

Article continues below advertisement

The fund’s assets were invested across 69 holdings as of June 2016, and it was managing assets worth $1.5 billion as of June’s end. Its top ten equity holdings included RELX Group (RELX), WPP (WPPGY), and British American Tobacco (BTI), which composed a combined 7.3% of its portfolio. As of March, the fund was also invested in Publicis Groupe (PUBGY) and UBS Group (UBS), among others.

Portfolio changes in the Invesco European Growth Fund

Financials, consumer discretionary, and industrials are the core sectors that make up AEDAX. These three sectors form a combined 63.5% of the fund’s assets. From the previous quarter, financials have taken over discretionary as the topmost invested sector.

The fund has a large portion of its assets—8.7% to be precise—held as cash and equivalent securities. It’s not invested in telecommunications services or utilities stocks. Its management exited utilities sometime in 4Q15.

Let’s look at the quarterly portfolios of AEDAX for the past three years. A few sectoral changes are prominent. Exposure to consumer staples read in the double digits three years ago, but is less than 8% at present. Energy stocks have seen sharp fall in exposure. Healthcare stocks saw a rise in weight intraperiod, but their present allocation is down to levels seen three years ago.

Meanwhile, exposure to financials has been stepped up. Information technology stocks have also seen an increase in their portfolio weight. AEDAX has nearly always had more than 5% of its portfolio held in cash and non-equity funds in the past three years.

In the next article, let’s take a look at the performance of the fund in year-to-date 2016.


More From Market Realist