Invesco Perpetual High Income
Neil Woodford’s £10.9bn Invesco Perpetual High Income fund has returned 15 per cent in the past year, at a volatility of 8.3 per cent, while the average fund in the sector returned 14.2 per cent at a volatility of 10 per cent.
A similar pattern is true over three years; in the period, the fund returned 22 per cent at a risk of 13.2 per cent, while the sector average return was 21 per cent at 17.5 per cent volatility. As has been well documented, Woodford’s longer-term performance is stronger.
More overlooked funds in the IMA UK Equity Income sector include Troy Asset Management’s Trojan Income, which has returned 15 per cent and 36 per cent over one and three years respectively, and Unicorn’s UK Income fund, which has returned 30 and 91 per cent over one and three years respectively. Both funds did so at a lower volatility than Woodford’s vehicle.
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| Fund |
1-yr returns (%) |
3-yr returns (%) |
| Invesco Perp High Income |
7.85 |
12.75 |
| JPM Natural Resources |
7.36 |
30.77 |
| Aberdeen Emerging Markets |
-0.16 |
47.54 |
| BlackRock Gold & General |
1.27 |
80.36 |
| Invesco Perp Monthly Income Plus |
0.31 |
26.17 |
Source: FE Analytics
JPM Natural Resources
While JPM Natural Resources' returns aren’t bad, other similar vehicles can offer better performance at lower risk. The £2.3bn JP Morgan fund returned 45 per cent over three years at a volatility of 32 per cent, while Investec Enhanced Natural Resources returned 50 per cent at a volatility of 14 per cent.
Another alternative for investors to consider is Thesis Australian Resources. Its returns are better than the JPM fund, but it is also more volatile. Its one-year performance is far better than either the JPM or Investec funds.
Aberdeen Emerging Markets
Aberdeen Emerging Markets has long beaten its benchmark, and is often less volatile than its peers, but there are other vehicles to consider.
First State’s Global Emerging Markets and Global Emerging Markets Leaders have both pipped the Aberdeen fund to the post over one, three and five years. McInroy & Wood Emerging Markets is also a strong performer, but it doesn’t have as long a track record as the Aberdeen fund.
BlackRock Gold and General
Evy Hambro’s fund is fairly niche, and has given a nice return to investors looking for diversification and exposure to precious metals.
Alternatives include Smith & Williamson Global Gold and Resources, which has beaten the BlackRock fund since its launch, and Ruffer Baker Steel Gold, which has performed roughly in line with Hambro’s vehicle.
There is also a closed-ended version of the BlackRock fund, which offers stronger returns than the OEIC, but investors should keep in mind that gearing in investment trusts means they can fall further in down markets, as well as rising faster in boom times.
Invesco Perpetual Monthly Income Plus
Managed by Invesco’s highly regarded Paul Causer, Paul Read and Neil Woodford, this is another favourite among FE Trustnet users. With an FE Risk Score of 39, the fund takes on far less risk than the FTSE 100. Like Woodford’s other popular vehicle, though, it has struggled over the shorter-term, and is one of the worst-performing vehicles in its sector over the past 12 months.
Investors looking for a higher-returning vehicle can look to Fidelity Strategic Bond, which has returned more at a lower risk over one, three and five years.