The five-crown rated fund has taken £389m in new money in the past three months, making it the best-selling portfolio in the highly competitive IMA UK All Companies sector.
Only two funds in the IMA UK Equity Income sector – CF Woodford UK Equity Income and Royal London UK Equity Income – have seen more in the way of inflows.
It’s been a very difficult time for Invesco Perpetual since star manager Neil Woodford handed in his resignation last October.
The news has led many retail and institutional investors to pull their money from the Invesco Perpetual Income and High Income funds.
Outflows from the two flagship portfolios have slowed recently, though FE data shows that almost £2bn has been pulled over the past three months.
Source: FE Analytics
Strategic Income isn’t the only Invesco fund that’s performed well in the sales stakes of late.
David Millar and team’s Invesco Perpetual Global Targeted Returns fund has seen inflows of almost £200m over the past three months, with Invesco Perpetual Distribution not far behind on £120m and Invesco Perpetual Global Equity Income and Invesco Perpetual European Equity Income around the £50m mark.
While this hasn’t been enough to break even given the volume of money coming out of Income and High Income, Ian Trevers (pictured), head of UK retail, says he’s very pleased with the way the business has held up since last October.
“Yes we’ve lost Neil Woodford, but the sales we’ve had so far this year have actually been higher than to the same point last year,” he said.“If you take out High Income and Income, net sales are at £1bn this year.”
“[Bond managers] Paul [Causer], Paul [Read] and Michael Matthews continue to sell very well as they have done in recent years. Global Financial Opps has done very well, benefiting from the managers’ high conviction positions in bank-denominated debt.”
“European equities have also been a really good area, with the position in the peripheral countries particularly effective. [Stephanie Butcher’s] European Equity Income fund has sold 10 times more this year than last year.”
Performance of fund and sector over 3yrs
Source: FE Analytics
“You’ve got Stephen Anness as well, who like Mark Barnett has been with us for a long time. His [£164m Invesco Perpetual Global Opportunities] fund has sold four times more so far this year than last year.”
According to FE data, Invesco Perpetual Income and High Income have shed around £4bn in assets over the past six months, meaning that overall net sales figure for the firm is most certainly negative.
However, Trevers points out that outflows from these two funds are slowing, whereas other areas of the business are accelerating.
Mike Deverell, portfolio manager at Equilibrium Asset Management, says Invesco has planned for Woodford’s departure very effectively, and is now reaping the rewards.
“I don’t know what they could have done better. They have a very good range of products,” he said.
“We hold Global Targeted Returns, Tactical Bond and the Hong Kong & China fund. The only area where I’d say they are a bit light is property.”
“They’ve been developing the range for a long time, because I think they felt they were so reliant on Woodford. That’s proven to be a good thing to do.”
One of the biggest success stories for Invesco in the past 12 months has been Invesco Perpetual Global Targeted Returns – a direct rival for the £21bn Standard Life GARS fund.
Millar (pictured) and his team have yet to amass a one year track record, but have already grown assets to £404m, and Trevers expects this to be a high growth area of the business, with more fund launches to follow.
“This is very much a long-term story for us. We are looking at what else we can do with the team, and we’re sure it is an area that could get bigger,” he said.
Performance of fund and index since launch
Source: FE Analytics
FE data shows that Invesco GTR has made a good start since its launch in September last year, delivering returns of 7.6 per cent.
This ensures it is on track to achieve its objective of cash plus 5 per cent over a rolling three-year period, with half the volatility of equities.
While it’s yet to see significant inflows, Trevers is also optimistic about Invesco Perpetual Emerging Countries’ future.
Headed up by the highly experienced Dean Newman, the fund has performed very strongly in recent years, and is one of a number looking to fill the void left by the soft-closed Aberdeen Emerging Markets and First State Global Emerging Markets Leaders portfolios.
Performance of fund and sector over 3yrs
Source: FE Analytics
The combined assets of Invesco Perpetual Income and High Income prior to Woodford’s resignation in October were £24.5bn, according to Trevers, and today stand at £19.9bn.
This includes the impact of fund performance, meaning that outflows have been closer to 25 per cent.
It seems that some of the money that has come out of Invesco Perpetual High Income and Income has gone straight into Invesco Perpetual UK Strategic Income.
Three Counties’ Andrew Alexander told FE Trustnet that he made this move because he wanted to retain exposure to Barnett without having to worry about the impact of redemptions and industry hype, and the numbers suggest others are thinking along similar lines.
Invesco confirmed that a large mandate was moved from Invesco Perpetual Income into UK Strategic Income earlier this year.
Barnett confirmed last week that he will not be merging Strategic into the larger income funds.
Deverell believes Invesco needs to do more to differentiate the three funds.
“At the moment he is running three funds with very similar objectives. I’m not sure what the point is of that,” he said.
Invesco Perpetual UK Strategic Bond has been a top quartile performer in its IMA UK Equity Income sector over one, three, five and 10 year periods. It is ahead of both Invesco Perpetual Income and High Income over all but 10 years.
Barnett says Strategic is likely to have more in large caps than its two rivals, and will also have a shorter list of companies overall.
FE Trustnet will take a closer look at the performance of Invesco Perpetual’s stable of funds in an article next week.
