Invesco EQV International Equity Fund Q4 2024 Commentary

2025-02-11 11:03:00 ET

Summary

• Class A shares underperformed the MSCI ACWI ex USA Index. Notable detractors from relative return included stock selection in financials, consumer staples and health care, along with an underweight in financials and an overweight in consumer staples.
• During the quarter, we initiated four new positions and exited one stock based on our EQV fundamentals. Our actively managed, bottom-up stock selection drives the fund’s sector, country and regional allocations.
• Regardless of the macroeconomic environment, we remain focused on applying our well-established, long-term, bottom-up EQV investment process that seeks to identify attractively valued, high quality growth companies.

Manager perspective and outlook

• Global equity returns were mixed in the fourth quarter, with developed equities outperforming emerging market equities. US stocks posted a positive return and were among the best-performing developed markets, helped by November’s strong post-election rally. France was among the weakest European markets, hurt by political instability as December brought the country’s fourth new government of 2024. German stocks fared better but also declined amid political uncertainty.
• Potential trade policy risks related to the incoming US administration and a stronger US dollar spurred losses in emerging market equities, particularly in Latin America and Asia ex Japan. Equities in Brazil and South Korea were among the worst performers in US dollar terms as Brazil’s rising interest rates and South Korea’s political turmoil dampened investor confidence.
• Our team remains focused on applying our long-term, bottom-up EQV investment process that seeks to identify attractively valued, high quality growth companies. As global equities have continued to rise in some regions, we believe it is important to acknowledge potential risks, including geopolitical tensions, which may create market headwinds and increase volatility. In this environment, we believe equity investors may focus on the type of high quality and traditional investment fundamentals that are central to our balanced EQV investment philosophy.

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