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Study: Education Paramount as Alternatives Become More Mainstream Among Investors

Invesco planning expansion of both alternative product distribution and client education in 2014

HOUSTON, Feb. 19, 2014 /PRNewswire/ -- Despite the growing proliferation of liquid alternative funds attracting considerable assets from investors, a recent study shows a vast majority of certain investors are not familiar with the term alternative investment.

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In November of 2013 Invesco teamed with Cogent Research, a division of Market Strategies International1, to survey investors with at least $250,000 in investable assets and who work with a financial advisor. Among this target group, 77% were not familiar with the term alternative investment, and among the 23% who were, only 4 out of 10 were using them. The remainder of the research focused on the 23%, or 429 investors, who were familiar with alternative investments.

"While at least somewhat surprising given the amount of discussion about this topic, these survey results present a tremendous opportunity for Invesco and our industry to better educate investors on the potential benefits of liquid alternative investments in a balanced portfolio," said Andrew Schlossberg, Head of U.S. Retail Distribution. "Based on the changing dynamics of today's global economy and markets, we see a long-term, growing need for alternative investments as a complementary component in portfolio construction among financial advisors and individual investors."

The survey indicated only 10% of participants believe they have a relatively high level of understanding about alternative investments, and their descriptions of an alternative investment were very broad and non-descript. For example, approximately 5% named money market funds as an alternative investment.

"While alternative investments are not new to the investing landscape, their adoption into the retail marketplace is still in the very early stages and I think the definition of these products remains a work in progress," said Gary Wendler, Head of Product Development & Investment Measurement/Risk. "With greater education will come a better understanding and recognition of how liquid alternatives can help investors meet their financial goals while providing a potentially better risk profile."

Many investors may be overlooking the possibility that a diversified portfolio containing traditional investments and non-correlated alternatives can be an effective way to mitigate volatility and improve performance. In fact, 80% of survey participants who held alternative investments in their portfolios considered them more risky than traditional investments.

"Depending on an investor's goals and risk profile, alternatives can be recommended by financial advisors as a way to actually lower risk in a portfolio," Mr. Wendler said. "Whether investors are searching for additional yield, greater total returns or reducing their risk profile through diversification, we believe investors should consider the possibility that adding alternative investments to their portfolio may be a prudent decision."


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Given the need for greater education about alternative investments permeating from the survey's results, Invesco will be introducing a comprehensive approach to educating financial advisors on Invesco's extensive alternatives management experience, growing suite of liquid alternative capabilities, and how they might consider using them for the benefit of their clients through a program called Invesco Risk Institute.

The Invesco Risk Institute provides a three-pronged approach to risk management that includes a robust suite of advisor education opportunities, tactical implementation ideas and client education and communication tools. Through the Institute's holistic approach to risk awareness and management, advisors will gain access to Invesco's expertise in risk management, alternatives and client education.

"Through Invesco Risk Institute, we will be diligently working to equip our clients with the knowledge and tools they may need to accurately discuss alternatives so investors can make the most informed decisions in meeting their financial goals," Mr. Schlossberg said.

About Invesco Ltd.

Invesco Ltd. is a leading independent global investment management firm, dedicated to helping investors worldwide achieve their financial objectives. By delivering the combined power of our distinctive investment management capabilities, Invesco provides a wide range of investment strategies and vehicles to our clients around the world. Operating in more than 20 countries, the firm is listed on the New York Stock Exchange under the symbol IVZ. Additional information is available at www.invesco.com.

1Market Strategies International acquired Cogent Research in May 2013

SOURCE Invesco

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