More than half of Invesco funds performance flagged as an ‘area of concern’
Over half of Invesco funds have seen their performance flagged as an “area of concern” in the firm’s annual Assessment of Value report, Morning Wire can reveal.
22 of Invesco’s 51 funds received a red rating, or ‘area of concern identified’ for their fund performance, with six more receiving a yellow in a traffic light system, or ‘potential area of concern identified rating.
Asset managers are required to publish an Assessment of Value report annually by the Financial Conduct Authority.
Measured over a five-year rolling period, only 14 Invesco funds outperformed their benchmark 50 per cent or more of the time, while nine outperformed their benchmark between 25 per cent and 50 per cent of the time.
Some of the funds classed as underperforming received a fee reduction of 0.05 per cent in December 2023, the company added.
All funds received a ‘green’ for quality of service, comparable services, economies of scale and comparable market rates in the report from Invesco.
Consumer advocacy group Boring Money has slammed asset manager’s Assessment of Value reports in the past for “marking their own homework“, after an analysis of 2020’s reports found only three per cent were found to not be delivering value.
In February, only three of Hargreaves Lansdown’s 13 funds received a green flag for performance, while only half gained a green for ‘comparable market rates’, however only two were described as not providing good value.
However, six Invesco funds were flagged as their cost of service being a potential area of concern, with four charging fees above 1.6 per cent.
Invesco said that following further investigation, along with a comparison against what other providers in the market are charging, revealed that these fees were in “an appropriate range”.
Invesco’s highest fee fund is the firm’s Managed Income fund, which charges 1.78 per cent annually, and was not flagged as its cost of service being a potential area of concern.
Last year, the FCA criticised the way fund houses were conducting their Assessment of Value reports, arguing that the way justified fees put “too much emphasis” on comparable market rates over conducting reviews and utilising “the full range of value assessment considerations”.
Meanwhile, comparable market rates were often used to “override” another value assessment minimum consideration, such as when a fund’s fees might not be justified, managers will instead switch to assessing the comparable market rates over justifying their own fees, the regulator said.
An Invesco spokesperson said: “The report assesses the consistency of a fund’s outperformance to gauge all investors’ experiences in a fund over time.
“Of those funds in the Value Assessment that can be measured against an IA peer group 79 per cent by number are outperforming over three years (50 per cent first quartile) and 60 per cent by number are outperforming over five years (39 per cent first quartile).
“Where funds are not delivering value as consistently as we think they should, we take action.”