Morningstar

Invesco Sus Pan Eurp Stu Eq C € Acc

Analyst Report
Morningstar's Take
|29/02/2024
by Morningstar Manager Research
Invesco has announced a reorganization in a drive to foster integration across regions and units. The firm is forming a new multi-asset group under the leadership of Scott Wolle, who will report to co-CIO Stephanie Butcher. The new group is responsible for around USD 50 billion in assets under management and combines units such as the global asset-allocation team (led by Wolle) and the Henley-based fundamental multi-asset teams (headed by Georgina Taylor) with the Invesco Quantitative Strategies group led Bernhard Langer. IQS is responsible for the analyst-covered Sustainable Pan European Structured Equity strategy.

Following the reorganization, the overall headcount of the IQS group remains broadly unchanged at 52, scattered across five locations. However, the firm is reducing the team’s portfolio manager headcount to 10 from 12, resulting in the departure of both named portfolio managers of the Sustainable Pan European Structured Equity strategy, Alexander Uhlmann and Thorsten Paarmann, who are expected to leave the firm in June 2023. This is somewhat surprising: Uhlmann had been appointed co-portfolio manager in April 2021, while Paarmann had been involved with the strategy since its inception. Manuela von Ditfurth should take over the portfolio manager role on the European strategy, while Invesco has indicated that there may be possible additions going forward. According to the firm, Langer will focus more on operational matters, assuming the role of CIO and head of portfolio management on 1 June 2023.

These changes bear watching as the two departures follow the exit of Michael Fraikin in 2021. We also think it’s unclear how the IQS team's further integration with the expanded multi-asset division might benefit investors in this strategy. The reorganization leaves questions around the group’s longer-term trajectory and focus on refining the quantitative models underpinning its active equity strategies.

That said, in the short term, the impact on the running of this strategy is limited, owing to its systematic investment process. In fact, the portfolio manager role in this unit is client-facing in nature. Paarmann and Uhlmann provided oversight on the implementation of the process, but managers can’t override the models and don’t have final authority for making tweaks in the underlying quantitative process. Reassuringly, the reorganization has not affected IQS’ research team, which counts 28 researchers and continues to be led by Tarun Gupta. As a result, we reaffirm the strategy’s pillar scores and overall ratings.
 

Invesco Sus Pan Eurp Stu Eq C € Acc earns a Morningstar Medalist Rating of Neutral with strength in areas such as People offset by weaker spots such as Process. The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.



The strategy merits a Below Average Process Pillar rating. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating. People, Process and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

 
Morningstar Medalist Rating™
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Morningstar Pillars
PeopleAbove Average
ParentAverage
ProcessBelow Average
 
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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