Invesco Select has published its annual report for the period ending 31 May 2023. As a reminder, Invesco select has four different share classes, UK Equity Shares, Global Equity Income Shares, Balanced Risk Allocation Shares and Managed Liquidity Shares, each of which has its own separate portfolio of assets and attributable liabilities.
UK Equity Income
- The UK Equity portfolio generated a NAV total return of -2.6% and share price return of -4.7%, compared to the 0.4% of its benchmark, the FTSE All-Share Index.
- The UK Equity portfolio paid a total dividend of 7.05p per share, up from the 6.70p the year before.
- There were £2m net outflows from the UK portfolio due to share conversions.
- 3.8m shares were bought back at an average price of 165.5p. £121.7m worth of shares were cancelled for the UK portfolio.
Global Equity
- The Global Equity Income portfolio returned a NAV total return of 9.8% and share price return of 4.6%, compared to the 3.8% of its benchmark, the MSCI World.
- The Global Equity Income portfolio paid a total dividend of 7.20p per share, increasing from the 7.15p the year prior.
- There were £1.8m net inflows into the Global Equity portfolio due to share conversions.
- 740,000 shares were bought back at an average price of 224.9p.
Balanced Risk Allocation
- The Balanced Risk Allocation portfolio returned a NAV total return of -11.4% and share price return of -14.3%, compared to the -17.1% of its composite benchmark.
- A total of 3.0p in dividends was paid for the Balanced Risk Allocation, with 2.0p being a special dividend.
- There were £0.1m net inflows into the Balanced Risk portfolio due to share conversions.
- 110,000 shares were bought back at an average price of 132.9p. £1.3m worth of shares were cancelled for the Balanced Risk portfolio.
Managed Liquidity
- The Managed Liquidity portfolio returned a NAV total return of 3.5% and share price return of -5.2%.
- A total of 1.0p in dividends was paid for the Managed Liquidity portfolio.
- There were £0.1m net inflows into the Managed Liquidity portfolio due to share conversions.
- 80,000 shares were bought back at an average price of 94.75p
Invesco Select’s chairman, Victoria Muir, commented:
“Within the context of my earlier comments on the market backdrop, we expect market volatility to continue and this may present your Portfolio Managers with attractive investment opportunities. In times of volatility, the worst days are often followed by the best days, and one needs to remain invested to capture those days.
“Your Company’s UK Equity and Global Equity Income Portfolios are committed to a `valuation based’ approach, which aims to identity the true valuation of a company and whether the current share price reflects this. Although, it is difficult to know how long the market will take to appreciate the value of a company, your Managers identify specific drivers that aim to enable this recognition. UK equities, in general, have experienced a prolonged period of being rather unwanted, unfashionable and unloved, and share prices have been affected by a significant withdrawal from this market. Their value is being very gradually recognised and we expect an uptick in M&A. In the US, it has been striking to note how narrow the market has been, with performance concentrated across a handful of names and a marked difference between the S&P 500’s returns versus that minus its seven dominant stocks. We are starting to see some signs of this normalising. The Managers are of the view that income, in the form of dividend, is an important constituent of the total return of the equity portfolios. They have a strong belief in the ability of equities to protect the investor from the effects of inflation over the long term.
“The Balanced Risk Allocation Portfolio aims to deliver equity-like returns but with half the volatility of equity markets. Although there will still be day-to-day volatility, over the longer term investors may have a smoother experience in the price movements, gained through a diversified spread of exposures across equity, bond and alternative assets.
“By investing predominantly in ultra-short dated bonds, the Managed Liquidity Portfolio aims to offer a higher degree of security for those with a more conservative outlook; its investments may be impacted by interest rates as well as other factors.
“As I write, we are starting to see evidence of inflationary pressures beginning to ease slightly, with the expectation across US, European and UK markets, that the rate rise cycle is coming to an end. Your Managers expect a more substantive downward move in inflation over the autumn. I continue to believe that your Company’s structure and portfolios remain well positioned to negotiate the market challenges and opportunities that lie ahead.”