Summary

• Invesco American Franchise Fund had a negative return for the quarter but outperformed its benchmark, driven by stock selection in industrials and information technology.
• Portfolio managers have taken targeted steps to reduce Invesco American Franchise Fund's consumer cyclical exposure and added defensive stocks while remaining aligned with long-term themes.
• In 2026, the AI cycle appears to be moving from infrastructure build-out to revenue-driven proof of concept, expanding opportunities beyond early infrastructure leaders.
• Invesco American Franchise Fund introduced Amphenol to the portfolio's AI supply chain exposure, favoring optical interconnects for their superior speed and reliability compared to copper.
• Shopify was sold as the potential for AI to disrupt existing software and software adjacent firms has seemingly weighed on investor sentiment.

Q1 2026 Key takeaways

1 Volatility resurfaced amid geopolitical and macro uncertaintyMarkets began 2026 with strong momentum, but risk appetites appeared to deteriorate as the Iran conflict, rising energy prices, government shutdown disruptions and AI valuation