Fund Profile

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Overview
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Overview

IP Select UK Equity shares owns an actively managed portfolio of UK equities held for the long term, with the manager, James Goldstone, aiming to identify undervalued companies and take advantage of the under-pricing.

James has repositioned the UK equity portfolio since taking over in October 2016, and the focus is on companies exposed to the UK economy and consumer, which James thinks are currently undervalued. However, this exposure is balanced out by holdings with international earnings, although these positions are all held because of the manager’s conviction in them as businesses and the attractiveness of their valuations, rather than simply risk-management tools.

The trust has underperformed this year due to the exposure to domestic earnings, with the UK market being unloved thanks to the uncertainty around Brexit. However, negotiations over the UK’s exit from the EU are nearing a conclusion with the “divorce” scheduled for the first quarter of next year.

Gearing has remained at the upper end of the permitted range under James’ management. However, this debt is not structural but reflects the valuation opportunity the manager sees in the UK market.

The company tends to trade quite closely to NAV, supported by a strong buyback policy, and in fact traded on a premium prior to the June 2016 referendum.

The dividend yield is 4%, paid quarterly, and the board’s intention is to at least maintain the dividend in each year going forward. It has backed this up by using capital reserves to pay when necessary.

Kepler View

‘The best time to invest is when there’s blood on the street’, is the adage. That isn’t, happily, a literal description of the state of British politics, but the turmoil within parliament over Britain’s exit from the EU has worsened significantly in recent weeks. In our view this is a good time to be increasing UK domestic exposure, albeit slowly and cautiously. Any resolution should lead to a relief rally in UK assets over the medium term, we believe, meaning that it is sensible to be picking up exposure on the dips. James has positioned his portfolio in the most appealing cheap stocks in the market, which has led to significant exposure to the domestic UK economy. This is, incidentally, in good shape, which we all seem to have forgotten in a period dominated by fears for the future. The depressed valuations of UK assets are not justified by any likely outcome in our view, and the risk/reward profile of UK assets is attractive for those with a medium to long term perspective. Recent share price falls means that investors can bake in a yield of 4% if they buy the trust now.

Bull Bear
A highly attractive yield from a growth-first mandate Brexit uncertainty could be prolonged
A portfolio of attractively-priced stocks with rebound potential The manager is relatively inexperienced
Limited discount risk relative to peers The performance fee will be unpalatable to some
Continue to Portfolio

Fund History

09 Feb 2022 Fund Analysis
A new force getting recognition in the UK Equity Income sector…
28 Jul 2021 Fund Analysis
IVPU’s new co-manager set up provides the best of both worlds...
16 Jun 2021 A better class of travel*
Sharing many features of a traditional family office, investment trusts offer a sophisticated, cost effective solution for managing family wealth...
11 Mar 2021 Flash update: Invesco Select & Invesco Income Growth
With a merger of Invesco Select UK Equity shares and Invesco Income Growth, we learn that the management team is also merging….
21 Oct 2020 A closer look at gold mining companies and ESG
In this article, we hear from James Goldstone - fund manager of Keystone Investment Trust and Invesco Perpetual Select Trust: UK Equity Share on assessing mining companies within an ESG framework...
30 Jul 2020 James Goldstone
James Goldstone manages a number of UK and pan-European equity mandates at Invesco’s Henley-on-Thames office, including Keystone Investment Trust and the UK Equity Share Portfolio of Invesco Perpetual UK Select Trust...
15 Jun 2020 Investment Trust outlook
As the scale of the Covid-19 pandemic unfolds, James Goldstone explains his investment approach, what it means for markets, the companies he owns in his investment trusts, and how they are positioned for what may lie ahead...
08 Apr 2020 James Goldstone's UK equity strategy update
The sell-off across global markets has been widespread in recent weeks. Joanna Smith, UK Equities Product Director at Invesco, questions whether we have seen the market lows of this crisis yet...
23 Mar 2020 An approach to governance: creating long-term value for our clients
James Goldstone outlines why they advocate for proper and effective corporate governance and sustainable business practices within the Invesco UK Equities team...
28 Aug 2019 Fund Analysis
IVPU’s returns have bounced back in 2019 thanks to a contrarian allocation to domestically-exposed UK stocks…
13 Dec 2018 Efficiency is everything
With fee structures under increasing scrutiny, we analyse which trusts limit their costs without sacrificing standards...
04 Dec 2018 Fund Analysis
James Goldstone aims to identify undervalued companies and take advantage of the under-pricing...
27 Jun 2018 A winning combination
New research from Cass Business school helps explain why closed-ended funds have outperformed their open-ended peers in the major equity sectors since 2000...
23 May 2018 Backing Blighty
We highlight trusts with a heavy focus on domestically focused UK equities...
23 May 2018 Fund Analysis
Positioned for a rebound in valuations in companies exposed to the unloved UK domestic economy...
26 Jul 2017 Apt student
Invesco CIO Nick Mustoe tell us he started out with just a university grant as seed capital for his first portfolio...
25 Jul 2017 Carpe discount
Our analysis shows that there is a right time, and a wrong time, to seize a trust which is languishing on a discount...
19 Jun 2017 The investment trust advantage...
Our event in June saw eight of the UK's most experienced fund managers discuss the outlook for each major asset class...
12 Jun 2017 Fund Analysis
21 May 2017 Brave new world
We ask the top managers in each sector, region and asset class where they see the opportunities in the months ahead...
21 Mar 2017 The new kids on the block...
We highlight the three newest managers to grace the UK equity sectors and how they have put their own individual stamps on the portfolios they've inherited...
21 Mar 2017 Fund Analysis
View all

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