Invesco Greater China Equity E EUR Acc

Analyst Report
Morningstar's Take

by Chloe Qu
Invesco Greater China Equity is in the hands of an experienced manager, but we have reservations around the team's stability and the consistency of the investment process. It continues to carry a Morningstar Medalist Rating of Neutral across all share classes.

Portfolio manager Mike Shiao brings 31 years of investment experience in Greater China equities and has managed this strategy since January 2008. He continues to come across as a capable investor, and the supporting team remains experienced, but its high level of turnover in recent years is concerning. The Asia ex-Japan equity team has lost eight Greater China portfolio managers and analysts since 2021. The team has been slow in filling these openings, and its Greater China dedicated resources has shrunk to nine members compared with 12 two years ago. Its research resource is also not as deep as other highly rated Greater China teams, leaving it less equipped to stay on top of the vast investment universe.

The team’s recent turmoil has limited our conviction in the execution of the research-intensive, bottom-up driven investment process. Some recent changes also raise concerns about the consistency of the process' implementation. In contrary to its long-term, bottom-up focus, the manager has more frequently considered short-term macro factors in constructing his portfolio over the past three years. Portfolio turnover has therefore climbed from 47% in 2020 to 108% in 2022, and the number of holdings has fluctuated between 30 and 60 names. While this is partly understandable given the volatile market environment, we continue to hold some reservations regarding the process’ execution. Besides, the incorporation of top-down insights also brings the process’ repeatability into question.

The strategy's performance has been middling over Shiao's tenure. Between 1 Jan 2008 through 31 March 2023, the clean Z USD Acc share class returned 3.0% per year, slightly ahead of the MSCI Golden Dragon Index's 2.9% and ranking in the 50th among Greater China equity peers.
Morningstar Medalist Rating™Not a standout.
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Morningstar Pillars
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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