A new star in Invesco’s income team
There is a lack of established funds in the IMA Global Equity Income sector, but a portfolio managed by Paul Boyne has made quite an impression since its launch in March 2009.
Paul Boyne’s Invesco Perpetual Global Equity Income
fund has the best risk-adjusted returns over three years in its Global Equity Income sector, according to FE data.
The £246m fund, which only recently celebrated its third anniversary, has returned 55.56 per cent since June 2009, with an annualised volatility of 11.88 per cent.
By contrast, the average Global Equity Income portfolio has returned 42.17 per cent over the period, with a volatility score of 12.56 per cent.
Performance of fund vs sector over 3-yrs
Source: FE Analytics
No Global Equity Income fund has returned more over the period.
The study used the Sharpe ratio to determine which funds had the best risk-adjusted performance over the set periods. The ratio measures a fund's return relative to a notional risk-free investment – in this case, cash. The difference in returns is then divided by the fund's volatility.
With a score of 0.87, Boyne’s fund has the highest Sharpe ratio in the sector by some distance. Joint second are Veritas Global Equity Income and Threadneedle Global Equity Income, with a score of 0.76.
Invesco Perpetual Global Equity Income is also a top performer over one year, beaten only by Newton Global Higher Income in the total return table.
The fund's investment approach is in the mould of Neil Woodford’s highly successful Invesco Perpetual income portfolios, in that it aims for above-average performance with below-average volatility, by holding solid, defensive, dividend-paying companies.
"We seek companies that are high quality, with attractive franchises and balance sheets with a conservative level of debt," said Boyne in a recent note to investors.
"We believe that these types of companies are more likely to be able to return cash to investors in the form of growing dividends."
Like Invesco Perpetual Income and High Income, the fund is currently overweight healthcare, which accounts for 15.57 per cent of assets under management. The average fund in its sector has a 10 per cent weighting.
All three Invesco funds are also underweight financials and overweight telecoms.
Boyne and Woodford also share a superior record in falling markets
compared with their peers.
Last year, Invesco Perpetual Global Equity Income was the best performer in its sector by some distance, delivering 4.88 per cent when the vast majority of Global Equity Income funds lost money.
Performance of fund vs sector over 1-yr
Source: FE Analytics
Boyne currently has only marginal direct exposure to emerging markets, preferring more established companies in the UK, US, Europe and Japan.
The one drawback of Boyne’s portfolio is its below-average payout. According to FE data, it has a one year historic yield of 3.25 per cent, which is among the lowest in the Global Equity Income sector.
The fund’s short track record means it is yet to achieve an FE crown rating. It has a total expense ratio (TER) of 1.7 per cent and a minimum investment of £500.