Invesco Launches Risk Premium Capture Strategy

An Invesco news release said the new offering is designed to take advantage of a market’s risk premium and diversification with the intent to raise the average excess return above cash and reduce the range of outcomes. The strategy uses proprietary risk management and rebalancing techniques to generate equity-like returns with bond-like risk.

The strategy invests in a balanced set of asset classes: equities, government bonds and commodities.  The weights of the asset classes are set such that each contributes a similar amount of risk to the overall portfolio in an effort to defend against negative economic outcomes, the announcement said.

Premia Plus targets a return of cash plus 6% with total volatility of 8%.  The strategy employs a long-only implementation that can be used as a stand-alone investment or combined with other alpha or beta strategies, similar to fund of hedge funds, Invesco said.

“The essence of the product is efficiently capturing risk premia, the excess return that investors receive for owning risky assets, above the cash return,” said Scott Wolle, CIO of Invesco Global Asset Allocation, in the news release.