Invesco Wholesale Senior Secured Income aims to provide a floating rate of regular income after fees above the Bloomberg AusBond Bank Bill Index. The Fund invests into the underlying Invesco Zodiac Fund whose investment horizon looks across a full credit cycle with the view that returns are maximized over the longer run for all private, credit-sensitive assets such as bank loans. The investment process is active, fundamental and highly disciplined. The portfolio is biased to more liquid positions in the upper mid-to-large cap segment of the bank loans market.
Loans delivered solid returns in September, gaining 0.88% during the month and bringing year-to-date total returns to 9.91%. Despite increased primary supply and weaker risk markets, loan prices edged up 0.11% during the month. More impactfully, coupon income contributed another 0.76% to September’s total return. Meanwhile, the Federal Reserve (Fed) provided updated policy guidance at their September meeting which further signalled elevated base rates at least through 2024, implying today’s high carry environment is expected to persist for the foreseeable future.
During September, loans outperformed high yield and investment grade, which returned -1.16% and -2.45%, respectively, and year-to-date are also outpacing the 5.97% and 0.45% returns for high yield and investment grade bonds respectively. The average price in the loan market rose 30 basis points (bps) to 94.83. At their current average price, senior secured loans are providing a 10.11% yield inclusive of the forward curve.
All data in USD. Source: Credit Suisse Leveraged Loan Index, Bloomberg and JP Morgan.
What is Invesco WS Senior Secured Income Invesco WS Senior Secured Income is an Managed Funds investment product that is benchmarked against Global High Yield Credit Hdg Index and sits inside the Fixed Income - High Yield Credit Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Invesco WS Senior Secured Income has Assets Under Management of 17.36 M with a management fee of 0.75%, a performance fee of 0.00% and a buy/sell spread fee of 0.1%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Invesco WS Senior Secured Income has returned 0.9% in the last month. The previous three years have returned 4.07% annualised and 20.05% each year since inception, which is when the Invesco WS Senior Secured Income first started.
How is risk measured in this investment product?
There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Invesco WS Senior Secured Income first started, the Sharpe ratio is NA with an annualised volatility of 20.05%. The maximum drawdown of the investment product in the last 12 months is -0.03% and -16.34% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product?
Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Invesco WS Senior Secured Income has a 12-month excess return when compared to the Fixed Income - High Yield Credit Index of -3.45% and 0.45% since inception.
Does the investment product produce Alpha over its Peers?
Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Invesco WS Senior Secured Income has produced Alpha over the Fixed Income - High Yield Credit Index of NA% in the last 12 months and NA% since inception.
What are similar investment products?
For a full list of investment products in the Fixed Income - High Yield Credit Index category, you can click here for the Peer Investment Report.
What level of diversification will Invesco WS Senior Secured Income provide?
Invesco WS Senior Secured Income has a correlation coefficient of 0.61 and a beta of 0.32 when compared to the Fixed Income - High Yield Credit Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers?
For a full quantitative report on Invesco WS Senior Secured Income and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Invesco WS Senior Secured Income with the Global High Yield Credit Hdg Index?
For a full quantitative report on Invesco WS Senior Secured Income compared to the Global High Yield Credit Hdg Index, you can click here.
Can I sort and compare the Invesco WS Senior Secured Income to do my own analysis?
To sort and compare the Invesco WS Senior Secured Income financial metrics, please refer to the table above.
Has the Invesco WS Senior Secured Income been independently verified by SMSF Mate?
This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
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Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the Invesco WS Senior Secured Income. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - August 31, 2023 Loans continued moving higher in August, gaining 1.15% during the month and bringing year-to date total returns to 8.95%. Loan prices rose to their highest levels since May 2022 amid constructive macro data and earnings reporting. Prices advanced 0.34% during the month, again led by the lower end of the credit ratings spectrum. Coupon income added another 0.81% to August’s total return. With the Federal Reserve’s (Fed) policy guidance signalling elevated base rates at least through 2024, today’s high carry environment is poised to remain intact.
During August, loans outperformed high yield and investment grade, which returned 0.28% and -0.77%, respectively, and year-to-date are also outpacing the 7.22% and 2.87% returns for high yield and investment grade bonds respectively. The average price in the loan market rose 40 basis points (bps) to 94.54.3 At their current average price, senior secured loans are providing a 9.93% yield inclusive of the forward curve.
All data in USD. Source: Credit Suisse Leveraged Loan Index, Bloomberg and JP Morgan.
Performance Commentary - July 31, 2023 Loans gained 1.29% in July, bringing year-to date total returns to 7.85%. Loan prices rose to their highest levels in over a year amid solid earnings and diminishing economic growth concerns. Prices advanced 0.49% during the month, led by the low end of the credit ratings spectrum. Coupon income added another 0.79% to July’s total return.
On the back of the latest Federal Reserve policy guidance, market expectations continue to signal elevated base rates at least through 2024, creating runway for today’s high carry environment to continue.During July, loans underperformed high yield but outperformed investment grade, which returned 1.46% and 0.35%, respectively. Year-to-date, loans are outpacing the 6.93% and 3.66% returns for high yield and investment grade bonds respectively. The average price in the loan market rose 45 basis points to 95.42. At their current average price, senior secured loans are providing a 9.91% yield inclusive of the forward curve.
All data in USD. Source: Morningstar LSTA US Leveraged Loan Index, Bloomberg and JP Morgan.
Performance Commentary - June 30, 2023 Loans gained 2.26% in June as improved economic sentiment overshadowed hawkish central bank rhetoric to create a positive backdrop for risk assets. Prices advanced 1.49% during the month, reaching levels that nearly eclipsed the year-to-date highs last reached in February. Buoyant price action was broad-based in June, but the outperformance of single-B issuers versus CCC issuers embodied the selective risk-on spirit of the month.
Meanwhile, coupon income contributed another 0.77% to June’s total return. Interest rate expectations repriced higher on the back of hawkish Federal Reserve (Fed) policy guidance, signaling a longer runway for today’s high carry environment to continue. At the midpoint of 2023, year-to-date total returns are 6.48%, putting loans on pace to deliver their strongest annual total return since 2009.
During June, loans outperformed high yield and investment grade, which returned 1.63% and 0.28%, respectively. Year-to-date, loans are outpacing the 5.42% and 3.23% returns for high yield and investment grade bonds respectively. The average price in the loan market rose 140 basis points (bps) to 94.97. At their current average price, senior secured loans are providing a 10.19% yield inclusive of the forward curve.
Performance Commentary - May 31, 2023 Loans lost -0.18% in May amid cautious sentiment and tepid investor demand, bringing year-to-date total returns to 4.12%. Price declines of -0.95% during the month were partly offset by 0.77% of coupon income.
A constructive overall backdrop for loans better-than-feared earnings, generally stable macro data, resolution on the debt ceiling at month-end, and a higher forward rate curve failed to translate into better demand for the asset class. During May, loans outperformed high yield and investment grade, which returned -0.93% and -1.46%, respectively. Year-to-date, loans are outpacing the 3.70% and 2.92% returns for high yield and investment grade bonds respectively. The average price in the loan market fell 46bps to 93.57. At their current average price, senior secured loans are providing a 10.31% yield inclusive of the forward curve.
Performance Commentary - April 30, 2023 Loans returned 1.05% in April, bringing year-to-date total returns to 4.31%. Prices gained 0.31% during the month and coupon added another 0.74% to return. The overall tone in risk markets improved as anxiety around regional banking stress eased and Q1 earnings season got off to a positive start.
Firm trading in loans enticed more issuers to approach the new issue market for refinancing needs, and deals were generally received favourably. Net new issuance remained sparse amid a slump in M&A and LBO activity, thus continued retail outflows and a moderation in CLO formation did not noticeably upset the market’s technical balance. During April, loans underperformed high yield and investment grade which returned 0.93% and 0.79%, respectively.
Year-to-date, loans are slightly lagging the 4.65% and 4.42% returns for high yield and investment grade bonds respectively. The average price in the loan market rose 26 basis points (bps) to 94.03. At their current average price, senior secured loans are providing a 9.76% yield inclusive of the forward curve.
Performance Commentary - March 31, 2023 Loans returned -0.03% in March, bringing year-to-date total returns to 3.23%. Suddenly emergent stress in the banking sector during the month sent shockwaves through risk markets and upended investors’ economic outlooks. Swift government action to stem the crisis of confidence in smaller banks contained the fallout from bank failures, but the looming threat of diminished lending activity kept a lid on risk appetite. In response, investors recalibrated their interest rate expectations downwards. Capital market activity stalled amid the turbulence but the loan market continued to function in an orderly fashion. Except for a choppy three day period in which loans shed -1.10% (March 13-15), loans demonstrated muted price action amidst broader risk market voilatility and retraced much of the mid month drawdown by month end. Ultimately, prices declined -0.77% in March, largely offset by 0.74% of coupon income.
During March, loans underperformed high yield and investment grade which returned 1.08% and 2.95%, respectively as interest rates declined. Year-to-date, loans are slightly lagging the 3.68% and 3.61% returns for high yield and investment grade bonds respectively. The average price in the loan market dipped 75 basis points (bps) to 93.77. At their current average price, senior secured loans are providing a 9.98% yield inclusive of the forward LIBOR curve.
Performance Commentary - February 28, 2023 Loans gained 0.58% in February, bringing year-to-date total returns to 3.26%. After a euphoric start to the year, risk assets slumped as investors re-evaluated the interest rate outlook amid stronger inflation data. Loans however bucked the trend, as was the case throughout much of 2022 when rising rates were central to market sentiment. The monthly return was comprised of -0.08% price erosion and 0.66% coupon income. Several consecutive months of tightening spreads finally coaxed more loan borrowers to refinance their shorter dated maturities in February. The demand side remained anchored by CLO managers seeking to buy assets for new structures; the copious year-to-date CLO issuance is second only to 2021. During February, loans outpaced high yield and investment grade which returned -1.30% and -3.14%, respectively. Year-to-date, loans have outperformed the 2.58% and 0.64% returns for high yield and investment grade bonds respectively. The average price in the loan market dipped 3 basis points (bps) to 94.52. At their current average price, senior secured loans are providing a 10.53% yield inclusive of the forward LIBOR curve. All figures are in USD.
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