How a Billion-Dollar Invesco Fund Did a U-Turn After Hot Inflation Data

Alessio de Longis spent the last three months loading up on risk in his $1.1 billion Invesco Global Allocation Fund. Now, he’s winding down those positions and reversing course back to safety.

The senior portfolio manager at Invesco is changing tack after a flurry of hotter-than-expected economic data fueled expectations that Federal Reserve officials will keep raising rates for longer. Amid souring investor sentiment, de Longis is ditching stocks for bonds and turning less bearish on the US dollar.

Invesco’s Global Allocation Fund has returned about 5% this year through Friday, behind the 5.7% gain for the S&P 500 Index, but ahead of peers like the T Rowe Price Global Allocation Fund, American Funds Global Balanced Fund and BlackRock Global Allocation Fund Inc.. The fund is the largest of at least seven active funds managed by de Longis, according to data compiled by Bloomberg.

His new positioning underscores the flight-to-safety that has permeated markets in recent weeks as Treasury yields skyrocketed and stocks unwound their January rally. The Fed Funds rate is now expected to top 5.4% by July 2023, compared with a peak of 5% priced in at the start of the year.

“We’re back to where we were in the summer, where inflation was surprising to the upside and the Fed was communicating quite clearly, ‘We are not done yet’,” de Longis, who has led the Global Allocation Fund since 2019, said in an interview. “We spent the last three months hoping for a pause, for a signal of a pause.”

He is no longer convinced any such respite is coming soon.