As well as delivering very strong performance on a relative and absolute basis since its launch in March 2008, Rhodes’ fund has been one of the most popular in the IMA unit trust and OEIC universe, already growing to £7.4bn in its relatively short life. According to FE it has grown by £1.3bn in the last 12 months alone, and Cofunds recently reported that it was the bestselling fund on the platform in August of this year.
When talking about Rhodes’ biggest competitors, two other multi-billion funds immediately come to mind: Newton Global Higher Income and Veritas Global Equity Income, which both have strong records since launch.
The popularisation of global equity income as a theme has led to a number of fund launches from smaller firms, which is likely to be of interest to those worried about the lack of flexibility in a giant fund like M&G Global Dividend. However, though some of these boutiques have made a good start – Bedlam Global Income being a good example – many investors understandably like the stability of firms like M&G and Newton when it comes to portfolio selection.
In Invesco Perpetual Global Equity Income, arguably investors have the best of both worlds. On one hand the fund is run by one of the largest asset managers in the UK – with perhaps the most respected equity income desk in the land – and is also small enough to give its managers full flexibility when picking stocks.
The £450m fund has five FE crowns to M&G, Newton and Veritas’ four, and is also included in the FE AFI’s Balanced index. All this is as a result of its very strong performance on a relative, absolute and risk-adjusted return basis since its launch in March 2009.
Our data shows the fund has returned 114.75 per cent over the period, putting it in the top quartile of its IMA Global Equity Income sector.
Performance of funds and sector since March 2009
Source: FE Analytics
The only global equity income funds that have returned more are M&G Global Dividend and Threadneedle Global Equity Income, though the Invesco portfolio has been significantly less volatile.
Our data shows that Invesco Perpetual Global Equity Income has an annualised volatility of 13.01 per cent since March 2009, compared to 16.27 per cent from M&G Global Dividend and 13.42 per cent from the IMA Global Equity Income sector.
Over one and three years, Invesco Perpetual Global Equity Income is ahead of its M&G rival – again with a lower annualised volatility – and top decile in its sector in both cases. In fact, over three years, it is the number one performer of its kind.
Performance of funds and sector
| Name | 1yr (%) | 3yr (%) |
|---|---|---|
| Invesco Perp Global Equity Income | 25 | 55.85 |
| M&G Global Dividend | 21.72 | 42.98 |
| Newton Global Higher Income | 13.19 | 39.18 |
| IMA Global Equity Income | 18.1 | 37.42 |
| Veritas Global Equity Income | 9.36 | 33.52 |
Source: FE Analytics
The fund was dealt a blow when former managers Paul Boyne and Doug McGraw exited at the end of last year, but in Nick Mustoe they have a highly experienced replacement.
Mustoe (pictured), who is chief investment officer at Invesco, believes that the whole global equity range will be the next success story for the firm, with Invesco Perpetual Global Equity Income as the leading force.
“Global equity is the area that we’re really looking to develop,” he said in an exclusive interview with FE Trustnet. “This is what I spend my day to day in the office doing. We’ve got some great numbers and quite an unusual process.”
He explains that the fund changed its process at the beginning of this year, which has so far translated into an improvement in performance. “As lead manager I do all of the asset allocation, and leave five fund managers who I work with to pick the stocks,” he said. “On the Global Equity Income fund, we have [FE Alpha Manager] Mark Barnett from the UK team, Stephanie Butcher from Europe, Tony Roberts from Japan, Tim Dickson from Asia and Simon Clinch from the US.”
“It’s worked very well from a performance point of view, and we’ve worked very well together. This is all our portfolio – there is no separate mandate. We all get together and discuss stock selection, to make sure we’re all on the same page and getting the right stock.”
“We’ve had a great deal of demand because the fund screens so well in terms of performance,” he added.
All of the managers in question have competitive track records and have beaten their peer group composites consistently. Barnett is the standout manager, thanks to his stellar performance running the Invesco Perpetual UK Strategic Income fund and Keystone IT – among others.
Mustoe says the fund’s priority is not to find companies with high starting yields, but those that have a “quality and rising” dividend policy. The prospective yield for the fund is currently 3.4 per cent, which is a touch above average for the sector. By means of comparison, M&G Global Dividend is currently yielding 3.06 per cent.
The fund, which tends to have between 50 and 60 stocks, is regionally very diversified. The US is by far the biggest allocation at 39 per cent, with the UK and Switzerland a long way behind with 17 and 13 per cent, respectively. The rest of the portfolio is split relatively evenly between more than 10 countries, including the Netherlands, Ireland, Japan, Australia and Hong Kong.
Mustoe concentrates almost exclusively on developed markets, and actively shifts his regional allocation to where he sees the most value. He says he is currently overweight Europe and Japan for this reason.
Invesco Perpetual Global Equity Income has a minimum investment of £500 and ongoing charges of 1.68 per cent – almost exactly the same figure as M&G Global Dividend. Both are available across all major platforms.
