For the year ended 30 September 2017, Invesco Perpetual Enhanced Income Limited “performed strongly” with a total return to shareholders, based on the share price with dividends reinvested, of
10.5%. The share price rose from 77.4p at the start of the year to 80.3p, an increase of 3.7%. The managers earned a £1m performance fee. The 5p annual dividend was maintained but 0.5p of this came from revenue reserves.
The manager says that “The portfolio holds a core (33%) of non-financial high yield corporate bonds, focused on seasoned issuers that we consider have a low likelihood of default. In addition, we have significant exposure to areas of the market, which we believe offer relatively attractive yield. Approximately 19% of the portfolio is invested in bank capital, predominantly in the debt of large European banks. We also have around a 9% allocation to subordinated bonds in the insurance sector. Elsewhere we also have holdings in non-financial corporate hybrid capital instruments (bonds with some equity-like characteristics). These instruments are held across various sectors including telecoms and utilities. The recent new share issuances by the Company provided us with the opportunity to selectively add some bonds to the portfolio. We currently use borrowing to try and enhance the portfolio’s income.” This borrowing averaged 16% net over the year with gross borrowing at 23% at the year end.
IPE : Invesco Perpetual Enhanced “performed strongly”