Invesco Perpetual Select Trust has published its accounts for the year ended 31 May 2017. The UK equity portfolio returned 22% (22.5% in share price terms), underperforming the All-Share index which returned 24.5%. The Global equity income portfolio returned 29.2% (31.1% in share price terms), underperforming the MSCI World Index which returned 31.3%. The balanced risk portfolio returned 9.7% (11.9% in share price terms), well ahead of the 5.5% returned posted by its Merrill Lynch 3 month LIBOR plus 5% benchmark. Returns on the managed liquidity portfolio were flat.
Significant contributors to the Global Equity Income Portfolio’s slight underperformance relative to its benchmark were the positions in major drug companies and the underweight in commodity-based companies. The UK Equity Portfolio had a much better second half to the year as the outperformance of commodity-based companies faded, though this was not sufficient to erase the difficulties of the first half. Its longer-term performance remains excellent. The Balanced Risk Portfolio had a good year, outperforming its benchmark of 3 month Libor plus 5%, and maintaining that position for the last five years overall. It has performed much better than many of its competitors who seek to provide stable returns with relatively low correlations, particularly to equity markets. However, such “risk parity” strategies have remained unpopular in the UK, in contrast to the US, even though other absolute return funds have attracted substantial inflows. It remains a tax-efficient share class with some of the characteristics of a zero dividend preference share with higher volatility but without any prior charges ranking above it. The Managed Liquidity Portfolio was inevitably and appropriately dominated by the continuing very low level of short term interest rates.
IVPU / IVPG / IVPB / IVPM : Invesco Perpetual Select equity portfolios lag benchmarks