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
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Overview

Invesco Select: UK Equity (IVPU) trust's shares merged with Invesco Income Growth (IVI) at the end of April this year. As a result, the combined entity now has critical mass, but more significantly has a new management team with Ciaran Mallon having joined as co-manager with James Goldstone. It is a new constituent of the UK Equity Income sector.

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). We discuss the innovative features of this structure in Discount.

Both managers bring differing but complementary views on stocks and sectors, but they share equal responsibility for every stock in the Portfolio. Ciaran has a strong focus on company fundamentals, whilst James has historically placed greater emphasis on valuations. They believe that this diversity of thought strengthens the investment process, given their objective is to have a relatively balanced portfolio in terms of growth and value exposures. With two co-managers working closely together to pick stocks, IVPU’s portfolio now includes 16 stocks that were not held in the portfolio previously.

The overall aim is to ensure the portfolio generates strong total returns through stock selection, but not be exposed to industry specific or a narrow set of 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), fewer constraints on stock selection, and to use gearing fairly consistently (see Gearing).

Analyst's View

As a package, IVPU offers a highly differentiated exposure to UK equities, which many commentators believe look cheap when compared to other equity markets. The early results from the change in management arrangements (in terms of outperformance of the benchmark) are encouraging.

We believe that having two fundamentals-based managers combine their efforts on IVPU is a strong positive for shareholders. The result is a stock picking, high conviction portfolio, focussing on companies of all sizes in the UK and a balance between growth and value. Additionally, the trust structure gives the managers a broader toolkit to enable them to deliver performance from stock picking. With complementary skill-sets, the managers should be in a strong position to deliver on the trust’s objectives for shareholders: attractive total returns from a valuation sensitive investment process and a good level of income.

IVPU’s historic dividend yield is 3.7%. The board can and does use capital to maintain the payments, as the dividend is not fully covered. Paying from capital has enabled investors to have a high degree of confidence on the dividend distribution each year. Equally, it allows the co-managers to invest for the best total returns possible without the pressure to hit a particular income target.

IVPU offers an interesting way to gain a balanced exposure to UK equities. The discount is marginally wider than the three-year average, and if the co-manager’s stock picking success continues, then we might expect the discount to narrow closer to NAV.

BULL
BEAR
A highly attractive yield from a multi-cap balanced exposure to the UK
UK could remain undervalued relative to peers for a protracted period
A portfolio of attractively-priced stocks with rebound potential
Gearing can exacerbate the downside (as well as enhance the upside)
Limited discount risk relative to peers
Co-management set-up has only been in existence for c. 12 months
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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