Summary

• Invesco believes ramifications for the global economy give Iran leverage in negotiations as the country has incentives to restrict the Strait of Hormuz and constrain oil and gas supply.
• Invesco has elected to reduce the fund’s aggregate exposure to hyperscalers and semiconductors because the fund sees increasing risk of capital misallocation in the current artificial intelligence investment cycle.
• Relative underperformance primarily resulted from lower exposure to the energy sector during the quarter as energy stocks rose on spiking oil prices amid the conflict in Iran.
• Invesco added new positions in Service Corp., Netflix, SEA and Keyence during the first quarter while selling SAP, Ferguson, Moody's, Hoya, Coca Cola, HDFC Bank and Abbott.
• Canadian Pacific delivered resilient results and announced a share buyback for 2026, allowing Canadian Pacific to capitalize on a historically low valuation multiple.

Key takeaways

1 Geopolitical risks

There seems to be, in our view, a clear US desire to resolve the Iran conflict given potentially significant economic consequences. However, Iran has incentives to restrict the Strait of Hormuz and constrain oil

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