Risk & Reward – 2nd Issue 2022

Risk & Reward

Proxy voting can be powerful, but also challenging, particularly when it comes to ESG. Invesco’s approach aims to increase the impact of active stewardship by leveraging the voting strength of our passive strategies – because every vote counts in the era of responsible investing.


Our lead article is accompanied by interviews with Matthew Tagliana, Head of ETF Product and Sales Strategy for EMEA at Invesco and Oğuzhan Karakaş, Associate Professor of Finance at the University of Cambridge’s Judge Business School.


The potential for incoherent ESG portfolios due to disagreements between equity and fixed income managers is quite high in multi-asset portfolios. We recommend multi-asset investors be mindful of potential pitfalls when it comes to achieving ESG targets.


As more and more investors incorporate ESG, the impact on risk and return must be made more transparent. Using a returns-based attribution framework, we find that a generic multi-factor index with ESG objectives delivers no significant exposure to ESG. Therefore, we propose a novel approach.


Investment managers have traditionally viewed taxation as something of an afterthought – but that is beginning to change. We describe three levers of tax alpha, discuss them in detail and show in a case study how tax-aware investing can improve investment returns for different portfolio setups.


For many US investors, low-yielding European and Japanese government bonds seem less than attractive. But when hedged into US dollars, they offer returns similar to those of US Treasuries and can meaningfully improve the risk-return profile of a US core bond portfolio.

Investment risks


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.



Important Information


Data as at 30 April 2022, unless otherwise stated.

This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities.

Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals, they are subject to change without notice and are not to be construed as investment advice.

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