Invesco Perpetual Select risk assets outperform over interim period – Invesco Perpetual Select has published its interim results for the six months to 30 November 2019.
But first, a bit more on the company:
The company’s investment objective is to provide shareholders with a choice of investment strategies and policies, each intended to generate attractive risk-adjusted returns.
The company’s share capital comprises four share classes, each of which has its own separate portfolio of assets and attributable liabilities:
UK Equity Shares (IVPU), Global Equity Income Shares (IVPG), Balanced Risk Allocation Shares (IVPB) and Managed Liquidity Shares (IVPM),
Performance
Invesco Perpetual Select UK Equity Shares (IVPU)
In NAV terms, with dividends reinvested, the UK Equity Share Portfolio returned +6.4% over the six months to the end of November 2019, compared with its benchmark, the FTSE all-share index total return of +5.8%. The share price total return was +4.4%.
Invesco Perpetual Select Global Equity Income Shares (IVPG)
The Global Equity Income Share Portfolio returned +9.1% in NAV terms, and +8.8% on the share price, compared with its benchmark, the MSCI world index total return over the period of +10.1%.
Invesco Perpetual Select Balanced Risk Allocation Shares (IVPB)
The Balanced Risk Allocation Share Portfolio returned +4.6% in NAV terms, and +4.0% on the share price. The portfolio’s benchmark, Merrill Lynch 3 month LIBOR plus 5% per annum, returned +2.9%.
Invesco Perpetual Select Managed Liquidity Shares (IVPM)
The Managed Liquidity Share Portfolio had a return of +1.1% based on NAV and +1.3% based on the share price.
Chairman’s notes on performance and outlook
Chairman, Graham Kitchen, noted that “This was a very good period for most markets in risk assets. Both the UK Equity Share Portfolio and the Balanced Risk Allocation Share Portfolio outperformed their respective benchmarks, and although the Global Equity Income Share Portfolio continued to lag its benchmark the performance ranked second for the period amongst its peers in the AIC Global Equity Income sector. The Balanced Risk Allocation Share Portfolio benefited from the rise in both equity and bond markets, although fears over global growth impacted the return from commodities. As was stated in the Annual Report, the UK Portfolio is somewhat contrarian, with an emphasis on stocks with low valuations and exposure to the UK economy. During the period the Portfolio benefitted from a degree of rotation in style towards value. This outperformance continued after the period end, with the Conservatives’ election victory prompting a significant rise in the equity market and in some domestically orientated stocks in particular.
The Global Equity Income Portfolio also benefited from the rotation in investment style, but it still underperformed the benchmark over the period. The portfolio was negatively impacted by the underweight position in the US market, which continued to outperform markets in the UK and Europe. Furthermore, the Portfolio was overweight in energy stocks, which lagged the market on investor concerns about potential oversupply of oil and gas.
Performance of the Managed Liquidity Portfolio, although modest, was encouraging, given the continued low interest rate environment. It should be noted that with the adjustment of the investment policy and change in principal investment in January 2019 the risk profile marginally increased. The directors would like to remind shareholders that the Managed Liquidity Share Portfolio is not designed to replicate the returns or other characteristics of a bank or building society deposit or money market fund. Accordingly, the NAV of the shares can both increase and decrease, albeit the risk of a significant loss of value is considered to be quite small.”
Outlook-wise, Graham went on to say that “Since the period end, equity markets have continued to rise, with both the US S&P and NASDAQ indices reaching all-time highs. Confidence in equity markets was boosted by the announcement in December that the US and China had reached a phase one trade agreement, now signed. European markets, and the UK in particular, have rallied following the UK general election. Investors had been concerned by the radical economic policy proposed by the Labour Party, as well as by the prospect of prolonged political deadlock in the event of a hung parliament. The decisive Conservative victory has removed this uncertainty, and there are hopes that business and consumer confidence will recover.
There are good reasons why markets have risen over recent months, and although valuations are not stretched by historical standards relative to bond and cash yields, a period of consolidation seems likely. Geopolitical tensions remain high, with the US and China clashing over a number of issues including the situation in Hong Kong. Furthermore, at the time of writing the outbreak of the coronavirus has prompted a classic flight to safety, but it appears it is being well contained and, from a market perspective, will likely not have a long term impact and, conversely, may provide short term opportunities for investment. Attention will also shift to the US presidential election, and the outcome of any impeachment proceedings against President Trump. In the rest of the world economic growth remains subdued, most notably in Europe, where conventional monetary policy may have reached its limit. In the UK the political deadlock over leaving the EU has been removed, but considerable uncertainty remains over the exact nature of any future trade agreement with the EU. After a year, and a decade, of very positive returns from markets, a more cautious outlook seems appropriate. Against this background our portfolio managers continue to emphasise valuation, holding relatively cheap assets which mitigate some of the wider risks in the equity market.”
IVPB/IVPG/IVPM/IVPU: Invesco Perpetual Select risk assets outperform over interim period