Last checked at 13 Jul 2018 08:00
Invesco Perpetual Select - Global Equity Income Share Portfolio: New Research
13/07/2018
Highlights:
· IP Select's Global Equity Income Share Portfolio (IVPG) aims to deliver a growing level of income, and capital appreciation over the long term, through a concentrated portfolio of global equities
· The trust currently has significant exposure to oil companies and banks, with key overweights to the UK and Europe, and underweight the US
· The start of the year saw global equities struggle - Q1 of 2018 was the worst quarter for the sector in more than two years. However, global equity markets have recovered over the past two months and continue to shake off the pessimism that arose as a result of angst over threats to global trade
· Accompanying the strong NAV returns, the trust has seen year-on-year increases in dividend payments since its launch
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IP Select's Global Equity Income Shares (IVPG) portfolio is run by a group of regional-specialist managers from the Henley on Thames offices of Invesco Perpetual (known as the Global Equity Income Group,(The Group)). They aim to achieve a growing level of income return each year, with capital appreciation over the long term, through a concentrated but diversified portfolio of global equities.
The trust actively uses the unique advantages of the closed-end structure to do this, including gearing, an enhanced dividend policy and an active discount control policy which has historically prevented the trust's shares from slipping to a significant discount to NAV.
A key differentiator of IP Select Trust is that it is split into four 'share classes', each pursuing different strategies, and each led by a different manager but sharing the costs of the structure. Alongside the Global Equity Income shares, the others are UK Equity, Balanced Risk Allocation and Managed Liquidity. Investors in the trust can switch between the share classes on a quarterly basis. This profile focuses only on the 'Global Equity Income' share class.
IVPG's portfolio is relatively concentrated, comprising approximately 50 stocks. The Group management team look to invest in high quality companies at attractive valuations, offering attractive yields, sustainable income and capital upside. The trust currently has significant exposure to oil companies and banks, with the majority of assets geographically split across the UK (17%), US (32.1%) and Europe (37.1%).
The start of the year saw global equities struggle, demonstrated in Q1 of 2018 which was the worst quarter for the sector in more than two years. However, global equity markets have recovered over the past two months and continue to shake off the pessimism that arose as a result of angst over threats to global trade.
Despite this volatile environment, the trust has outperformed the MSCI World over the 12 months to end April 18, delivering NAV returns of 10.4% compared to the index return of 6.3%. Over five years, the NAV total returns are 77.6%, outperforming the average trust in the Morningstar IT Global Equity Income sector (42.8%) and the MSCI World NR index (76.1%).
Accompanying the strong NAV returns, the trust has seen year-on-year increases in dividend payments. Over the past 5 years, investors have benefited from a dividend increase of 13.5% per annum, some of which has come from capital. At the current price, the shares yield 3.2% (31/04/18).
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