Invesco Global Equity Income 17 July 2024

Manager Stephen Anness aims to offer investors an all-weather approach to income investing with Invesco Global Equity Income (IGET). This is achieved through a concentrated portfolio of c. 45 companies from which the manager expects to deliver annualised double-digit returns. The aim is for this to come from a combination of an attractive dividend as well as capital growth, and the trust is designed to create a differentiated offering (see Portfolio).

The trust was named Invesco Select Global Equity Income (IVPG) until May 2024, when it absorbed the assets of the three other share classes of the Invesco Select trust. This transaction has increased the trust’s size, offering benefits in terms of Charges and better liquidity. However, the strategy, Management and approach remain the same. Stephen continues to take a contrarian mindset with his bottom-up approach, which has a strong focus on valuations. Despite this, the trust doesn’t have a style bias to either value or growth, and instead remains a core offering, albeit with a mid-cap tilt. The IVPG trust was awarded Kepler’s Growth Rating in 2024.

One key change is to the Dividend. The manager continues to focus on compounding dividend growth from the underlying portfolio, meaning he can invest in low- or non-yielding stocks, which also supports the capital growth potential. Now though, the board has committed to making a contribution from capital to bring the yield up to 4%, based on the NAV at the beginning of the trust’s financial year.

IGET currently trades at a Discount that is over one standard deviation wider than its own five-year average, and considerably wider than the peer-group average. The board has also introduced a new discount-control mechanism. The discount has widened despite the solid Performance of the trust over the long term, which is ahead of its benchmark over five years.

We believe IGET offers an attractive combination of income and growth potential to investors. Whilst it is not alone in having an enhanced dividend policy, the highly concentrated portfolio and focus on dividend growth from its holdings helps differentiate IGET and makes it a compelling option for income investors.

Furthermore, the manager’s focus on stock selection with a contrarian mindset means the portfolio is likely to look significantly different to the benchmark. This has led to a mid-cap bias, which we believe can be supportive to performance in the near term, should the economic recovery continue, and over the long term, due to the better growth characteristics often seen in medium-sized companies leading to strong dividend as well as capital growth. Stephen has shown his ability to generate good alpha with his stock-selection approach, and we believe this is well supported going forward, especially considering his valuation awareness in an environment where high interest rates are likely to remain a factor.

Furthermore, IGET is currently trading at a very wide Discount. Not only is this wide versus its own history – the current level of 13.5% is over one standard deviation wider than the five-year average – but it is significantly wider than the peer-group average despite the good long-term performance. The new discount control mechanism could help to narrow this too. As such, we believe the current discount could be an attractive entry point for long-term investors.