INVESCO PERPETUAL

Distribution Fund

Type:
Oeic

Aim:
Income and growth by investing in equities and bonds

Minimum Investment:
Lump sum £500,
monthly £20

Investment split:
At least 60% bonds, remainder in equities

Isa link:
Yes

Pep transfers:
Yes

Charges:
Initial 5%,
annual 2%

Commission:
Initial 3%,
renewal 0.5%

Tel: 0800 028 2121

Invesco Perpetual&#39s distribution fund invests in a combination of at least 60 per cent in fixed interest and the remainder in equities. The fund will be managed by Paul Causer, Paul Read and Neil Woodford, who have worked together at Invesco Perpetual for the last nine years

Morgans Independent Advisers director Martin Dilke-Wing thinks the fund is good for IFAs and their clients because it combines the talents of three of Invesco Perpetual&#39s star names in one fund. He says: “The strength of the management proposition, with its impressive and long-established track record will make this fund a certainty to take in money this Isa season. But at the end of the day I wonder if it will create any good value above putting 60 per cent into Causer and Read&#39s funds and 40 per cent into Woodford&#39s fund.”

Dilke-Wing predicts a broad expansion of the cautious managed sector over the next two to three years, assuming that markets remain generally quiet. He sees this a result of investors remaining wary of large-scale, disproportionate commitment to equity markets and cautious managers will attract investors exiting from with-profits and those who would have chosen with-profits in the past.

Considering the negative aspects of the fund, Dilke-Wing says: “The problem is that it focuses on two specific principal areas &#45 high-yield bonds in the UK and Neil Woodford&#39s expertise in managing a UK equity portfolio at the value end of the spectrum. If the UK high-yield market doesn&#39t work and UK equities do not do as well as other markets, there is a danger the annual management charge taken from the capital may add to the potential for capital erosion.”

In Dilke-Wing&#39s view, risk is an issue with this fund, as designated cautious investors hate to see their capital values decrease. He adds: “I am concerned that the management remit of the fund could provide an inadequate protection against a decrease in capital values based on a relatively small number of things going wrong.”

Dilke-Wing thinks the main competition for this fund will come from insurers that are trying to get what would have been with-profits money into life distribution funds. He also suggests managers who already operate similar funds and the increasing number of multi-manager/fund of fund providers promoting multi-manager cautious portfolio solutions.

BROKER RATINGS

Suitability to market: Average
Investment strategy: Average
Charges: Average
Remuneration: Good

Overall 7/10