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Invesco transforms its UK equities fund for a new era of sustainable investors

Photo of Invesco's Tim Marshall.

Invesco today announces that the Invesco UK Companies Fund (UK) has been relaunched as the Invesco Sustainable UK Companies Fund (UK). Invesco recently wrote to shareholders about the changes taking effect today, which Invesco believes will now offer investors a core UK equity allocation towards some of the best UK companies, across a wide range of industries, that demonstrate superior sustainable characteristics.

The relaunched Fund is a high-conviction, actively managed equity portfolio which uses specific sustainability factors to positively screen the most exciting opportunities and doesn’t just rely on exclusions. The fund has no sector, style or market-cap bias and looks at more than the usual ESG factors. It uses what Invesco calls a 3D sustainability approach,  which looks at (1) environmental and social sustainability, (2) financial and governance sustainability and (3) valuation sustainability, to assess whether a company is truly sustainable.

The Fund encourages progress, and not just perfection on sustainability matters and as such invests in sustainability leaders, enablers and improvers.  The Fund manager and the UK Equities team actively engage with companies to bring about change and hold boards accountable by exercising their voting rights.

Tim Marshall, Fund Manager, commented: “In our view, the long-term investment opportunity in UK companies promoting sustainable themes is underestimated. We believe that putting sustainability front-and-centre, above all stylistic factors such as value and growth, will create attractive long-term return potential for clients. This is the hallmark of the Fund.”

Given that some ESG ratings can often be backward-looking and inconsistent, this Fund uses a scoring system, along with proprietary research to identify best-in class data and proprietary research to bring clarity to environmental, social, governance, financial and valuation factors and to identify opportunities in misunderstood and mispriced companies.

The Fund will continue to be managed by Tim Marshall, a fund manager in Invesco’s UK Equities team. Moreover, the Fund’s overall risk profile and objective of achieving long-term (5 years plus) capital growth will remain unchanged.

The manager is supported by the resources and skills of Invesco’s Global ESG team, which consists of around 20 experienced specialists who conduct fundamental research in coordination with Invesco’s investment teams, particularly in cases where an investment team judges that further investigation is warranted.

The Fund will invest 100% of its assets (excluding derivatives, cash and cash equivalents) in investments that meet the Fund’s ESG criteria, with at least 80% in UK companies, and up to 20% in non-UK companies. It will take an approach to stock selection driven by the fund manager’s assessment of companies with sustainable ESG and financial characteristics, underpinned by valuations that offer the opportunity of attractive and sustainable long-term capital growth. It will take a flexible approach with no inbuilt sector bias, albeit with a preference for larger companies.

The benchmark used to compare the Fund’s performance will change from the Investment Association UK All Companies Sector to the FTSE All Share Index (Net Total Return).

Alexander Millar, Head of UK Distribution at Invesco added: “As society transitions to a more sustainable future, our industry has an important role in both financing the transition and providing investors with access to the opportunities that arise from it. The change in mandate allows us to support the current generation of leaders in sustainability, as well as those that can act as enablers of progress whilst to providing clients with opportunities to both support and gain from those businesses that are committed to making real and lasting improvements for the benefit of the environment and society as a whole.”

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