The Invesco UK Companies fund has undergone a rebrand as it moves towards a more environmental, social and governance (ESG) mandate. The £158m portfolio, managed by Tim Marshall, will now be named the Invesco Sustainable UK Companies fund.
Marshall and his team will remain in place, as will the portfolio’s long-term investment strategy of making positive capital gains over five years, but they will use a different stock-picking criteria.
The manager said: “In our view, the long-term investment opportunity in UK companies promoting sustainable themes is underestimated.”
Invesco said, however, that traditional ESG ratings can often be “backward-looking and inconsistent”. It and will therefore use scores with analyst research to identify “misunderstood and mispriced companies”.
This may help previously poor performance – the fund has been a bottom-quartile performer over three and five years, returning just 13% over the latter period (compared with a 30.1% gain from the average fund in the IA UK All Companies sector).
Total return of fund vs sector over five years
Source: FE Analytics
It has performed better over the past year, returning 20.5% (a top-quartile performance), as its value style has returned to form.
ESG funds have increased in popularity in recent years, especially since world leaders joined in a global effort to combat global warming at COP 26 in October last year.
Blackrock chair, Larry Fink said in recent statement that the “decarbonising of the global economy is going to create the greatest investment opportunity of our lifetime.”
Alexander Millar, head of UK distribution at Invesco said: “As society transitions to a more sustainable future, our industry has an important role in both financing the transition and providing investors with access to opportunities that arise from it.”
Other fund have rebranded themselves in recent weeks to adapt to the ESG trend, with Premier Miton confirming that the Balanced Multi Asset fund will be renamed the Diversified Sustainable Growth fund in March.