Can Perpetual Income & Growth find its way? – Perpetual Income & Growth has published results covering the year to the end of March 2020. As we knew it would do, it makes for grim reading. An NAV return of -29.9% and a return to shareholders of -35.5% are set against a return on the UK market of -18.5%. The discount moved from 10.9% to 19.5% and the ongoing charges ratio edged up to 0.73%. The bright spot is an increase in the dividend from 14.5p to 15.0p.
Search for a new manager
“We have started the search for a new investment manager with the credentials and capacity to deliver capital growth and real growth in dividends over the medium to longer term from mainly UK equities. The board has engaged Winterflood Securities Limited, the company’s broker and financial adviser, to coordinate the search process alongside Mercer, a leading global consultancy firm. The process is well underway and, although it is somewhat hampered by the current restrictions, we nevertheless expect to announce the new investment manager during the summer months. Meanwhile there has been a change in the investment team at Invesco and the board has set specific controls around the portfolio over the interim period.”
Extract from the manager’s statement
Martin Walker has written a statement, following Mark Barnett’s departure. Martin says: “We are disappointed with the outcome of the Board’s decision in respect of our role as portfolio manager. We understand the performance pressures that exist in today’s market, but since the half year results we have embraced the Board’s views on performance with improved results in the latter part of 2019, consistent with the principled valuation-based approach we have always taken. We are disappointed that we were unable to build on this, given the recent extreme volatility in financial markets. These are extraordinary times as we are all aware, and in our opinion requires the experience and expertise of portfolio managers who have weathered severe cyclical shocks.”
[The three UK equity income trusts that Invesco was managing this time last year are the three UK equity income trusts trading on the widest discounts today (barring Value & Income which is unloved because of its High Street property portfolio). Amongst these is Edinburgh, which shareholders might have hoped was off to a bright new start under a new manager. This hasn’t happened. Perpetual Income & Growth’s board must choose carefully when selecting a new manager. we reiterate that the best move might be a merger with a trust with a better long-term track record. we don’t get the sense from the above statement that this route is being considered.]
With respect to the prospects of a merger, it seems that we missed something buried in the fine print. In the viability statement there is the following comment “As at the date of this report it is not possible to predict whether an outcome of the search for a new investment manager might be a corporate event, such as a merger, or whether shareholders will support the newly appointed investment manager and vote for continuation in 2021, except to the extent that, in seeking to act in the best interests of shareholders, the Board aims to select an investment manager that will merit such support.” Fingers crossed!