Aim: Income and growth by investing in European fixed interest and equities excluding the UK
Minimum investment: Lump sum £500, monthly £20
Investment split: 100% in European fixed interest and equities excluding the UK
Isa link: Yes
Charges: Initial 5%, annual 1.25%
Special offer: Initial charge reduced to 3% on Isa investments and 3.25% outside Isa
Offer period: Until further notice
Commission: Initial 3%, renewal 0.5%
Tel: 0800 028 2121
This European high income fund employs three managers – Paul Causer, Paul Read and Katharina Hoyland – to invest in equities and fixed interest securities.
Wilson Dean Financial Services director Nick Lincoln thinks Invesco Perpetual is forward looking in offering funds with no renewal commission and a reduced annual management charge for fee-based advisers or those who take ongoing remuneration through the client’s wrap.
“As to the fund itself, if you believe in active management and you like deferring asset allocation to a third-party, then this fund is likely to appeal. The desire for income producing funds, whether taken or re-invested for growth, shows no sign of diminishing. We all know the strengths long-term of the UK equity income market. Now there appear to be bona fide overseas offerings that may help to diversify investors away from UK-centric income portfolios,” he says.
Lincoln regards the Invesco brand as solid, while the literature is clear and concise for clients – if they read it – and advisers. He feels the adviser remuneration is standard and notes that the annual management charge is made to the capital. “This will help the yield stand up to the promised 6 per cent but it will impinge on capital growth – and this fund promises both a healthy yield and capital growth,” he says.
Considering the features which let this product down, Lincoln says: “We prefer pure asset class funds where we, as the adviser, control asset allocation, rather than funds where asset allocation is delegated to a third-party, as is the case with this fund.”
Lincoln also finds the initial charge steep, but adds that the discount is likely to remain for a while.
“The fund is not hedged back to sterling, so this adds currency fluctuations to the return mix. Over time however this could add as much as subtract from performance, so it may not matter but you need to be aware of the risk.” he says.
Identifying possible competitors Lincoln says: “Every man and his wife is pushing cautious managed funds as a substitute for with-profits. However, these have typically been UK focused. This fund – with a pure Europe ex-UK basis – has little competition.
“If you asked any adviser for key Invesco strengths the likely response would be equity income and corporate bonds. So putting these two strengths together in a fund that has few comparables would indicate little, if any, serious competition for this fund.”
Summing up Lincoln says: “The fund could be a good one stop fund for smaller investments for IFAs who defer asset allocation. The fund is currently neutral with a 50 / 50 split between equities and bonds. IFAs using this fund may be reassured in knowing the maximum equity exposure will never be more than 60 per cent.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average