Invesco Global Opportunities Fund has little interest in ‘Big Tech.’ Here’s why.

Rich valuations and the potential for more regulation have led this fund to shun the sector — for now

Time to read: 3 min

It is now three years since we were overweight the information technology (IT) sector and almost two years since we had more than 5% IT exposure in Invesco Global Opportunities Fund. While the performance of “Big Tech” has gone much further than we expected — the sector has dramatically outperformed the broader market since the start of 2013 (see Figure 1) — we believe the future for many of these businesses is more uncertain than most investors anticipate. Below, we outline two main reasons why we have been more hesitant about owning Big Tech stocks in recent times, and offer some perspective on the outlook from here.

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Three reasons to consider convertibles now

Equity volatility, the prospect of rising interest rates and an uptick in issuance may bode well for the asset class

Time to read: 3 min

After trailing US stocks in 2017,1 US convertible securities outperformed during the volatile first quarter of 2018. Given the prospect of further market volatility, the expectation for rising interest rates and a recent pickup in convertible issuance, the Invesco Convertible Securities team has a favorable outlook for this asset class in the near to medium term.

Convertibles may withstand equity volatility

A convertible security is a corporate bond that has the added feature of being converted into a fixed number of shares of common stock. Therefore, convertibles have the ability to

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European equities may benefit as cycles diverge

Europe looks more fairly valued than the US, and has good earnings potential

Time to read: 2 min

Markets around the world experienced the return of volatility during the first quarter of 2018, as central banks tightened policy and the specter of a trade war grew. Despite these pressures, the European market may offer the most opportunity.

Notwithstanding the well-publicized Brexit negotiations and a coalition stalemate in Italy following that country’s March elections, I can’t recall political risk in Europe being this muted for a long time.  And, while I believe we’re in the very late innings of the US bull market, an argument could be made that Europe is in a different stock market cycle, without the same level of froth and extreme valuation.1

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Trade talk tempers Asian market optimism

Quality and valuation may become more important to investors if volatility continues

Time to read: 3 min

Investors began 2018 with a generally optimistic view, but this euphoria faded by quarter-end as protectionism and talk of a US/China trade war became a key concern. Despite investor pessimism, we expect further volatility might create the opportunity to invest in high-quality Asian equities at lower valuations.

Pre-negotiation posturing

Market volatility spiked as US President Donald Trump started delivering

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Looking for quality growth in a volatile world

A weak 1Q rattled investors, but we welcome the opportunity to find quality companies at attractive valuations

Time to read: 3 min

Early this year, concerns over higher inflation and interest rates led to a rise in volatility, and global equity indices ended the quarter down in most markets. However, despite the weak start to 2018, the Invesco International and Global Growth team sees positive signs among a number of important Earnings, Quality and Valuation (EQV) measures. The recent spike in volatility is a welcome development for investors like ourselves who emphasize valuation as a critical input to risk and return potential.

The quarter in review

In dollar terms,

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China: SOE reform is making good progress

How could positive developments in SOE reform benefit the Chinese economy — and investors?

Time to read: 6 min

2018 marks the 40th anniversary of China’s “reform and opening-up” program. As an integral part of the Chinese economy, the state sector has undergone tremendous transformation over the decades, and state-owned enterprise (SOE) reforms have been closely scrutinized by the investment community. After all, inefficient SOEs, which we believe are generally highly geared and less profitable, represent a large part of China’s debt problem and hinder productivity growth. Without reform measures, many SOEs will remain unprofitable and might default on their liabilities, putting strains on the financial system and unsettling the economy.

While disappointments in this area have been common, we have seen some positive developments recently. SOEs have

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