This report details the recent performance and significant upcoming changes for the Invesco EQV Emerging Markets All-Cap Fund. In the second quarter of 2025, the fund achieved positive returns, yet it did not match the performance of its benchmark, the MSCI Emerging Markets Index. This outcome was influenced by varied sector-specific results, with certain areas bolstering performance while others acted as a drag. Looking ahead, the fund is set to undergo a notable strategic realignment later in 2025, which includes a renaming and a shift in its primary market focus, alongside a transition in its management team. These adjustments are poised to redefine the fund's investment approach and target geography.
The fund's performance in Q2 2025 was a mixed bag. Positive contributions largely stemmed from strategic stock selections within the financial and consumer discretionary sectors. These areas demonstrated resilience and growth, providing a much-needed boost to the fund's overall returns. However, this positive momentum was offset by weaker performance in other key sectors. Stock choices in consumer staples, industrials, and communication services were identified as the primary detractors from relative results, highlighting areas where the fund's investments did not yield the anticipated returns compared to the broader market index.
A pivotal change for the fund is slated for August 22, 2025. On this date, the fund will officially be renamed the Invesco Emerging Markets ex-China Fund. This rebranding signifies a deliberate shift in investment focus, explicitly excluding Chinese equities from its portfolio. Concurrently, the MSCI Emerging Markets ex-China Index will be adopted as the new style-specific benchmark, aligning the fund's performance measurement with its revised investment mandate. This strategic pivot reflects an evolving perspective on emerging markets, potentially in response to geopolitical or economic shifts that necessitate a more targeted approach.
Adding to the transformative period for the fund, a new portfolio management team took the helm on June 23, 2025. James McDermottroe, Charles Bond, and Matthew Pigott assumed management responsibilities, bringing fresh perspectives and expertise to guide the fund through its strategic redirection. This change in leadership, preceding the fund's renaming and benchmark adjustment, underscores a comprehensive effort to re-energize and refocus the fund's investment strategy.
In summary, while the Invesco EQV Emerging Markets All-Cap Fund posted positive returns in the second quarter of 2025, it faced challenges in outperforming its benchmark, primarily due to varied sector performance. The impending strategic shifts, including a name change to Invesco Emerging Markets ex-China Fund, the adoption of a new benchmark excluding China, and the recent appointment of a new management team, signify a significant reorientation designed to better position the fund within the dynamic landscape of global emerging markets.