Invesco Perpetual UK Smaller to embrace income focus

Invesco Perpetual UK Smaller Companies, which has long been plagued by a wide discount, is to switch focus to become an income fund. The Board, chaired by Ian Barby (pictured), consulted holders of more than 50% of the shares before making this proposal.

The first element of this switch is a more than doubling of the dividend for the year to 13.75p from 6.5p in 2013. At this level of dividend the fund will be on a yield of 4%. Hopefully this will attract new shareholders, cause the discount to narrow and everyone will be happy but, mindful that this might not be the case, the Board is proposing that at the AGM in 2017, they will consider offering the options of a continuation of their existing investment, a rollover into a similar or other investment vehicle and / or the provision of a cash exit at a price close to NAV.

Part of the increased dividend will need to be funded to reserves (about £600,000 or 0.3% of NAV). Thereafter they will continue to pay out part of the company’s capital as dividend – c2% they say in the year to the end of January 2016. The dividends will be paid quarterly.

More of the company’s overheads will be charged against capital (an 85:15 split capital : income). The objective will be reworded to remove the statement that “the pursuit of income is of secondary importance”.

One thing they want to make clear is that the manager will make no change to his investment style or approach except that he might take larger positions in higher yielding stocks.

IPU : Invesco Perpetual UK Smaller to embrace income focus