Invesco Summit Responsible 2 (UK) Fund

Sustainable, Responsible &/or ESG Policy:

It is the investment team’s belief that non-financial considerations such as ESG are a third dimension of investing, alongside return and risk. The team acknowledges that consideration of ESG-related factors in investment analysis can help to mitigate risk and/or identify opportunities that may benefit from the ESG-related trends.

For its funds, the team sees ESG considerations as part of an investment toolkit that can help in its macro analysis, fund research and also in underlying fund managers' stock analysis.

It is important to note that no decisions are taken because of ESG scores or ESG analysis alone. Rather, these observations are used to complement other aspects of the team’s own independent research.

ESG is embedded throughout the investment process, both from a top-down and bottom-up perspective.

Asset allocation

As macro thinkers, ESG considerations naturally form part of the team’s top-down macro research efforts. The VOTE framework drives the team’s tactical asset allocation views. The VOTE framework encompasses a comprehensive set of inputs to facilitate the team's qualitative assessment of markets and asset classes. Here, the team fundamentally grades each asset class and market on the basis of the following factors: Valuations (V), Other factors (O), Technicals (T) and Earnings/Economics (E). Where appropriate, ESG is considered within each of these elements; however, it is within ‘Other’ where ESG is most pertinent. Considerations within this area include politics and policy.

Major political changes, such as a shift from one party to another, for instance, impact the perceived country risk of a particular economy, while social factors such as income inequality play an important role in determining a country’s growth potential. While the team finds that ESG issues, per se, may or may not be determining factors of our economic analysis, they do nonetheless form part of our overall evaluation.

The ESG assessment of developed sovereign exposures harnesses the Fundamental Fixed Income team’s sovereign proprietary ESG ratings, with a minimum issuer score of B.

Fund selection     

While the asset allocation stage of the process determines which markets (and how much of those markets) should be owned, responsible fund selection is concerned with determining how these markets are accessed and in ensuring the underlying funds selected deliver on the intended ESG outcomes.

The Summit Responsible portfolios allocate to Invesco’s proprietary ESG ETFs which are selected for their expected ability to yield similar risk/return profiles (through high correlation and low tracking errors) to traditional regional equity and corporate bond indices, but with improved ESG characteristics compared to such traditional indices.

In practice, Invesco’s ESG ETFs maintain exposure to all equity GICS sectors (which helps achieve a low level of active risk and therefore a ‘market-like’ experience) though combine exclusionary and positive tilting approaches within sectors to improve the range’s overall ESG characteristics.

Engagement

The team’s engagement is typically top-down, carried out at a national, industry and regulatory level. Lead manager for the fund range, David Aujla, is engaged with several organisations on responsible investment matters, particularly around the ‘S’ in ESG and on topics such as how financial services can drive social mobility. He founded and co-leads the Diversity Project’s Social Mobility workstream, which seeks to improve socio-economic diversity within the investment and savings industry.

Top-down engagement is complemented with bottom-up efforts where, as a firm, we exercise our rights as active owners to encourage continual improvement in the companies that we invest in. Together with our Global ESG team, we may escalate concerns along a broad escalation hierarchy, such as engaging directly with the company’s board and/or senior management, collaborating with fellow shareholders or sponsoring service provider engagement.

Process:

The investment process comprises asset allocation, fund selection, and portfolio construction:

For illustrative purposes only.

Stage 1: Asset allocation
The asset allocation stage determines the asset classes owned and the proportions in which they are owned. There are two key steps in this stage:

• Strategic asset allocation (SAA): The starting point is SAA, which ensures that each portfolio is aligned to its intended risk profile, while seeking to maximise return potential. The team is fortunate to be able to access this expertise via the firm’s in-house global Invesco Solutions team. It is this team’s proprietary 10-year capital market assumptions (CMAs) - risk and return estimates for each asset class - that drives these long-term allocations.
• Tactical asset allocation: Each portfolio’s final positioning is determined by the team’s TAA views, which seek to exploit relative value opportunities between asset classes and markets on a one-to-three-year time horizon. This stage of the process is driven by the team’s fundamental VOTE framework, which combines the team’s deep macro experience and Invesco’s extensive investment capabilities.

For illustrative purposes only.

The VOTE framework encompasses a comprehensive set of inputs to facilitate the team's qualitative assessment of markets and asset classes. Here, the team fundamentally grades each asset class and market on the basis of the following factors; valuation, other, technicals and earnings/economics. Each market is graded on an A to E scale determining those markets the team believes should be tactically overweight, underweight, or neutral.

Example of the TAA framework:

For illustrative purposes only. Red letters denote a score downgrade, green letters denote a score upgrade. Scores range from A to E with A being the strongest rank.

Stage 2: Fund selection
While the asset allocation stage of the process determines which markets (and how much of those markets) should be owned, responsible fund selection is concerned with determining how these markets are accessed and in ensuring the underlying funds selected deliver on the intended ESG outcomes.

Summit Responsible takes relatively little active risk (i.e. typically has low tracking error) as it is designed to deliver a market-like experience with ESG improvements vs a non ESG-comparator.

To achieve this, the Summit Responsible portfolios allocate to Invesco’s proprietary ESG ETFs which are selected for their expected ability to yield similar risk/return profiles (through high correlation and low tracking errors) to traditional regional equity and corporate bond indices, but with improved ESG characteristics compared to such traditional indices.

As a responsible range, Summit Responsible targets a more broad-church approach to ESG, not necessarily a sustainable or impact approach. Therefore, while certain exclusion criteria are applied, a tilting approach within the underlying ETFs is favoured which means overweights towards higher scoring or positive ESG momentum companies.

Importantly, the methodology used is industry neutral so that we don’t end up with significant over-weights to certain sectors or regions as some other ESG funds do. This ensures that this range of funds is more balanced and less skewed to style factors like growth and value or to sectors like technology and oil & gas.

Ultimately this also means that the range has exposure to all the 11 equity GICS sectors (which helps achieve a ‘market-like’ experience) though applies exclusions and positive tilting within sectors to improve its ESG characteristics.

The adopted methodology therefore tends to provide a more balanced outcome for investors in relation to the customary trade-off between tracking error and ESG improvement potential.
With the aim of achieving 100% responsible investments, the underlying ETFs selected by the team typically follow four key index methodologies to deliver responsible outcomes.

The four index methodologies used are:

• MSCI ESG Universal Select Business Screens index
• FTSE All Share ex Investment Trusts ESG Climate Select index
• S&P 500 ESG index
• Bloomberg MSCI Liquid ESG Weighted Bond index.
  
  

To varying degrees, each methodology adopts a combination of:

• Negative ESG screening by which certain sectors may be excluded, including but not limited to weapons, oil sands, tobacco or companies that have not been rated due to poor ESG credentials.
• Positive ESG screening or tilting increasing overall exposure to those companies demonstrating a robust ESG profile and/or a positive trend in improving that profile.
  
  

Where the range has exposure to government bonds, this will be accessed via Invesco ETFs which meet certain ESG internal criteria but are not inherently ‘ESG’ funds (i.e. such funds do not meet Article 8 or 9 of Sustainable Finance Disclosure Regulation (SFDR) or equivalent local regulation). The ESG assessment of these exposures harnesses the Invesco Fixed Income (IFI) team’s sovereign proprietary ESG rating which rates over 160 sovereign issuers. The Summit Responsible range will invest in issuers whose rating in our proprietary tool is an A or B.

When identifying and selecting the underlying ETFs, the investment team considers the following ESG factors:

• Underlying index ESG methodology: Construction decisions such as exclusions (e.g. business involvement exclusions), revenue thresholds, positive screening or tilting and sustainable selection are considered to ensure they are in line with the requirements of the investment objective and policy, and to maximise consistency of approach where relevant/possible. 
• ESG rating/score: The overall ESG score, and the improvement achieved versus an equivalent non-ESG index is considered. In particular, the team is interested in the ESG improvement relative to the active risk (tracking error) taken against a non-ESG index.
• Relative performance: The team seeks to understand how the underlying index can be expected to behave versus its non-ESG equivalent. Performance history is considered where available, and for new (or custom) indices a back-test may be considered. 
• Asset class representation: The team seeks to ensure that each fund (and by extension the index it tracks) is representative of the sub-asset class it is intended to reflect. While a low tracking error versus the non-ESG equivalent index can mitigate the risk of poor sub-asset class representation, the team also considers other metrics such as overlap/coverage, relative sector and geographic tilts, and market capitalisation. 
• Replication methodology: Whether physical or synthetic, the team seeks transparency over the way in which a fund replicates its underlying index, and where the key risks may lie.

 
The ‘buy’ decision is qualitative in nature with the investment team making a fundamental assessment of the factors above in the context of the Summit Responsible range investment objectives.

Once selected and part of the portfolio, due diligence on each ETFs is performed at least on a quarterly basis and will undergo a comprehensive due diligence review at least once a year. This is intended to:

• Ensure that at least 80% of each of the five fund’s assets (excluding cash and cash equivalents) are invested responsibly.
• Review any methodological changes of the underlying ETFs. This is supported by regular interaction with the Invesco ETF team.
• Review that the methodologies in use by the underlying ETFs remain relevant to the changing requirements of responsible investing. This is supported by regular interaction with Invesco’s Sustainable Investing Services team.
• Monitor whether the underlying ETFs are behaving in line with expectations.
• Review if alternative funds exist that would improve the risk, return or ESG criteria of the Summit Responsible range.

The investment team benefits from excellent access to information on underlying ETFs as well as regular engagement with their fund managers.

Where an underlying ETF has ceased to be suitable (for example, due to a change or deterioration in its ESG characteristics in the opinion of the investment team), funds part of the Summit Responsible range may continue to hold such investment until such time that it is possible and practicable, in the team’s view, to liquidate the position.

The team also monitors and measures each fund’s performance with metrics and indicators such as the fund’s ESG score, ESG rating and carbon intensity. This is done by aggregating data from the underlying ETFs and third-party data providers. The team compares this against the same indicators for a relevant comparable broad market index to measure the attainment of the environmental and/or social characteristics promoted by the Range.

Each fund’s ESG characteristics is outlined in monthly factsheets which have an ESG addendum, as well as in a detailed half yearly report. The half yearly reports are produced by an independent third party on Invesco’s behalf and utilise MSCI data. Both the factsheets and the half yearly reports can be found on the funds’ product pages on our website.

Stage 3: Portfolio construction
Before final portfolios are determined they are analysed by the on-desk dedicated risk manager who provides detailed risk analysis to the fund managers. This is to ensure that the funds are aligned with intended risk profiles and that the risk exposures are consistent across the portfolios and aligned with the views of the investment team.

The contributors to portfolio risk, both absolute and relative, are decomposed to ensure that risk is well balanced, in-line with expectations and that no unintended biases or skews exist. Scenario analysis is also undertaken to understand how the portfolios may have behaved in given historical environments, and ‘what-if’ analysis to understand what may happen in forward-looking, or hypothetical, scenarios.

Resources, Affiliations & Corporate Strategies:

Investment Stewardship at Invesco

Invesco’s dedicated Investment Stewardship team comprises over 40[1] stewardship specialists who provide expertise and support to investment teams who manage products in line with client objectives, stated investment strategies and applicable regulatory requirements. The team serves as a strategic resource to support, inform and guide Invesco’s investment teams globally on stewardship activities, including corporate governance, proxy voting and engagement, sustainable investing, and thematic investment research. Our client-centric approach is rooted in our commitment to long-term value creation for clients.

We view stewardship as a core responsibility of asset management. It encompasses our duty to act in the best interests of our clients, using our investment expertise and resources to support outcomes aligned with our clients’ objectives. This includes engaging with companies, voting proxies on behalf of clients, contributing to industry dialogue, and transparently reporting on our stewardship activities, all of which is conducted in accordance with applicable regulatory requirements and client commitments. For relevant strategies and clients, it also includes our sustainable investing capabilities.

Our Organizational Structure

The Investment Stewardship team is organized across four pillars to support investment teams across asset classes and geographies:

 Corporate Governance & Advisory

This team provides governance expertise and supports stewardship across global investment teams. The core responsibility of this team is to support investment teams in considering corporate governance factors within their investment process and to contribute to proxy voting decisions in alignment with Invesco’s stewardship principles. The team collaborates with investment teams in conducting corporate governance engagements and actively participates in industry-wide initiatives and regulatory consultations. It includes our proxy operations and voting capabilities, which execute proxy voting across thousands of shareholder meetings annually.

Stewardship Strategy, Operations & Reporting

This team ensures investment stewardship business planning aligns with Invesco’s firm-wide strategy, incorporating the firm’s priorities into our roadmap and project prioritization. It is responsible for strategy execution, operational alignment, and organizational efficiency across the Investment Stewardship department. The team manages global stewardship workflows, policy implementation, external reporting, and communications, while maintaining operational integrity and regulatory compliance.

Investment Stewardship Analytics

This team supports global stewardship through analytics, portfolio screening, and data vendor management. This team ensures investment teams have access to high-quality, decision-useful information. It also maintains data systems to streamline proxy voting and engagement workflows.

Sustainable Investing Services (SIS)

This team provides expertise and insights on environmental and social topics to support investment decision-making by conducting proprietary research and contributing to meeting client objectives for relevant products and strategies. It partners with investment teams, distribution, and clients to support engagement on sustainability topics and to meet strategy and client-specific commitments.

Global Collaboration and Governance

The Investment Stewardship team includes professionals located in North America, Asia Pacific, and EMEA, providing localized support and analysis to our investment teams across the globe. Our stewardship professionals collaborate closely with investment teams, providing support, insights, and analysis while investment teams maintain discretion on portfolio decisions. In addition, Invesco has dedicated specialists within individual investment teams across the globe who are closely connected with the Investment Stewardship team.

Our governance structure enables oversight and accountability through the Investment Stewardship Leadership Committee, comprised of senior members of the firm from various functions. This ensures that our investment teams receive appropriate guidance on stewardship considerations that are relevant to their investment strategies and processes. We also monitor external service and data providers through regular reviews and audits, meet routinely with major vendors to align methodologies and resolve issues, and increasingly automate data controls (timeliness, conformity, completeness and accuracy) for sources used in portfolio monitoring and compliance. Where gaps arise, we work to resolve them and continue to evaluate new data sets and approaches as sustainability‑related data evolves.

[1] Figure as of 31 March 2026. 

SDR Labelling:

Unlabelled - promotes sustainable characteristics (has CFD)

SDR Literature:

• Consumer Facing Disclosure