Invesco Pan European Equity Fund
The case for value
April 2016
This marketing document is exclusively for use by Professional Clients and Financial Advisers in Continental
Europe and Qualified Investors in Switzerland. This document is not for consumer use, please do not
redistribute.
Contents
Introduction
Macro and markets
Portfolio positioning
Performance, attribution and fund characteristics
Investment team, philosophy and process
2
Henley Investment Centre
Manages €117.4bn*
Invesco:
 AUM €714.1bn
 More than 750 investment
professionals
 On-the-ground presence in more
than 20 countries
Invesco Perpetual:
Equities
Fixed income
Multi Asset
37 Investment
Professionals
19 Investment
Professionals
10 Investment
Professionals
17 years avg.
experience
15 years avg.
experience
16 years avg.
experience
10 years avg. with
firm
9 years avg. with
firm
3 year avg. with
firm
AUM €69.0bn
AUM €38.3bn
AUM €10.0bn
Henley Investment Centre
9%
33%
Equities
59%
Fixed income
Multi-Asset
Source: Invesco Ltd as at 31 December 2015.
Investment Professionals includes CIO, Fund Managers, Analysts and Trainee Analysts, Multi Asset Product Directors and Fixed Income Dealers. Equities
information includes Global, US, European, UK, Emerging Market, Asian and Japan equities teams. *Including retail, offshore and institutional assets.
Years experience and tenure subject to rounding. Invesco Perpetual is a business name Of Invesco Asset Management Limited (IAML) and forms part of Invesco UK
Limited, which itself forms part of Invesco.
3
John Surplice & Martin Walker
Fund Managers
AUM €4.7bn
Jointly managed since 2003
John Surplice
Fund Manager
 20 years experience
 20 years tenure
AUM €78.2m
Strategy launched July 2011
Invesco
Pan
European
Focus
Equity
Strategy
Invesco
Pan
European
Equity
Fund
Martin Walker
Fund Manager
 18 year experience
 16 year tenure
Together with Oliver Collin
and Jonathan Brown
AUM €1.8bn in strategy
Strategy managed since Feb 2010
Members
of Global
Equity
Group
(GEG)
Together with US, UK, Asia
and Emerging Markets
specialists
A broad framework of collaboration:

Joint analyst and company meetings

UK Equities team meeting – weekly

Pan European Equity process meeting – bi-monthly

GEG investment meeting – fortnightly

European Equities team meeting – weekly

Investment Floor meeting – monthly
Source: Invesco as at 31 March 2016. Years experience and tenure subject to rounding.
4
Invesco Pan European Equity Fund
Fund characteristics
Investment
approach
Active, valuation-led, bottom up
investment approach with macro overlay
Strong emphasis on valuation, a key
determinant of future returns
Long-term approach, typically with 3 to 5
year investment time horizon
Investment style
No style bias. Investment team try to
target the best mix of individual
risk/reward opportunities at any point in
time
Benchmark index MSCI Europe. Flexibility to have off
Invesco Pan European Equity Fund
Annualised returns, gross of fees in EUR (%)
12
9.78
9.88
6.88
6.64
8
5.89
2.67
4
0
-4
-8
reference index exposure
No. of holdings
-12
Typically 65-75
Current Fund size €4.1bn
Market cap size
Holdings typically range from €1bn to over
€50bn. Flexibility to invest in companies
with a market cap of less than €1bn.
-16
-20
-13.71
-16.59
1 year
3 years
5 years
Invesco Pan European Equity Fund
10 years
MSCI Europe Index
Past performance is not a guide to future returns.
Source: Invesco as at 31 March 2016. Fund performance figures are shown in euros on a mid-to-mid basis, inclusive of reinvested income and gross of
the ongoing charges and portfolio transaction costs. The figures do not reflect the entry charge paid by individual investors. Benchmark index figures are
total return, in euros. Please see Net Performance slide for the impact of all fund charges.
5
Macro and markets
Valuation dispersion back to 2000 levels
Valuation dispersion on sector neutral basis back to 2000 levels (x)1
2000 Tech boom
1.6
Today
Jul 12
1.4
Mar 09
1.2
1.0
0.8
0.6
0.4
'96
'98
'00
'02
'04
'06
'08
'10
'12
'14
'16
Source: Datastream, UBS Quant and UBS European Equity Strategy as at 29 February 2016. 1Using a ‘value’ composite (price/earnings.
price to book and dividend yield) every month each sector within the MSCI Europe is broken down into 3 groups – top, middle and
bottom. The price to book of the bottom third is then deducted from the top third, divided by the price to book of the median of the
middle group. All individual sector scores are then aggregated to calculate the overall valuation dispersion at a market level. The higher
the dispersion typically indicates less faith in a greater proportion of the companies within a sector.
7
What’s happened historically following a period
of significant valuation dispersion?
Performance of ‘value’ and ‘quality’ 18mths after a crisis1
Aug-00
Mar-03
Mar-09
Jul-12
-30%
-10%
10%
Value
30%
50%
70%
Quality
Source: Datastream, UBS Quant and UBS European Equity Strategy as at 11 February 2016. 1Using a ‘value’ composite (price/earnings.
Price to Book and dividend yield) every month each sector within the MSCI Europe is broken down into 3 groups – top, middle and
bottom. Then the performance of the ‘cheap’ third minus the ‘expensive’ third is calculated. All individual sector performances are then
aggregated to calculate the overall performance at a market level. Using a ‘quality’ composite (equal weightings of ROCE, gross profit
margins and average daily stock price volatility over 365 days) every month each sector within the MSCI Europe is broken down into 3
groups – top middle and bottom. Then the performance of the ‘high quality’ third minus the ‘low quality ’ third is calculated. All
individual sector performances are then aggregated to calculate the overall performance at a market level.
8
Why is value so cheap in Europe?
Number of concerns:
 Potential for external events to impact Europe
 Resilience of European banking system
 Deflationary pressures
 Lack of corporate earnings growth since 2012
 Politics e.g. UK referendum
Source: Invesco as at 31 March 2016.
9
Europe in a better place today
Euro area Real M1 growth is recovering which normally
leads GDP (%)
6
14
12
4
10
8
2
6
4
A number of factors should help the
European economy:

Proactive ECB

Increasing demand for credit

Recovering investment/consumption
trends

Structural reforms
0
2
-2
0
-2
-4
-4
-6
-6
1992 1995 1998 2001 2004 2007 2010 2013 2016
Real M1 Money Supply YoY, 9mths fwd, LHS %
Real GDP YoY, RHS %
Source: ECB, Eurostat, Berenberg calculations as at 31 March 2016. Real M1 money supply, deflated by headline CPI, brought forward by three quarters.
Money supply and headline CPI data as at 31 March 2016, Real GDP data as at 31 December 2015 (latest available).
10
After a period of weakness some early signs of
stabilisation emerging
M2 money supply has picked up in China – typically associated with an improvement in business
confidence to come
15
0
10
-30
5
-60
China M2 Money Supply (%y/y)
2014
30
2012
20
2010
60
2008
25
2006
90
2004
30
China Macroeconomic Climate Index (%y/y, rhs)
Source: Barclays Global and European Equity Strategy, Datastream and MSCI as at 23 March 2016. Datapoints included: Industrial
Production, Fixed Asset Investment, Retail sales, Import & Export customs, Revenue, Profits of Industrial Enterprises, Per capita
disposable income of urban residents, Financial loans, M2 money supply, CPI. Data as at 15 December 2015. M2 money supply as
at 5 February 2016.
11
US GDP: A mixture of strengths and weaknesses
Manufacturing v services PMI data
65
80
60
70
60
55
50
50
40
45
30
40
20
35
10
30
0
97
98 99 00 01 02 03
ISM Composite Index
ISM Non-Manufacturing
04
05
06
07
08
09 10 11 12 13 14 15 16
ISM Manufacturing
ISM Manufacturing New Orders (RHS)
Source: JPM as at 31 March 2016. Composite index uses weighting of 75% non-manufacturing and 25% manufacturing.
12
The drag from energy on US manufacturing
should lessen from here
Oil and mining capex cuts have weighed on US GDP
1.3%
140
120
1.1%
100
0.9%
80
0.7%
60
0.5%
40
0.3%
20
0.1%
2015
2013
2011
2009
2007
2005
2003
2001
1999
1997
1995
0
Oil price $, LHS
Investment in mining, exploration and wells & oilfield machinery, % GDP, 2q lag, RHS
Source: Datastream, Credit Suisse Research as at 11 February 2016.
13
Banks in a much better position today
Euro Area Banks Tier 1 Ratio
Euro Area Banks leverage (Assets/Equity)
25x
14%
13%
23x
12%
21x
11%
10%
19x
9%
17x
8%
Source: ECB, Deutsche Bank as at 12 February 2016.
14
2Q15
1Q15
2014
2013
2012
2011
2010
2009
2008
2Q15
1Q15
2014
2013
2012
2011
2010
2009
15x
2008
7%
Banks in a much better position today
Liquidity Coverage Ratio1
Euro Area Banks Loan to Deposit ratio2
145%
180%
140%
150%
135%
120%
130%
90%
125%
Source: 1EBA, Deutsche Bank as at 15 September 2015. Results as provided by the CRD IV-CRR Basel III monitoring exercise report with data as at
31 December 2014. The monitoring exercise is based on a sample of 364 banks comprising 53 group 1 Banks and 311 Group 2 Banks across the EU.
Liquidity Coverage Ratio is a measure of bank’s short term resilience to potential liquidity disruptions. 2ECB, Deutsche Bank as at 12 February 2016.
15
4Q15
3Q15
2Q15
1Q15
2014
2013
2012
2011
2010
Dec 14
Jun 14
2009
Group 2 Banks
105%
2008
Group 1 Banks
Dec 13
110%
Jun 13
0%
Dec 12
115%
Jun 12
30%
Dec 11
120%
Jun 11
60%
Early signs of wages firming in the US
National Federation of Independent Business (NFIB) compensation plans point to firming
wage pressures
%
24
% y/y
4.5
20
3.8
16
3.0
12
2.3
8
Correlation = 0.75
4
1.5
0.8
0
87
92
97
02
07
12
17
NFIB percent planning to raise worker compensation (4q lead, ls)
Average hourly earnings: production & non-supervisory workers (rs)
Source: BLS, NFIB, Have Analytics and Deutsche Bank as at 31 March 2016. The NFIB survey is a balance/diffusion index with
800 small companies (that are members of NFIB) surveyed each month. Shaded blue = recession.
16
Oil prices already fallen a long way
Value of US dollar currency against other major world currencies and Brent per barrel1 (USD)
102.5
115
105
97.5
95
85
92.5
75
65
87.5
55
45
82.5
35
77.5
Value of USD currency versus other major world currencies (LHS)
Source: Bloomberg, Invesco as at 23 March 2016. 1Based on Generic 1st ‘CO’ Future.
17
Mar 16
Feb 16
Jan 16
Dec 15
Nov 15
Oct 15
Sep 15
Aug 15
Jul 15
Jun 15
May 15
Apr 15
Feb 15
Mar 15
Jan 15
Dec 14
Nov 14
Oct 14
Sep 14
Aug 14
Jul 14
Jun 14
May 14
Apr 14
Feb 14
Mar 14
Jan 14
Dec 13
25
Brent per barrel, USD (RHS)
Oil supply adjusting which should be helpful in the
future
The imbalance of supply & demand is relatively small
2015
Million barrels
per day
Global Oil & Gas Demand

Demand for oil is still growing by in excess of
1m barrel of oil equivalent per day

Natural depletion rates of existing fields is
estimated at +/- 4% pa

Non-OPEC supply is expected to fall in 2016,
as US shale oil has peaked, capex cuts
exacerbate depletion rates and a short term
boost to 2015 production growth falls away

OPEC supply boosts from some countries will
be at least partly offset by production
constraints due to underinvestment by others

Strategic petroleum reserve accumulation is
likely to continue
94.5
Non-Opec Supply
58.3
Opec Supply
37.8
Global Oil & Gas Supply
96.1
Over Supply
We see good reason why current low oil
prices are not sustainable medium term
-1.6
Source: Invesco, Bernstein as at 4 January 2016. Opinions and forecasts are subject to change without notice.
18
If oil doesn’t fall further headline inflation should
gradually move back towards core inflation
Euro area: Headline and core inflation since the peak in September 20111
3.5
3.0
Credit Suisse Forecasts
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
Headline inflation, HICP % yoy
Core inflation, CPI % yoy
Source: Credit Suisse as at 31 March 2016. 1Reported data from 30 September 2011 to 29 February 2016.
Thereafter Credit Suisse forecasts.
19
Dec 17
Sep 17
Jun 17
Mar 17
Dec 16
Sep 16
Jun 16
Mar 16
Dec 15
Sep 15
Jun 15
Mar 15
Dec 14
Sep 14
Jun 14
Mar 14
Dec 13
Sep 13
Jun 13
Mar 13
Dec 12
Sep 12
Jun 12
Mar 12
Dec 11
Sep 11
-1.0
Sovereign debt crisis and more latterly
commodity weakness have held back earnings
MSCI Europe annual earnings from 2007 to 2016E broken down into defensives, financials,
commodities and cyclicals (indexed, 2007=100)1
Custom Groupings Share of MSCI
Europe Earnings, rebased to '07
100
90
18
80
70
20
15
14
60
50
40
37
8
24
17
16
18
18
15
19
17
21
11
21
20
20
16
10
7
18
20
22
22
11
14
26
27
27
29
27
27
26
24
23
25
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016E
30
20
10
18
16
0
Defensives
Financials
Commodities
Cyclicals
Source: Datastream, IBES, Morgan Stanley as at 11 April 2016. 1Based on MSCI Europe annual historic trailing earnings. 2016E based
on IBES forecast consensus as at 11 April 2016. Defensives include Consumer Staples, Health Care, Telecommunications and Utilities on
Level 1 basis. Financials on Level 1 basis. Commodities include Energy and Materials. Cyclicals include Consumer Discretionary,
Information Technology and Industrials on Level 1 basis.
20
The drag from energy/mining on European
earnings should lessen from here
Energy and mining now account for around 6% of index earnings*
Share of earnings in Europe
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
Energy
Mining
Source: Datastream, UBS European Equity Strategy as at 11 February 2016.
*Based on MSCI Europe. For 2015E and 2016E earnings forecasts are based on IBES consensus aggregates.
21
2016E
2015E
2014
2013
2012
2011
2010
2009
2008
2007
0%
A number of sectors with earning recovery
potential at low valuations
Selected European sectors: Current earnings versus peak market earnings1, current valuation
relative to long term average cycle adjusted P/E (x)
Current earnings
versus peak
market earnings
at 31 October
20071
Current cycle
adj. PE (x)
Long term
average cycle
adjusted P/E (x)
(Discount)/
Premium
Consumer Goods
73%
23.9
16.6
44%
Technology
19%
27.8
25.9
7%
Healthcare
59%
26.2
26.0
1%
Industrials
-7%
20.2
21.0
-4%
Consumer Services
-8%
21.9
24.4
-10%
Telecoms
-33%
15.6
19.7
-21%
Basic Materials
-47%
12.7
17.8
-29%
Utilities
-47%
11.2
20.3
-45%
Financials
-53%
10.2
20.5
-50%
Oil & Gas
-87%
8.6
18.2
-53%
Source: 1Exane BNP Paribas, Datastream as at 31 March 2016. Data based on Thomson Reuters Datastream complied index, Europe exEmerging Markets, with peak market earnings as at 31 October 2007. Current earnings as at 31 March 2016. All based on 12 month
trailing earnings and on Euro basis. UBS European Equity Strategy, Datastream, as at 28 March 2016. Data based on Datastream
Indices. All underlying nominal earnings data starts from 19 December 1974, with the long term cyclically adjusted P/E starting from
19 December 1984. Cyclically adjusted P/E is based on 10 year average nominal earnings. Current cyclically adjusted P/E is as at
28 March 2016.
22
Overall market valuation still supportive
R2 = 0.74
10-Year subsequent Total Nominal Return
CAGR (%)
25
Current MSCI Europe Cyclically Adjusted PE of 14.9x
20
15
10
5
0
Current level of CAPE1
-5
10
15
20
25
30
35
40
45
50
Starting Cyclically Adjusted PE – MSCI Europe(x)
Past performance is not a guide to future returns.
Source: Citi, Thomson Datastream as at 28 March 2016. Each square/data point on the chart (monthly frequency) maps the starting
cyclically adjusted PE ratio from 31 December 1979 to 28 March 2006 (based on ten years average historic earnings with the underlying
data starting from 31 December 1969) to the subsequent ten year total nominal return up until 28 March 2016 (expressed as an
average annual nominal growth rate and based on historic data). Through regression analysis a line of best fit is calculated, based on the
two data sets that make up each square (all historic data). 1The current cyclically adjusted PE is highlighted – this provides an indication
of what potential returns could be generated based on the line of best fit if the future replicates history.
23
Portfolio positioning
How is our Invesco Pan European Equity Fund
positioned at present?
At present we are overweight:
 Industrials1
 Financials2
 Energy and Materials4
 Telcos3
At present we are underweight:
 Germany, Sweden and Denmark5
 Defensives6
Source: Invesco as at 31 March 2016. The categories highlighted above compare the portfolio weighting relative to MSCI Europe. 1Industrials based on Sector
Level 1 GICS classification. 2Financials based on Sector Level 1 GICS classification. 3Telcos based on Sector Level 1 GICS classification. 4Energy and Materials
based on Sector Level 1 GICS classification. 5These are our three largest active lower exposed positions. 6Defensives based on Sector Level 1 GICS classification:
Consumer Staples, Health Care, Telecommunication Services, Utilities and Sector Level 2 GICS classification: Consumer Durables & Apparel. For illustrative
purposes only. Portfolio characteristics are subject to change without notice.
25
Current positioning highlights a more substantial
tilt to value than usual
Portfolio Tilt Relative to MSCI Europe
(Style SkylineTM)
Invesco Pan European Equity Fund ‘Value’, ‘Growth’ and Market Capitalisation tilts:
Minimum/Maximum range, median and current values 5 years to 31 March 2016
2.25
1.75
1.25
0.75
0.25
-0.25
-0.75
-1.25
-1.75
Value
Growth
Median
Current
Source: Style Research, Invesco as at 31 March 2016. The chart shows how the Invesco Pan European Equity Fund is positioned or
“tilted” relative to MSCI Europe – maximum, minimum, current and median values are provided. Based on the default setting as
provided by Style Research. For “value” six factors are included and equally weighted: Book to Price, Dividend yield, Earnings yield,
Cashflow yield, Sales to Price and EBITDA to price (all historic). For “growth” six factors are included and equally weighted: Return on
Equity, Earnings Growth, Income/Sales, Sales Growth, IBES 12mths Forward Earnings Growth and IBES Full Year 1 Earnings Revisions.
Typically, Style Research provide the following guidelines: Any tilt between -0.5 and +0.5 are probably not significant, any tilt less than
-0.5 or more than +0.5 indicate a tilt exists but many not be significant, and tilt less than -1 or more than +1 are significant and less
than -2 or more than +2 are very significant.
26
Some similarities in current positioning to other
times when valuation dispersion high e.g. June
2012
Portfolio Tilt Relative to MSCI Europe
(Style SkylineTM)
Invesco Pan European Equity Fund ‘Value’, ‘Growth’ and Market Capitalisation tilts:
Minimum/Maximum range, median and current values 5 years to 31 March 2016
2.25
1.75
1.25
0.75
0.25
-0.25
-0.75
-1.25
-1.75
Value
Growth
June 2012
Current
Source: Style Research, Invesco as at 31 March 2016. The chart shows how the Invesco Pan European Equity Fund is positioned or
“tilted” relative to MSCI Europe – maximum, minimum, current and median values are provided. Based on the default setting as
provided by Style Research. For “value” six factors are included and equally weighted: Book to Price, Dividend yield, Earnings yield,
Cashflow yield, Sales to Price and EBITDA to price (all historic). For “growth” six factors are included and equally weighted: Return on
Equity, Earnings Growth, Income/Sales, Sales Growth, IBES 12mths Forward Earnings Growth and IBES Full Year 1 Earnings Revisions.
Typically, Style Research provide the following guidelines: Any tilt between -0.5 and +0.5 are probably not significant, any tilt less than
-0.5 or more than +0.5 indicate a tilt exists but many not be significant, and tilt less than -1 or more than +1 are significant and less
than -2 or more than +2 are very significant.
27
Where are we finding value today?
Key sector positioning and valuation – (discount)/premium to long term average CAPE as at end of March 2016
Region
Oils
Basic Resources
Banks
Pan Europe valuation1
(52%)
(60%)
(52%)
Active fund positioning2
+6%
+6%
+7%
Active positioning by region within
Pan Europe2
Oils
Basic Resources
Banks
Core Europe3
o/w
u/w
o/w
UK
o/w
o/w
o/w
Periphery5
u/w
u/w
o/w
Scandinavia4
o/w
o/w
u/w
Source: Datastream, Invesco as at 31 March 2016. 1Cyclically adjusted PE as at 31 March 2016 compared to the long term average expressed as a discount. Data
based on Datastream index, Europe ex Emerging markets, with the earliest data starting at 31 January 1973. 2Active positioning highlights the active position of
the Invesco Pan European Equity Fund versus Datastream Europe ex Emerging markets index, both Level 1 and Level 2. 3Core Europe includes Belgium,
Netherlands, Austria, Germany, France and Switzerland. 4Scandinavia includes Denmark, Finland, Norway and Sweden. 5Periphery includes Greece, Ireland, Italy,
Portugal and Spain.
28
We are finding it more difficult to find value in
the ‘defensive’ areas
Key sector positioning and valuation – (discount)/premium to long term average CAPE as at end of March 2016
Region
Food & Beverage
Personal &
Household Goods
Healthcare
Telcos.
Pan Europe valuation1
+27%
+26%
+1%
(33%)
Active fund positioning2
(8%)
(8%)
(5%)
+3%
Core Europe3
u/w
u/w
u/w
u/w
UK
u/w
u/w
u/w
o/w
Periphery5
u/w
u/w
u/w
o/w
Scandinavia4
u/w
u/w
u/w
u/w
Active positioning by region
within Pan Europe2
Source: Datastream, Invesco as at 31 March 2016. 1Cyclically adjusted PE as at 31 March2016 compared to the long term average expressed as a discount. Data
based on Datastream index, Europe ex Emerging markets, with the earliest data starting at 31 January 1973. 2Active positioning highlights the active position of
the Invesco Pan European Equity Fund versus Datastream Europe ex Emerging markets index, both Level 1 and Level 2. 3Core Europe includes Belgium,
Netherlands, Austria, Germany, France and Switzerland. 4Scandinavia includes Denmark, Finland, Norway and Sweden. 5Periphery includes Greece, Ireland, Italy,
Portugal and Spain.
29
Invesco Pan European Equity Fund
Active sector weightings (%)1
Financials
Industrials
Energy
Telecommunication Services
Information Technology
Materials
Utilities
Consumer Discretionary
Health Care
Consumer Staples
-15.0
-10.0
-5.0
0.0
5.0
10.0
Source: Invesco as at 31 March 2016. 1Relative to MSCI Europe ND. Portfolio characteristics are subject to change without notice.
30
Invesco Pan European Equity Fund
Top 10 holdings
Stock
Sector
Novartis
Health Care
3.25
BP
Energy
2.84
HSBC
Financials
2.62
Roche
Health Care
2.42
Airbus
Industrials
2.34
Intesa Sanpaolo
Financials
2.30
CAP Gemini
Information Technology
2.29
Intl Consolidated Airlines
Industrials
2.28
Deutsche Boerse
Financials
2.21
Total
Energy
2.21
Source: Invesco as at 31 March 2016. No investment advice for buying/holding/selling shares of the above mentioned companies.
31
% in portfolio
Key changes in fund positioning over last 12 months
Invesco Pan European Equity Fund active sector
weighting relative to MSCI Europe Index (%)
Invesco Pan European Equity Fund active country
weighting relative to MSCI Europe Index (%)
12
8
8
4
4
0
0
-4
-4
12 months ago
6 months ago
Current
6 months ago
Italy
Germany
UK
12 months ago
Switzerland
Health Care
Cons Disc
Energy
Telecoms
Industrials
Financials
-12
Peripheral Countries*
-8
-8
Current
Source: Invesco as at 31 March 2016. *Peripheral countries include Greece, Ireland, Italy, Portugal and Spain. No investment advice for buying/holding/selling
shares of the above mentioned companies.
32
Banks: a number of developments are worrying the market
Banks Relative Performance (RHS)
3.3%
250
3.1%
2.9%
200
2.7%
150
Net Interest Income
2014
2013
2012
2011
2010
2009
2008
2007
2006
2.5%
2005
Euro Area 5Y5Y Inflation Breakevens (%)
3.5%
2004
75
3.7%
300
2003
1.0
3.9%
2002
80
350
2001
1.2
4.3%
4.1%
2000
85
Jan 16
1.4
Oct 15
90
Jul 15
1.6
Apr 15
95
Jan 15
1.8
Oct 14
100
Jul 14
2.0
Apr 14
105
Jan 14
2.2
Worries fuelled by the US: US Banks system wide
Net Interest Margins have been eroded post QE
400
US$ bn
Falling inflation expectations have weighed heavily on
valuations….
2.4
110
Net Interest Margin (RHS)
Source: Left Hand Chart: MSCI, Bloomberg, Morgan Stanley as at 17 February 2016. Relative performance of banks is based on MSCI Europe banks
sector relative to MSCI Europe. Right Hand Chart: Federal Reserve Economic Data, Deutsche Bank as at 11 January 2016. Data for all US banks. No investment
advice for buying/holding/selling shares of the above mentioned companies.
33
Banks: Whilst some headwinds likely to remain there
are some reasons for optimism
An improving economy should also help loan growth…
1.6%
12
1.4%
10
1.2%
8
1.0%
6
0.8%
4
0.6%
2
0.4%
0
0.2%
-2
Bad debt charge / Average loans
Average
Source: Left Hand Chart: Haver, European Central Bank and Morgan Stanley Research as at 31 December 2015. Right Hand Chart: Deutsche Bank as at
17 February 2016. No investment advice for buying/holding/selling shares of the above mentioned companies.
34
2014
2012
2010
2008
2006
2004
2002
2000
1998
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
Loans To Private Sector
Loans To Private Sector Adjusted For Sales & Securitisation
1996
0.0%
-4
1994
Euro Area Loan Growth (%)
14
…..and further reduce the cost of risk
Trough
Energy: Rising capex has hurt returns and ratings
European Oil & Gas Producers capex (US$ bn)
300
European Oil & Gas Producers ROE (%) and Price to
Book (x)
3.5
25
250
3.0
20
2.5
200
15
2.0
150
1.5
10
100
1.0
Price to Book (RHS, x)
Dec 14
Jun 13
Dec 11
Jun 10
Dec 08
Jun 07
Dec 05
Jun 04
Jun 01
Dec 02
Dec 99
Jun 98
Dec 96
Jun 95
Dec 93
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Capex (US$ bn)
0.0
Jun 92
0
0.5
Dec 90
0
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
50
5
ROE (LHS, %)
Source: Datastream, Invesco as at 19 February 2016. All data on an annual basis up to and including 31 December 2015. Based on the Datastream Index “Europe
Oil and Gas Producers.” No investment advice for buying/holding/selling shares of the above mentioned companies.
35
Materials: Attractive valuations within specific subsectors
Europe ex emerging markets basic resources: Cyclically
adjusted PE and long term average (x)1
40
35
We have exposure to specific areas of
basic resources2:

Paper and packaging: Finnish pulp,
paper and timber manufacturers

Mining: British-Australian multinational
metals and mining corporation,
Anglo–Swiss multinational commodity
trading and mining company

Steel: Swedish steel company
30
25
20
15
10
Sep 15
Jul 07
May 99
Mar 91
Jan 83
5
Europe ex emerging markets CAPE (x)
Europe ex emerging markets average CAPE (x)
Source: 1Datastream, Invesco as at 31 March 2016. 2Invesco as at 31 March 2016. For illustrative purposes only. No investment advice for buying/holding/selling
shares of the above mentioned companies.
36
Why we do not own consumer staples
16
R² = 0.70
Current Cyclically
Adjusted PE = 29.1x
14
12
10
8
6
4
2
0
15
20
25
30
Starting Cyclically Adjusted PE ratio (x)
Food and Beverages sector: Starting CAPE (x) and
subsequent 10 year total return CAGR (%)1
Subsequent 10-year total return CAGR (%)
Subsequent 10-year total return CAGR (%)
Personal and Household Goods sector: Starting CAPE (x)
and subsequent 10 year total return CAGR (%)1
R² = 0.63
16
Current Cyclically
Adjusted PE = 29.4x
14
12
10
8
6
4
2
0
15
20
25
30
35
Starting Cyclically Adjusted PE ratio (x)
Past performance is not a guide to future returns.
Source: Thomson Datastream, Invesco as at 1 April 2016. 1Based on Thomson Datastream Index, Europe ex Emerging Markets. Each square/data point on the
chart (monthly frequency) maps the starting cyclically adjusted PE ratio from 1 January 1983 to 1 April 2006 (based on ten years average historic earnings with
the underlying data starting from 1 January 1973) to the subsequent ten year total nominal return up until 1 April 2016 (expressed as an average annual nominal
growth rate and based on historic data.) Through regression analysis a line of best fit is calculated, based on the two data sets that make up each square (all
historic data). Current cyclically adjusted PE as at 1 April 2016.
37
Healthcare sector: some specific opportunities
available
Invesco Pan European Equity Fund active Healthcare sector weighting1 and MSCI Europe
Healthcare 12 month forward P/E relative to MSCI Europe since 31 October 2009 (%)
128
6.00%
123
4.00%
118
2.00%
0.00%
113
-2.00%
108
-4.00%
103
-6.00%
Jan 16
Oct 15
Jul 15
Apr 15
Jan 15
Oct 14
Jul 14
Apr 14
Jan 14
Oct 13
Jul 13
Apr 13
Jan 13
Oct 12
Jul 12
Apr 12
Jan 12
Oct 11
Jul 11
Apr 11
Jan 11
-12.00%
Oct 10
88
Jul 10
-10.00%
Apr 10
93
Jan 10
-8.00%
Oct 09
98
Invesco Pan European Equity Fund: Healthcare sector active weighting relative to MSCI Europe (RHS)
MSCI Europe Healthcare: 12 mths forward P/E relative to MSCI Europe (%)
Source: Style research, Thomson Datastream, Invesco as at 31 March 2016. 131 October 2009 was the maximum active overweight
position in the Healthcare sector of the fund since John Surplice and Martin Walker took over the portfolio on 1 July 2003.
38
Summary
 Equity markets are focused on a number of concerns e.g. oil,
economic growth and inflation…
 ….and UK referendum more in focus
 Despite several challenges facing the global economy not all is
bad
 The focus on these concerns is providing some attractive
valuation opportunities…
 …in sectors such as Financials/Basic resources/Energy & some
cyclicality
Source: Invesco as at 31 March 2016.
39
Performance, attribution &
fund characteristics
A number of worries has lead to quality
outperforming value in recent times
Value has underperformed
1 Jan 2010 = 100
160
150
140
130
120
110
100
Quality v Value
Dec 15
Sep 15
Jun 15
Mar 15
Dec 14
Sep 14
Jun 14
Mar 14
Dec 13
Sep 13
Jun 13
Mar 13
Dec 12
Sep 12
Jun 12
Mar 12
Dec 11
Sep 11
Jun 11
Mar 11
Dec 10
Sep 10
Jun 10
Mar 10
Dec 09
90
Growth v Value
Source: Barclays Research, DataStream, IBES, MSCI, Worldscope as at 31 January 2016. "Quality" is defined as the performance of the
top quartile of MSCI Europe index ranked according to ROE, net debt/equity and earnings variability, rebalanced monthly. "Value" is the
best quartile according to 12 month forward PE, trailing price/book and trailing dividend yield. "Growth" is similarly the best quartile
according to analysts' consensus forecasts for 3 year forward EPS growth, long-term EPS growth and the internal growth rate (defined as
ROE retention ratio).
41
Quality sectors highly correlated with bond yields
Food and Beverages price index relative to Euro Stoxx 600 Index vs US & German 10 year
government bond yield (inverted, %)1
0.5
85%
r2 :
0.94
1.0
65%
1.5
45%
2.5
2.0
3.0
25%
3.5
5%
4.0
4.5
-15%
5.0
Dec 15
Aug 15
Apr 15
Dec 14
Aug 14
Apr 14
Dec 13
Aug 13
Apr 13
Dec 12
Aug 12
Apr 12
Dec 11
Aug 11
Apr 11
Dec 10
Aug 10
Apr 10
Dec 09
Apr 09
Aug 09
Dec 08
Aug 08
Apr 08
Dec 07
Aug 07
Apr 07
Dec 06
Aug 06
5.5
Apr 06
-35%
Food & Beverages sector price index relative to Euro Stoxx 600 (Euro basis)
Blended US & German 10 year government bond yield (RHS, inverted, %, equal weight)
Source: Datastream, Goldman Sachs as at 29 February 2016. 1Blended US and German 10 year government bond yield is the simple
average of the two.
42
Valuation gap between value and quality
becoming extreme
Europe sector neutral composite value: P/B ratio of “cheap” quartile of stocks compared to
“expensive” quartile of stocks (x)
0.55
0.50
0.45
0.40
0.35
0.30
0.25
Nov 15
Jan 15
Mar 14
May 13
Jul 12
Sep 11
Nov 10
Jan 10
Mar 09
May 08
Jul 07
Sep 06
Nov 05
Jan 05
Mar 04
Jul 02
May 03
Sep 01
Nov 00
Jan 00
Mar 99
May 98
Jul 97
Sep 96
Nov 95
Jan 95
Mar 94
May 93
Jul 92
Sep 91
Nov 90
Jan 90
0.20
Source: Nomura StrategyInsight as at 29 February 2016. Sector neutral composite value is defined as the “cheap” quartile of stocks
relative to the “expensive” quartile of stocks screened on an equal weighted sector neutral basis by trailing price to book, trailing
dividend yield and 12 month forward mean consensus price earnings ration. The chart is based on the price/book of “cheap” quartile
of stocks relative to “expensive” quartile of stocks. The universe is based on the top 300 stocks in the FTSE World Europe index. Rebalancing is conducted on a quarterly basis with last re-balancing on 31 December 2015.
43
Performance in 2014 and 2015 has been mostly
impacted by our underweights
Defensive1 sectors positioning and attribution for the period Dec 31 2013 to Dec 31 2015
Sector
Overweight/underweight
Attribution
Consumer staples
Underweight
(-ve)
Health Care
Underweight
(-ve)
Utilities
Underweight
(-ve)
Telcos.
Overweight
(+ve)
Other sectors positioning and attribution for the period Dec 31 2013 to Dec 31 2015
Sector
Overweight/underweight
Attribution
Financials
Overweight
(+ve)
Industrials
Overweight
(+ve)
Information Technology
Overweight
(+ve)
Energy
Overweight
(-ve)
Consumer Discretionary
Overweight
(-ve)
Materials
Overweight
(-ve)
Source: Invesco as at 31 January 2016. 1Defensive sectors as defined by Invesco Perpetual. The attribution figures are estimates and should be used for indicative
purposes only. Data cleansing and retrospective information availability may cause changes. Benchmark index: MSCI Europe.
44
Invesco Pan European Equity Fund
Net performance (%)
Calendar year returns
2005
2006
Invesco Pan European Equity Fund
25.84
22.93
-1.80 -42.26
34.08
14.68
-8.59
20.77
33.54
3.21
7.40
GIFS Europe Large-Cap Blend Equity
25.11
18.50
0.55 -43.69
29.50
11.58 -11.13
17.57
19.94
5.20
10.57
2
1
1
1
4
4
Quartile ranking
Cumulative returns
2007
2008
4
2
2009
2010
1
1
2012
2
2014
-10.04
-5.73
-18.21
25.07
44.51
45.25
GIFS Europe Large-Cap Blend Equity
-7.22
-1.69
-12.04
22.37
35.26
20.35
Quartile ranking
-7.06
-2.12
2
5 years
2015
6 months
4
3 years
2013
3 months
Invesco Pan European Equity Fund
1 year
2011
10 years
2
1
Past performance is not a guide to future returns.
Data as at 31 March 2016. Fund (A Acc share class) performance figures are shown in euros on a mid-to-mid basis, inclusive of gross reinvested income and net of
the ongoing charges and portfolio transaction costs. The figures do not reflect the entry charge paid by individual investors. Sector average performance is
calculated on an equivalent basis. John Surplice and Martin Walker took over management of this fund on 1 July 2003.
Source: © Morningstar 2016. All rights reserved. Use of this content requires expert knowledge. It is to be used by specialist institutions only. The information
contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied, adapted or distributed; and (3) is not warranted to be
accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information,
except where such damages or losses cannot be limited or excluded by law in your jurisdiction.
45
Invesco Pan European Equity Fund
Gross performance (%)
 Long-term outperformance vs. the Benchmark Index
Calendar year returns
2005
2006
Invesco Pan European Equity Fund
28.32
MSCI Europe (NRI)
26.09
Out/underperformance
Cumulative returns
2008
2009
2010
2011
2012
2013 2014
25.38
0.21 -41.08
36.80
17.00
-6.77
23.18
36.19
5.24
9.53
19.61
2.69 -43.65
31.60
11.10
-8.08
17.29
19.82
6.84
8.22
+2.23 +5.77
2007
2015
-2.48 +2.57 +5.20 +5.90 +1.31 +5.89 +16.37 -1.60 +1.31
3 mths
6 mths
1 year
3 years
5 years
10 years
Invesco Pan European Equity Fund
-9.60
-4.80
-16.59
32.66
59.42
77.17
MSCI Europe (NRI)
-7.06
-2.12
-13.71
22.11
37.94
30.12
Out/underperformance
-2.54
-2.68
-2.88
+10.55
+21.48
+47.05
Past performance is not a guide to future returns.
Source: Invesco as at 31 March 2016. Fund performance figures are shown in euros on a mid-to-mid basis, inclusive of reinvested income and gross of the
ongoing charges and portfolio transaction costs. Benchmark Index figures are total return, in euros. John Surplice and Martin Walker took over management of
this fund on 1 July 2003. Please see Net Performance slide for the impact of all fund charges.
46
Invesco Pan European Equity Fund
Time-series of fund “tilts”
Portfolio Tilt Relative to MSCI Europe
(Style SkylineTM)
Invesco Pan European Equity Fund ‘Value’, ‘Growth’ and Market Capitalisation tilts:
Minimum/Maximum range, median and current values 5 years to 31 March 2016
2.25
1.25
0.25
-0.75
-1.75
-2.75
-3.75
-4.75
Value
Growth
Median
Market cap
Current
Source: Style Research, Invesco as at 31 March 2016. The chart shows how the Invesco Pan European Equity Fund is positioned or
“tilted” relative to MSCI Europe – maximum, minimum, current and median values are provided. Based on the default setting as
provided by Style Research. For “value” six factors are included and equally weighted: Book to Price, Dividend yield, Earnings yield,
Cashflow yield, Sales to Price and EBITDA to price (all historic). For “growth” six factors are included and equally weighted: Return on
Equity, Earnings Growth, Income/Sales, Sales Growth, IBES 12mths Forward Earnings Growth and IBES Full Year 1 Earnings Revisions.
Typically, Style Research provide the following guidelines: Any tilt between -0.5 and +0.5 are probably not significant, any tilt less than
-0.5 or more than +0.5 indicate a tilt exists but many not be significant, and tilt less than -1 or more than +1 are significant and less
than -2 or more than +2 are very significant.
47
Invesco Pan European Equity Fund
Time-series of selected risk characteristics
Invesco Pan European Equity Fund Tracking error and portfolio volatility relative to reference
index volatility: Minimum/Maximum range, median and current values 5 years to 31 March 2016
6.0
Range of values (%)
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
Tracking error
Median
Portfolio volatility relative to reference
index
volatility
Portfolio
volatility relative to benchmark
volatility
Current
Source: Style Research, Invesco as at 31 March 2016. The maximum, minimum, current and median values are provided. Tracking error
is an estimate of the expected relative volatility of the portfolio versus the MSCI Europe and is expressed as an annualised percentage.
Portfolio volatility relative to reference index volatility is calculated by subtracting one from the other.
48
Investment team, philosophy
and process
UK and European Equities Team in Henley
Large cap fund managers
Small cap fund managers
Analysts
Mark Barnett
Head of UK
Equities
Matthew
Perowne
Fund Manager
Adrian Bignell
European Fund
Manager
Frederick Bouverat
UK Investment
Analyst
Stephanie
Butcher
European
Fund Manager
John Surplice
European Fund
Manager
Jonathan Brown
UK Fund Manager
Tim Marshall
UK Senior Investment
Analyst
James
Goldstone
UK Fund Manager
Jeff Taylor
Head of European
Equities
Erik Esselink
European Fund
Manager
Steve Smith
Trainee European
Analyst
Ciaran Mallon
UK Fund Manager
Martin Walker
UK Fund Manager
Robin West
UK Fund Manager
Oliver Collin
European Fund
Manager
Average industry experience of 17 years
Source: Invesco as at 31 January 2016.
50
Investment philosophy
 Valuation is the key determinant of future returns over the longer term
 Market inefficiencies create valuation opportunities
 As active Fund Managers we look to take advantage of these opportunities
 We are agnostic with regards to investment style, country or sector positioning
 We are reference index aware not reference index driven
 ‘Bottom up’ and ‘top down’ factors both add value
Our fundamental investment approach combines bottom up and
top down analysis to capitalise on valuation opportunities
For illustrative purposes only.
51
Investment process overview
Idea
generation
Fundamental
research
Portfolio
construction
Valuation
monitoring
Assessing & monitoring risk
Source: Invesco as at 31 December 2015. For illustrative purposes only.
52
Investment process
Idea generation
Process
Idea generation
Where do ideas come
from?
What are we looking
for?
Fundamental
research
Internal resources
Signs of change
Valuation
monitoring
 Fund Manager
 European Investment team
 Henley Investment colleagues
 Company meetings
 Proprietary portfolio valuation
tool in combination with HOLT
External resources
 Trusted sell side analysts
 Trusted sell side strategists
For illustrative purposes only.
53
For example:
 Strategy
 Management
 Market perceptions/consensus
 Macro trends
 Structural trends
 Valuation
Portfolio
construction
Assessing and
monitoring risk
Investment process
Fundamental research
Generic illustration at idea inception– a number of areas for potential
consideration
Content
Process
Idea generation
Valuation
Fundamental
research
 Long term scenarios incorporating both
potential & risks
 Compare with current share price
Portfolio
construction
Valuation
monitoring
Secular
Company specific
 Industry cycle
 Government policy
 Regulation
 Demographics
 Management
 Market position
 Strategy
 Restructuring
 Capital allocation
Context
For illustrative purposes only.
54
 Stage of the cycle
 Monetary policy
 Fiscal policy
 Lead indicators
Risk
 Valuation risk
 Financial risk
Cyclical
 Forecast risk
 Other risks
Assessing and
monitoring risk
Investment process
Fundamental research
Considerable experience and use of valuation methodologies across a wide
variety of industries
Valuation tools
Semiconductors
Basic Materials
Energy
Industrials
Financials
Autos
Retail
Utilities
Telecoms Services
Infrastructure
Consumer
Services
IT Hardware
Media
IT Software
Health Care
Consumer Staples
Stability of earnings
For illustrative purposes only.
55
Asset intensity
Asset intensity
Industry Groups
Process
Idea generation
Fundamental
research
Price/Book Value vs
ROE
EV/Sales vs EBIT
Margin
Dividend Yield
EV/IC – vs
ROIC/WACC
Price/Book Value
vs ROE
EV/EBITDA
FCF Yield
EV/IC – vs
ROIC/WACC
PE
EV/EBITDA
EV/Sales vs EBIT
Margin
FCF Yield
PE
FCF Yield
Dividend Yield
Stability of earnings
Portfolio
construction
Valuation
monitoring
Assessing and
monitoring risk
Investment process
Portfolio construction
Stock weightings are determined by a number of factors:
Size of holding influenced by:
 Our assessment of potential upside
 Our assessment of risk
 Individual stock contribution to risk
 Liquidity of stock
Other considerations:
 Reference Index aware but not reference
index driven
 Impact on the shape of the portfolio of new
purchase/sale
 Top down factors/turning points can also be
relevant at specific times
Portfolio
 Portfolio typically consists of between 65 to 75 stocks
 Active position typically not over 3% in any one stock
 Typically no more than 5% in any one stock
 Active share typically over 70%
 Cash position: Portfolio intended to be fully invested
We aim to create a well diversified portfolio of
active positions
Source: Invesco as at 31 December 2015. For illustrative purposes only.
56
Process
Idea generation
Fundamental
research
Portfolio
construction
Valuation
monitoring
Assessing and
monitoring risk
Investment process
Valuation monitoring
Valuation monitoring at a stock level
Our fundamental
research, incorporating
the key structural,
cyclical and company
specific drivers,
provides the basis for
our long term
valuation scenarios.
Incorporating our own
assumptions into
models provided by
trusted 3rd party
analysts is an
important part of
generating our long
term valuation
scenarios.
For illustrative purposes only.
57
We continuously
monitor these drivers
& risks and, if
required, adjust our
valuation scenarios
accordingly.
Greater/lower
confidence in the
delivery of the
individual drivers will
determine the potential
upside/downside.
We focus on the long
term.
Selling a holding is
normally due to:
 The drivers are fully
appreciated in the
share price.
 The anticipated
delivery of some or
all of the key drivers
have failed to
materialise.
 Another stock with
better risk/reward
characteristics
Process
Idea generation
Fundamental
research
Portfolio
construction
Valuation
monitoring
Assessing and
monitoring risk
Investment process
Valuation monitoring
Valuation monitoring at a portfolio level
Process
Idea generation
We continuously
assess:
This framework
highlights:
- Pan European sector
valuations
- Country valuations
within each sector
- Any Pan European
sector valuations
which are
cheap/expensive
against their history
- Which countries
within Europe are
cheap/expensive
against their history
at a sector level
- Our positioning on
the same basis
We then compare
these valuations with
our positioning
Valuation metrics
used:
- Cyclically adjusted PE (x)
- Price-to-Book (x)
Any anomalies are
flagged and further
investigated.
Anomalies can include:
1) Portfolio being high
exposed a sector in a
country whilst cheaper
opportunities in the
same sector exist in
another country
2) Portfolio being low
exposed a sector in a
country whilst being
high exposed in the
same sector in another
country
Individual holdings
which have been
highlighted are
scrutinised
For illustrative purposes only.
58
Fundamental
research
Portfolio
construction
Valuation
monitoring
Assessing and
monitoring risk
Investment process
Valuation monitoring
Process
CAPE Valuation Dashboard
Fund positioning and current cyclically adjusted PEs compared to their long term history
(premium/(discount))
Europe
Scandinavia
Core
Periphery
UK
Oils
Overweight
Overweight
Overweight
Underweight
Overweight
Basic Materials
Overweight
Overweight
Underweight
Neutral
Overweight
Industrials
Overweight
Underweight
Overweight
Overweight
Overweight
Consumer Goods
Underweight
Underweight
Underweight
Neutral
Underweight
Healthcare
Underweight
Underweight
Underweight
Neutral
Underweight
Consumer services
Underweight
Underweight
Underweight
Overweight
Underweight
Telecoms
Overweight
Underweight
Underweight
Overweight
Overweight
Banks
Overweight
Neutral
Neutral
Overweight
Overweight
Insurers
Overweight
Neutral
Underweight
Neutral
Overweight
Underweight
Neutral
Underweight
Neutral
Underweight
Financial services
Overweight
Underweight
Overweight
Neutral
Underweight
Financials
Overweight
Underweight
Overweight
Overweight
Overweight
Underweight
Neutral
Neutral
Underweight
Neutral
Overweight
Overweight
Overweight
Neutral
Neutral
Neutral
Overweight
Underweight
Overweight
Overweight
Real Estate
Utilities
Technology
Market
Key: Current CAPE vs Long-term average
Cheap
Expensive
Idea generation
Fundamental
research
Portfolio
construction
Valuation
monitoring
Assessing and
monitoring risk
Neutral
For illustrative purposes only. Source: Invesco. Uses data from Datastream in calculating Cyclically Adjusted PEs. Data as at 30 June 2015. The words “Overweight”,
“Underweight” and “Neutral” in the matrix indicate the fund’s weighting in a particular Sector/Geography relative to the Datastream Europe Excluding Emerging
Markets Index.
59
Investment process
Assessing and monitoring risk
A combination of fund manager judgment and
quantitative analysis at a:
 Stock level
 Portfolio level
A number of monitoring structures and tools to
assist fund manager:
 Investment oversight team
 CIO challenge
 Independent risk team
For illustrative purposes only.
60
Process
Idea generation
Fundamental
research
Portfolio
construction
Valuation
monitoring
Assessing and
monitoring risk
Investment process
Assessing and monitoring risk
Process
CIO challenge
Analysis of past performance
& risk relative to product
objectives
Idea generation
Has the fund manager met
investment objectives?
Has the fund manager
expressed conviction?
Quantitative & qualitative
view of past decisions
Has the fund manager made
sound investment
judgements?
Analysis of current
investment portfolio
Has the fund manager
applied due diligence in the
current portfolio?
Fund manager judgment and use of quantitative tools
For illustrative purposes only.
61
Fundamental
research
Portfolio
construction
Valuation
monitoring
Assessing and
monitoring risk
Investment process
Assessing and monitoring risk
Investment oversight team*:
 Regular in depth interaction to challenge investment team
 Assisting the CIO challenge process
 Provides much valued, thorough quantitative inputs for
investment team
EMEA Independent Risk Function (IRF):
 22 risk specialists monitoring and identifying operational and
portfolio risks
 GPMR1 team (80+ personnel) provides data for the IRF including
liquidity risk analysis and Value at Risk analysis
 Quarterly meetings with fund managers to discuss early warning
signs
Source: Invesco as at 31 December 2015.
*The Investment Oversight team has 4 dedicated specialists. 1GPMR: Global Performance Measurement and Risk.
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Process
Idea generation
Fundamental
research
Portfolio
construction
Valuation
monitoring
Assessing and
monitoring risk
Conclusion
 A stable and experienced fund management team
 Established and repeatable investment approach
 No pre-conceived style bias
 The Henley environment:
– Encourages a “challenge culture”
– Encourages a long term focus
– Provides senior management backing to take active,
non-consensual positions
Source: Invesco as at 31 December 2015.
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Investment team
Biographies
John Surplice, European Equities Fund Manager at Invesco Perpetual
Based in Henley-on-Thames, John is responsible for the management of a number of pan European mandates.
John began his career in 1992, joining Price Waterhouse, where he qualified as a chartered accountant before
joining our company in 1995. John holds an MA (Honours) in Economics from Edinburgh University.
Martin Walker, UK Equities Fund Manager at Invesco Perpetual
Based in Henley-on-Thames, Martin is responsible for the management of a number of UK equity portfolios. He
began his investment career in 1997 after previous experience as an investment analyst with BWD Rensburg.
Martin joined our company in 1999 as a trainee fund manager and has developed his career within the Henleybased UK Equities team, managing UK equity portfolios since 2003. Further recognition and a higher profile were
provided as he took over some of the portfolio management responsibilities of veteran fund manager, Ed Burke,
upon his retirement in 2008. Martin holds a BA in Financial Economics from Liverpool University and has also
attained the Securities Institute Diploma.
Source: Invesco as at 31 December 2015.
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Important information
This marketing document is exclusively for use by Professional Clients and Financial Advisers in Continental Europe and Qualified Investors in
Switzerland. Data as at 31.03.2016, unless otherwise stated. This document is not for consumer use, please do not redistribute. It is not
subject to German regulatory requirements that ensure impartiality of financial analysis. Therefore, the prohibition of trading before the
release of financial analysis does not apply.
Past performance is not a guide to future returns. The information provided on the investments and investment strategy (including current investment
themes, the research and investment process, and portfolio characteristics, weightings, and allocation) represents the views of the portfolio manager at the
time this material was completed, and is subject to change without notice. The value of investments and any income will fluctuate (this may partly be the
result of exchange-rate fluctuations) and investors may not get back the full amount invested.
Where securities are mentioned in this document they do not necessarily represent a specific portfolio holding and do not constitute a recommendation to
purchase, hold or sell. For more information on our funds, please refer to the most up to date relevant fund and share class-specific Key Investor Information
Documents, the latest Annual or Interim Reports and the latest Prospectus, and constituent documents. This information is available using the contact details
of the issuer and is without charge. Further information on our products is available using the contact details shown.
Whilst great care has been taken to ensure that the information contained herein is accurate, no responsibility can be accepted for any errors, mistakes or
omissions or for any action taken in reliance thereon. This marketing document is not an invitation to subscribe for shares in the fund and is by way of
information only, it should not be considered financial advice. The performance data shown does not take account of the commissions and costs incurred on
the issue and redemption of units. Any reference to a ranking, a rating or an award provides no guarantee for future performance results and is not constant
over time. Persons interested in acquiring the fund should inform themselves as to (i) the legal requirements in the countries of their nationality, residence,
ordinary residence or domicile; (ii) any foreign exchange controls and (iii) any relevant tax consequences. As with all investments, there are associated risks.
This document is by way of information only. Asset management services are provided by Invesco in accordance with appropriate local legislation and
regulations. The fund is available only in jurisdictions where its promotion and sale is permitted. Not all share classes of this fund may be available for public
sale in all jurisdictions and not all share classes are the same nor do they necessarily suit every investor. Fee structure and minimum investment levels may
vary dependent on share class chosen. Please check the most recent version of the fund prospectus in relation to the criteria for the individual share classes
and contact your local Invesco office for full details of the fund registration status in your jurisdiction. Please be advised that the information provided in this
document is referring to Class A (accumulation - EUR) exclusively. This fund is domiciled in Luxembourg.
Denmark: The fund is not registered for public distribution in this jurisdiction. This document is provided only to Professional Clients and must not be
redistributed to retail clients. Germany, Austria and Switzerland: This document is issued in Germany by Invesco Asset Management Deutschland GmbH.
This document is issued in Austria by Invesco Asset Management Österreich GmbH and in Switzerland by Invesco Asset Management (Schweiz) AG.
Subscriptions of shares are only accepted on the basis of the most up to date legal offering documents. The legal offering documents (fund & share class
specific Key Investor Information Document, prospectus, annual & semi-annual reports, articles and trustee deed) are available free of charge at our website
and in hardcopy and local language from the issuers: Invesco Asset Management Deutschland GmbH, An der Welle 5, D-60322 Frankfurt am Main, Invesco
Asset Management Österreich GmbH, Rotenturmstrasse 16-18, A-1010 Wien, and Invesco Asset Management (Schweiz) AG, Talacker 34, CH-8001 Zurich,
who acts as a representative for the funds distributed in Switzerland. Paying agent for the fund distributed in Switzerland: BNP PARIBAS SECURITIES
SERVICES, Paris, succursale de Zurich, Selnaustrasse 16, CH-8002 Zürich.
www.invescoeurope.com
CE1038/2016
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