Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Invesco Select: UK Equity. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
A new force getting recognition in the UK Equity Income sector…
Overview

Invesco Select: UK Equity (IVPU) trust's shares merged with Invesco Income Growth in April 2021, resulting in a new force in the AIC UK Equity Income sector which now has critical mass. Ciaran Mallon became co-manager alongside incumbent James Goldstone at the time of the merger. IVPU is one of four share classes which sit under the umbrella of Invesco Select Trust (the others offering global equities, multi-asset and cash exposures).

James and Ciaran aim to ensure the portfolio generates strong total returns through stock selection, and not have returns be too influenced by a narrow set of industry or style-specific drivers. The pair aim to use the investment trust structure to have a slightly more concentrated portfolio than their open-ended funds (40-50 holdings), embrace the fewer constraints the structure gives to stock selection, and to employ gearing fairly consistently (see the Gearing section).

It is the board’s longstanding policy of supporting dividends with capital, that enables the managers to invest in lower yielding opportunities (which may have higher total returns). In turn this makes IVPU likely to be of interest as a complement to other UK Equity Income trusts and funds.

As we discuss in the Performance section, the early signs of James and Ciaran’s union are good. IVPU has outperformed the benchmark by c. 3.2% in the ten months since the merger. Relative to the peer group’s weighted average performance according to Morningstar, IVPU has now outperformed by 7.6%.

IVPU’s Discount to NAV has narrowed over the past couple of months, and now stands in-line with the UK Equity Income peer group average.

Analyst's View

The early results of James and Ciaran’s co-managership are positive. Their aim – to ensure a balanced portfolio not subject to a narrow range of influences on returns – has so far paid off. The stock specific fundamentals of their stock-picking, and the diversification provided by portfolio construction has allowed IVPU to outperform the benchmark and the peer group by a decent margin. In our view this illustrates the value the new look IVPU brings to the UK Equity Income investment trust sector. The results suggest that IVPU is differentiated, and therefore complementary to existing UK Equity Income funds or trusts.

As one might expect after a merger, the market needed to balance in terms of supply and demand, and the discount initially remained wider than the peer group. However, we have now seen the discount narrow once again, and at 1.4% it stands in line with the average for the peer group.

It is possible that investors are increasingly recognising the attractions of IVPU’s solid dividend (yielding 3.5% at the time of writing), backed by capital. However, it is also possible that investors increasingly recognise the benefits of having two fundamentals-based managers that employ all of the advantages of the trust structure to deliver attractive returns over the long term. As a package, IVPU offers a differentiated exposure to UK equities, which many commentators believe look cheap when compared to other equity markets.

bull bear
An attractive yield from an unconstrained, balanced exposure to UK equities
UK could remain undervalued relative to peers for a protracted period
Co-manager set up, using advantages of the investment trust structure to maximise long term returns
Gearing can exacerbate the downside (as well as enhance the upside)
Limited discount risk relative to peers
With net assets of £150m, trust has some way to go before suitable for some professional wealth manager firms
Continue to Portfolio

Fund History

11 May 2022 What is an investment trust?
The ins and outs of closed-ended funds and how they can support your investments…
09 Feb 2022 Fund Analysis
A new force getting recognition in the UK Equity Income sector…
09 Feb 2022 Is it the UK’s time to shine?
IVPU offers a uniquely flexible approach to UK equities…
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 ordinary investors a cost-effective solution to 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 Portfolio 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...
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...
03 Oct 2019 Taking back control - the ultimate flexible fund
We examine the benefits of Invesco Perpetual Select Trust's unusual structure...
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...
26 Jul 2018 Is the UK keeping this investor awake at night?
Over a year on from taking over his UK equities trust mandates, Invesco's James Goldstone discusses his outlook for UK markets...
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 Fund Analysis
Positioned for a rebound in valuations in companies exposed to the unloved UK domestic economy...
23 May 2018 Backing Blighty
We consider the outlook for UK equities as they endure their Brexit induced 'darkest hour'...
15 Mar 2018 A fund for all seasons?
We examine the Invesco Perpetual Select Trust, which allows investors to switch between four share classes to suit their aims without crystallising gains...
13 Sep 2017 Big Issue(rs)
We highlight the UK equity trusts that have issued and bought back the most shares over the course of 2017 so far and how these actions have affected shareholders...
02 Aug 2017 Carpe Discount…
We analyse just how much discount movements have on shareholder returns in the AIC UK All Companies sector...
29 Jun 2017 Brave new world
We find out how the outlook appears today to you, and ask the top managers in each sector, region and asset class where they see the opportunities in it...
21 Jun 2017 Fund Analysis
A differentiated investment trust that has undergone a change in a management but still offers exposure to high quality companies...
21 Jun 2017 Keystone Investment Trust
A top-performing UK equity trust that has recently undergone a change in managers...
12 Jun 2017 MAYDAY!
As the Conservative party founders, we examine the impact of last week’s disastrous election on trusts...
07 Jun 2017 Omnishambles...
Given the huge levels of political-induced uncertainty, we analyse recent drivers and themes within the UK equity market ahead of the upcoming election
11 May 2017 Video: Fixed Interest investment companies update
Invesco Perpetual fixed interest portfolio manager Rhys Davies, discusses the improving global outlook...
04 Apr 2017 VIDEO: Meet the managers...
Invesco Perpetual's Mark Barnett and four of his fellow managers discuss their approach to managing money, and their market outlook...
31 Mar 2017 Video: James Goldstone
James Goldstone, UK Equities Fund Manager at Invesco Perpetual, outlines his approach...
22 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...
View all

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