Invesco Asia Opportunities Equity Fund
This marketing document is exclusively for use by Professional Clients in Belgium, Luxembourg, Netherlands, Finland, Sweden, Norway. This document is not for consumer use, please do not redistribute.
Mike Shiao Chief Investment Officer, Asia ex Japan December 2016
Overview
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1. Invesco Asia Opportunities Equity Strategy Summary
2. Investment Philosophy and Process
3. Performance and Characteristics
1. Invesco Asia Opportunities Equity Strategy Summary
4
Invesco’s Franchise in Asian Equities
1 Asia Regional Assets Under Management (Managed) as of 30 June 2016. AUM of portfolios managed by Invesco Fixed Income team in Asia Pacific, Direct Real Estate products managed by Invesco Real Estates in Asia Pacific, and Global Quantitative Equity products managed by IGS team in Japan are excluded. Reflects 49% of the AUM via Invesco Great Wall. AUM of Invesco Asset Management (India) Private Limited was not included.
2 Through 49% owned joint venture in China (Invesco Great Wall) 3 In 2013, Invesco acquired 49% stake in a joint venture with Religare Enterprises Limited. On 8 April 2016, Invesco Ltd announced the completion of the transaction under which
Invesco has increased its shareholding to 100% in the Indian asset management joint venture with Religare Enterprises Ltd – Religare Invesco Asset Management Company Private Limited is now renamed as Invesco Asset Management (India) Private Limited.
4 The investment platform in Asia includes 19 investment professionals from Invesco Equity Investment Team in Asia, 7 members from Asian Fixed Income and 1 Solutions Strategist, 43 portfolio managers and analysts from Invesco Great Wall and 9 investment professionals from Invesco Asset Management (India) Private Limited.
Source (AUM): Invesco, as at 30 June 2016, unless otherwise specified. Team data as at 30 September 2016.
Strong local presence
Over 50 years experience investing in Asia Pacific. Currently managing US$28.6bn1
Invesco Equity Investment Team in Asia managing US$9.4bn investing in Asia Pacific ex Japan markets, including
− US$3.1bn in Asia Pacific ex Japan regional funds
− US$4.8bn in Chinese equities
Investment team of 19 covering Asia Pacific ex Japan equities
A pioneer in Chinese equities, with dedicated funds since 1992;
Strong investment platform in Asia
− Around 80 dedicated professionals on-the-ground covering Asian equities and fixed income4
Dedication in core regional, thematic and single country funds
Tokyo
Singapore
Melbourne
Beijing
Shanghai
Hyderabad
Mumbai3
Sydney
Invesco Equity Investment Team in Asia
Shenzhen2
Hong Kong
Taipei
Invesco’s China Joint Venture: Invesco Great Wall (IGW)
Guangzhou
Investment Locations
Business Locations
Invesco Equity Investment Team in Asia Organisation structure
Source: Invesco, as of 22 September 2016. 1 Covering Australia, China, Hong Kong, India, Japan, Singapore and Taiwan.
Anna Tong1
Regional Head of Investments, Asia Pacific
Asian Fixed Income
Wing Hei Wong Regional Head of Investment Risk Management & Quantitative Research Desmond Young David Yu Clarence Yuen Cecilia Tam
Ken Hu
CIO, Fixed Income,
Asia Pacific
Jackson Leung Chris Lau
Senior Portfolio Manager
Yi Hu
Cosmo Zhang Senior Credit
Analyst
Yifei Ding Rick Wen
Fixed Income Analyst
Katrina Ma Head of Taiwan Fixed Income Acting Head of Investments
Corinna Lau Head of Asian Products
Benjamin Chan CK Huang
Michael Lockrow Yvonne Ngai
Linda Lam
Product Specialists
Centralized Trading
Stanley Luk Head of Trading, Asia Pacific
Chris Chan Parco Chang
Tim Wong Fiona Wong
Edmund Lui
Simon Jeong
Shekhar Sambhshivan Aditya Ahluwalia
Jalil Rasheed Gary Ng Wei Liang
Andy Wong
Regional Equities
Korea
India
ASEAN, Australia & New Zealand
William Yuen
Lorraine Kuo
Yoshihiko (Hiko) Kawashima
Eric Cheng
Elsa Yang
Hong Kong/China Equities
Hong Shen
Jennifer Chi
Patricia Chung
Taiwan Equities
Edward Cheng Dora Tu
Risk Management & Quantitative Research
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Mike Shiao CIO, Asia ex Japan
Paul Chan Head of Multi-Asset & Hong Kong Pensions
Nixon Mak Solutions Strategist
4,34%
5,36%
7,13%
0,29%
3,48%
6,89%
Since current team
management on
1 July 2014^
3 years^ 5 years^
Asia Opportunitites Equity Fund Index*
Invesco Asia Opportunities Equity Fund Fund Highlights
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Past performance is not an indication of future performance, provides no guarantee for the future and is not constant over time. The data shown relates to a representative account of the Invesco Asia Opportunities Equity Strategy. Each portfolio may differ due to specific investment restrictions and guidelines. 1Originally launched in June 1987 as a Cayman Fund under BVI Trust Laws. 2Active share over 80% during most periods under management of the current team * Index reflects the performance of MSCI AC Far East ex Japan to 31 January 2010 and thereafter MSCI AC Asia ex Japan. Performance of the current index applies retrospectively. Source: Invesco. Net of fees performance in USD terms. Fund performance refers to A-class (USD)-Accumulation share-class, gross income reinvested in fund currency.
^ Annualized figures, as at 30 Sep 2016
Invesco Asia Opportunities Equity Fund Long-term track record
Investment Objective
Aims to provide long-term capital growth from Asia ex Japan companies
Track Record Since
19991
Reference index MSCI AC Asia ex Japan Index
Team Mike Shiao (lead manager), Simon Jeong (co-manager)
Key Highlights Active management with high conviction
Strong emphasis on bottom-up opportunities2 with no market cap bias
Focus on companies with sustainable leadership & competitive advantages
Long-term investors
No. of holdings 50 – 70
Net-of-fee returns in USD%
Portfolio Management Team
Key Personnel Name Title
Years of Industry
exp. Tenure at Invesco Roles/ Specialization
Mike Shiao CIO, Asia ex Japan
24 14 Lead manager
Asset / tactical allocation
Country portfolio – Greater China markets
Simon Jeong Investment Director
29 10 Co-manager
Country portfolio – South Korea
Source: Invesco, as at September 2016
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2. Investment Philosophy and Process
Investment Philosophy & Approach
Our goal is to take advantage of market inefficiencies through a bottom-up stock selection process
Selective approach:
Focus on companies with sustainable leadership & competitive advantages
Original ideas:
Act before consensus is formed
Look for under-researched ideas
Valuation focus:
Utilize a disciplined fundamental analysis driven process
Long-term investment horizon:
Focus on both dividend income & capital appreciation
Identify companies that can deliver steady and above average earnings over business cycles
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Source: Invesco, September 2016. The information provided on the investments and investment strategy (including current investment themes, the research and investment process, and portfolio characteristics, weightings, and allocation) represents the views of the portfolio manager at the time this material was completed and is subject to change without notice.
Investment Process
For illustrative purposes only.
Strategic Focus
Country Allocation
Stock Selection
Portfolio Tactical
Rebalancing
China, India Rebalancing based on the results of the semi-annual regional meeting
Stock selection is done by Greater China, India, South Korea and ASEAN specialists
Daily flow managed by lead manager
Constantly monitor valuation of holdings
Tactical adjustments if required
Top-Down Bottom-Up
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Top-Down: Invesco Asia Opportunities Equity Strategy Country Allocation Process
Background
Over 10 years of implementation on the country allocation process by the Asian investment team
Allocations reviewed semi-annually, attended by all team members
Dedicated full-day of in-depth discussions
Process
Combination of quantitative inputs with qualitative discussions on Asia ex Japan countries
Consideration of fundamental and momentum factors:
– Fundamental– Earnings growth, valuation factors, nominal GDP growth, money supply, earnings revision, real interest rate, consumer confidence index
– Momentum– Rate of change of earnings and fundamental macro factors
Output
Country allocation reference for Asia ex Japan in terms of over/underweights
May maintain country neutral if output preference is not significant
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Source: Invesco, September 2016. For illustrative purposes only.
Top-Down: Invesco Asia Opportunities Equity Strategy Country Allocation Process (CONTINUED)
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Source: Invesco, as at 20 October 2016. Country rankings and overall scores are updated semi-annually. The data shown relates to a representative account of the Invesco Asia Opportunities Equity Strategy. Each portfolio may differ due to specific investment restrictions and guidelines. Portfolio weightings are subject to change without notice. There is no guarantee that the representative account will keep these countries within its portfolio in the future.
Ranking Country
Overweight India
Overweight Philippines
Overweight South Korea
Overweight Taiwan
Overweight China
Underweight Thailand
Underweight Hong Kong
Underweight Indonesia
Underweight Malaysia
Underweight Singapore
Latest Ranking Overall Score (Fundamental + Momentum Factors)
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
80,0
90,0
India
Philip
pin
es
Kore
a
Taiw
an
Chin
a
Thailand
Hong K
ong
Indonesia
Mala
ysia
Sin
gapore
Bottom-Up: Stock Selection Criteria
Qualitative Assessment:
Industries with medium to long-term growth trends
Strong competitive positioning and advantages
Sustainable business model/franchise, competitive products/services, superior brand/distribution/technology, innovation/ R&D
Financial discipline and capital management
Management quality, ownership and corporate
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For illustrative purposes only.
Source: Invesco, September 2016. ROE = Return on Equity; ROIC = Return on Invested Capital.
Quantitative Assessment:
Proprietary models (earnings projections, balance sheet, cash flow)
Sustainable earnings growth
Stable/ improving margins
Stable/ increasing free cash flows
Stable/ rising ROE/ROIC
Sound balance sheet
Valuation analysis
Portfolio Construction
Focusing on bottom-up stock selection
Position size determined by conviction, not benchmark
Country specialists accountable for stock selection
Risk control
Top down: maximum double or half weighted in “key” markets
Bottom-up:
– Maximum 10% in single stock holding
– Single stock active weight normally not exceeding 3%
– 50-70 stock holdings
– Prefer companies with market cap over US$400m
– Maximum 10% cash
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The information presented represents how the portfolio management team generally applies their investment process under normal market conditions. For illustrative purposes only. The data shown relates to a representative account of the Invesco Asia Opportunities Equity Strategy. Each portfolio may differ due to specific investment restrictions and guidelines.
Source: Invesco, September 2016.
Risk Management Quality Control Through Diligent Oversight
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For illustrative purposes only.
Source: Invesco, September 2016.
Process Description Shared Responsibility for Risk Management
1. Risk Budgeting Set performance and risk objectives
Set risk budget for portfolios
Investment Team/ Client
2. Ongoing Risk & Performance Monitoring
Monitor portfolio performance versus benchmark and peer group
Identify & monitor sources of risk and performance
Monitor tracking error, active stock, sector and
country bets through BARRA and FactSet reports
Monitor portfolio and stock liquidity
Regional Head of Investments, Asia Pacific/ Regional Head of Investment Risk Management & Quantitative Research
3. Quarterly Portfolio Review
Facilitate investment quality and product integrity assurance
Review performance & risk versus objectives/target
Review performance & risk attribution analysis
Review portfolio strategy, risk profile & characteristics
Review rationales for major buy/sell transactions and significant active positions
Regional Head of Investments, Asia Pacific/ Regional Head of Investment Risk Management & Quantitative Research/ Chief Investment Officer/Portfolio Manager
3. Performance and Characteristics
Invesco Asia Opportunities Equity Fund Performance
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Calendar Years in USD 2015 2014 2013 2012 2011 2010 2009
Invesco Asia Opportunities Equity Fund A
-2.66 8.90 0.47 19.45 -20.07 16.86 59.25
Index* -9.17 4.80 3.07 22.36 -17.31 19.62 72.08
Peer Group Quartile Ranking** 1 1 3 3 3 3 4
* Index reflects the performance of MSCI AC Far East ex Japan to 31 January 2010 and thereafter MSCI AC Asia ex Japan. Performance of the current index applies retrospectively. ^ Annualized figures
% returns as at 30/11/16 in USD 3 mths YTD 1 yr^ 3 yrs^ 5 yrs^
Invesco Asia Opportunities Equity Fund A -5.82 2.70 2.02 2.19 5.86
Index* -2.79 7.65 7.14 0.45 5.38
Peer Group Quartile Ranking** 4 3 3 1 2
Past performance is not an indication of future performance, provides no guarantee for the future and is not constant over time.
Source: Morningstar, NAV to NAV, A-class (USD)-Accumulation share-class net of fees returns; gross income reinvested in fund currency as at 30 November 2016. **Peer Group refers to Offshore Funds under Asia ex Japan Equity categorized by Morningstar
© 2016 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be
copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
Invesco Asia Opportunities Equity Fund Fund Characteristics vs MSCI AC Asia ex Japan
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Portfolio Characteristics
Source: Invesco, FactSet P/BV and ROE estimates. Index statistics represent the average consensus for regional markets weighted by the relative market capitalization of these markets as per the MSCI AC Asia ex Japan.
Top 10 Holdings
Holdings Wgt (%)
Tencent Holdings Ltd. 7.75
Alibaba Group Holding Ltd. 5.36
Samsung Electronics Co., Ltd. 4.74
Taiwan Semiconductor Manufacturing Co., Ltd. 4.62
China Mobile Limited 3.74
New Oriental Education & Technology Group, Inc. 3.56
Ctrip.com International Ltd. 3.38
Sun Art Retail Group Limited 2.99
Hengan International Group Co., Ltd. 2.80
Zhuzhou CRRC Times Electric Co., Ltd. 2.33
Portfolio Characteristics P/BV ROE
Portfolio 2.6x 13.1%
Index 1.4x 10.1%
Portfolio Turnover
(Lesser of Purchase or Sales divided by Average AUM) ~69% per annum, i.e. 1 round trip every 18 months
Risk Summary
Tracking Error vs. Index* 4.43
Beta vs. Index* 0.91
Total Portfolio Risk: 15.21
Benchmark Risk: 15.99
Past performance is not an indication of future performance, provides no guarantee for the future and is not constant over time. Summary as of 30 November 2016 Source: FactSet, Barra & Invesco. Fund characteristics are subject to change without notice. There is no guarantee that the abovementioned securities are currently held or will be held by Invesco funds in the future nor is there a recommendation to buy, sell or hold the securities. It must not be seen as an investment advice. * Reference Index: MSCI AC Asia ex Japan ND Index.
Market Capitalization Comparison
Portfolio Index*
Over US$10 Billion 40.6% 71.3%
US$5-10 Billion 25.3% 15.6%
US$1-5 Billion 28.7% 13.0%
US$400 Million - $1 Billion 4.9% 0.1%
Weighted Avg. Cap. (US$Billion) 64.4 57.5
Invesco Asia Opportunities Equity Fund Country Weights (%)
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1 Representative portfolio refers to Invesco Asia Opportunities Equity Fund 2 MSCI AC Asia ex Japan index Source: Invesco. 30 November 2016 For illustrative purposes only. Holdings may change without notice. There is no guarantee that securities of the regions mentioned above are currently held or will be held by Invesco funds in the future nor a recommendation to buy/sell/ hold the securities. It must not be seen as an investment advice.
Country (%)
Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Nov-16 Nov-16
Portfolio1 Portfolio1 Portfolio1 Portfolio1 Portfolio1 Portfolio1 Portfolio1 Portfolio1 Portfolio1 Portfolio1 Index2
China 31.8 38.9 37.1 36.3 39.7 42.0 37.4 38.4 39.6 45.6 32.1
Hong Kong 10.8 10.0 11.8 12.3 13.2 11.5 8.1 9.7 8.5 5.8 12.5
India 10.8 15.4 11.5 10.3 14.0 12.2 13.0 12.5 10.3 9.1 9.5
Indonesia 2.7 1.0 3.6 2.9 1.8 2.2 3.4 4.1 3.9 2.8 2.9
Korea 21.6 13.9 14.6 15.2 12.9 16.6 15.6 17.6 19.4 17.9 17.0
Malaysia 0.0 0.0 1.5 1.3 1.2 1.3 1.4 1.2 1.2 1.2 2.9
Philippines 0.0 1.0 1.6 1.4 1.8 1.9 2.5 2.4 2.0 1.4 1.4
Singapore 4.0 0.0 0.0 0.0 1.2 1.4 2.3 2.6 3.0 2.9 4.6
Taiwan 14.9 18.8 16.6 14.6 10.0 9.1 10.0 9.4 11.3 11.5 14.5
Thailand 2.8 0.0 0.0 0.0 1.3 1.2 0.0 0.0 -- -- 2.6
Cash 0.6 1.0 1.8 5.7 3.0 0.7 6.4 2.0 0.7 1.7 --
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Invesco Asia Opportunities Equity Fund Sector Weights (%)
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Sector (%)
Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Nov-16 Nov-16
Portfolio1 Portfolio1 Portfolio1 Portfolio1 Portfolio1 Portfolio1 Portfolio1 Portfolio1 Portfolio1 Portfolio1 Index2
Consumer Discretionary 21.8 20.0 23.2 25.1 25.2 24.6 21.2 23.6 25.7 21.7 9.7
Consumer Staples 12.8 12.9 10.4 13.5 17.5 16.8 16.6 17.2 17.4 18.2 5.0
Energy 1.8 2.0 0.0 0.0 0.6 1.7 0.0 0.0 - -- 4.2
Financials 14.0 21.5 19.3 14.8 14.9 16.5 7.0 8.4 5.1 4.1 24.2
Health Care 4.7 3.8 3.6 5.2 4.3 5.8 9.1 6.4 6.3 4.4 2.4
Industrials 7.2 1.0 3.7 2.9 9.0 9.8 11.5 10.7 7.8 8.9 7.9
Information Technology 21.8 26.2 23.4 23.2 17.1 17.4 20.3 18.9 24.3 29.0 27.3
Materials 3.4 4.7 2.2 0.5 0.3 0.3 0.4 0.3 0.4 0.5 4.4
Real Estate - - - - - - - - 2.0 1.4 5.8
Telecommunication Services 5.2 4.3 7.0 4.2 5.6 4.1 5.1 9.6 7.3 7.0 5.5
Utilities 6.7 2.7 5.5 4.9 2.4 2.4 2.5 2.9 3.0 3.0 3.6
Cash 0.6 1.0 1.8 5.7 3.0 0.7 6.4 2.0 0.7 1.7 --
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
1 Representative portfolio refers to Invesco Asia Opportunities Equity Fund 2 MSCI AC Asia ex Japan index Source: Invesco. 30 November 2016. Note: Effective 31 Aug 2016, real estate, which has been grouped under Financials sector, is now a stand-alone sector under GICS definition. For illustrative purposes only. Holdings may change without notice. There is no guarantee that securities of the regions mentioned above are currently held or will be held by Invesco funds in the future nor a recommendation to buy/sell/ hold the securities. It must not be seen as an investment advice.
Important information
This marketing document is exclusively for use by Professional Clients in Belgium, Luxembourg, Netherlands, Finland, Sweden, Norway. This document is not for consumer use, please do not redistribute. Data as at 30.09.2016, unless otherwise stated. Past performance is not a guide to future returns. Where Invesco has expressed views and opinions, these may change and are not to be construed as investment advice. The value of investments and any income will fluctuate (this may partly be the result of exchange-rate fluctuations) and investors may not get back the full amount invested. As a large portion of the fund is invested in less developed countries, you should be prepared to accept significantly large fluctuations of the value of the fund. Investments in small and medium sized companies involve greater risks than those customarily associated with larger
companies. Where securities are mentioned in this document they do not necessarily represent a specific portfolio holding and do not constitute a recommendation to purchase, hold or sell. For more information on our fund, please refer to the most up to date relevant fund and share class-specific Key Investor Information Documents, the latest Annual or Interim Reports and the latest Prospectus, and constituent documents. This information is available using the contact details of the issuer and is without charge. Further information on our products is available using the contact details shown. Whilst great care has been taken to ensure that the information contained herein is accurate, no responsibility can be accepted for any errors, mistakes or omissions or for any action taken in reliance thereon. This marketing document is not an invitation to subscribe for shares in the fund and is by way of information only, it should not be considered financial advice. The performance data shown does not take account of the commissions and costs incurred on the issue and redemption of units. Any reference to a ranking, a rating or an award provides no guarantee for future performance results and is not constant over time. Persons interested in acquiring the fund should inform themselves as to (i) the legal requirements in the countries of their nationality, residence, ordinary residence or domicile; (ii) any foreign exchange controls and (iii) any relevant tax consequences. As with all investments, there are associated risks. This document is by way of information only. Asset management services are provided by Invesco in accordance with appropriate local legislation and regulations. The fund is available only in jurisdictions where its promotion and sale is permitted. Not all share classes of this fund may be available for public sale in all jurisdictions and not all share classes are the same nor do they necessarily suit every investor. Fee structure and minimum investment levels may
vary dependent on share class chosen. Please check the most recent version of the fund prospectus in relation to the criteria for the individual share classes and contact your local Invesco office for full details of the fund registration status in your jurisdiction. This fund is domiciled in Luxembourg. This document is issued in Issued in Sweden by Invesco Asset Management S.A. Swedish Filial (France), Stureplan 4c, 4th Floor, Stockholm, SE - 114 35 Stockholm, Sweden, Issued in Belgium by Invesco Asset Management SA Belgium Branch, 235 Avenue Louise, 1050 Brussels, Belgium , Issued in the Netherlands by Invesco Asset Management S.A Dutch Branch, UN Studio Building, c/o The Office Operators, Office 9.13, Parnassusweg 819, NL-1082 LZ, Amsterdam, Netherlands and Issued in Luxembourg, Finland and Norway by Invesco Asset Management SA, 18, rue de Londres, F-75009, Paris, France. Subscriptions of shares are only accepted on the basis of the most up to date legal offering documents. The legal offering documents (fund & share class specific Key Investor Information Document, prospectus, annual & semi-annual reports, articles and trustee deed) are available free of charge at our website www.invescoeurope.com