Invesco Perpetual European High Income Fund
September 2017 (Content as at 31 August 2017)
The Invesco Perpetual European High Income Fund aims to achieve a high level of income together with capital growth over the medium to long term. The Fund seeks to achieve its objective by investing primarily in European government and corporate debt securities (which may be unrated or sub-investment grade) and European equities. The Fund may also invest in cash, cash equivalents, money market instruments, collective investment schemes, and other transferable securities. Financial derivative instruments can be used for investment purposes and for efficient portfolio management. They may include derivatives on currencies, interest rates, credit and equities and can be used to achieve both long and short positions.
The fund’s high yield bond exposure is focused on higher quality companies that we consider have a lower risk of default. We also have significant holdings in non-traditional parts of the high yield bond market. This includes bonds within the financial sector and bonds with equity like characteristics known as corporate hybrids. The fund’s overall interest rate sensitivity (duration) remains low. A significant allocation of the fund is invested in equity. Our focus for this allocation is on stocks with strong cash flow generation, which we believe have the ability to maintain or grow dividends, and we see such opportunities across sectors.
The European high yield bond market enjoyed positive returns through May as it benefitted from improving economic data, on-going central bank support, a reduction in political risk and strong corporate earnings. European equity markets also continued their advance in May. Stocks performed strongly in the first half of May as the victory of pro-Europe centrist Emmanuel Macron in France’s presidential elections resolved uncertainty about the outlook. European equities pared some of the advances in the second half of the month amid a rise in the euro against the US dollar.
|Launch date||01 May 2008|
|Sector||IA Mixed Investment 20-60% Shares NR|
|Available in an ISA?||Yes|
|Team:||Invesco Perpetual - European Equities|
|Title:||Co-Head of Fixed Interest|
|Team:||Invesco Perpetual - Fixed Interest|
|Title:||Co-Head of Fixed Interest|
|Team:||Invesco Perpetual - Fixed Interest|
|Accounting period ends||
|Accumulation (No Trail)||B2PZXZ9||GB00B2PZXZ99|
|Income (No Trail)||B2PZY01||GB00B2PZY012|
|Minimum lump sum||£500|
One-off charges taken before you invest
The entry charge for the fund is up to 5%. This is the maximum that might be taken out of your money before it is invested. For example, if you invest £1,000, an entry charge of 5% means £950 of your money will be used to buy shares in the fund.
The entry charge covers the costs of setting up your investment.
If you invest through a third party (such as a financial adviser), but do not receive financial advice on your investment, this charge may include payments to that third party. For more details see "What share classes are available for your ICVC funds?".
There is no exit charge for the fund.
Charges taken from the fund over a year
The ongoing charge figure is based on a fixed, all-inclusive fee and excludes portfolio transaction costs. The ongoing charge for each share class can be found in the relevant Key Investor Information Document available under 'Literature'. Investors will be provided with advance notice if any increases to this figure occur.
The ongoing charge covers all aspects of operating the fund during the year, including fees paid for investment management, administration and the independent oversight functions.
If you invest through a third party (such as a financial adviser), but do not receive financial advice on your investment, this charge may include payments to that third party. Once invested, your contract note or acknowledgement letter will show the amount of any payment in cash terms. For more details see "What share classes are available for your ICVC funds?".
Charges taken from the fund under specific conditions
No performance fee is charged.
Portfolio transaction costs1
On average, over the last three financial years, the fund incurred broker commissions of 0.03% and transfer taxes of 0.01%, as a necessary part of buying and selling the fund's underlying investments in order to achieve the investment objective. The commission and transfer taxes only relate to the equity (shares) portion of the fund. A proportion of these costs is recovered directly from investors joining and leaving the fund.
The bond portion of the fund invests in fixed interest securities which have no separately identifiable transaction costs; these costs form part of the dealing spread between the buying and selling prices of the underlying investments.
When the fund buys or sells equities or bonds, broker commissions and transfer taxes are paid by the fund on each transaction. In addition, there is a dealing spread between the buying and selling prices of the underlying investments. Dealing spreads vary considerably depending on the transaction value and market sentiment. The estimated average dealing spread for the fund is 0.41% of the transaction value.
Comparing portfolio transaction costs for a range of funds may give a false impression of the relative costs of investing in them, for the following reasons:
- Transaction costs do not necessarily reduce returns. The net impact of dealing is the combination of the effectiveness of the manager's investment decisions in improving returns and the associate costs of investment
- Historic transaction costs are not an effective indicator of the future impact on performance
- Transaction costs for buying and selling investments due to other investors joining or leaving the fund may be recovered from those investors. For further information see Pricing policy note below
- Transaction costs vary from country to country
- Transaction costs vary depending on the types of investment in which a fund invests
- As the manager's investment decisions are not predictable, transaction costs are also not predictable
Pricing policy note1
We operate a single pricing methodology for this fund and reserve the right to adjust the fund's price to protect your investment from the costs of buying and selling investments that result from other investors joining or leaving the fund. The amount of any such adjustment is calculated by reference to the estimated costs of dealing in the underlying investments, including any dealing spreads, broker commissions and transfer taxes.
Typical adjustments to the fund's price are to increase it by 0.59% for net inflows or decrease it by 0.39% for net outflows.
We usually adjust the price to the maximum extent possible when the value of net contributions or withdrawals is significant, which helps to protect your investment from the costs of the resultant transactions.
1The fund's financial year end is 30 April 2017. Figures in these sections are as at 30 April 2017.
Product & fund information
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested. Past performance is not a guide to future returns.
The securities that the fund invests in may not always make interest and other payments nor is the solvency of the issuers guaranteed. Market conditions, such as a decrease in market liquidity for the securities in which the fund invests, may mean that the fund may not be able to sell those securities at their true value. These risks increase where the fund invests in high yield or lower credit quality bonds and where we use derivatives.
The fund has the ability to make use of financial derivatives (complex instruments) which may result in the fund being leveraged and can result in large fluctuations in the value of the fund. Leverage on certain types of transactions including derivatives may impair the fund’s liquidity, cause it to liquidate positions at unfavourable times or otherwise cause the fund not to achieve its intended objective. Leverage occurs when the economic exposure created by the use of derivatives is greater than the amount invested resulting in the fund being exposed to a greater loss than the initial investment. The fund may be exposed to counterparty risk should an entity with which the fund does business become insolvent resulting in financial loss.
Yield and performance figures are based on the z (accumulation) share class. As this was launched on 12 November 2012, for the periods prior to this launch date, performance figures are based on the accumulation share class, without any adjustment for fees. Performance figures for all share classes can be found in the relevant Key Investor Information Document.
All fund portfolio figures are as at date shown (source: Invesco Perpetual).
Performance figures are shown in sterling, inclusive of reinvested income and net of the ongoing charge and portfolio transaction costs to date shown. The figures do not reflect the entry charge paid by individual investors. Sector average performance is calculated on an equivalent basis (source: Lipper).
The Historic Yield reflects distributions declared over the past twelve months as a percentage of the mid-market price of the fund, as at the date shown. It does not include any entry charge and investors may be subject to tax on their distributions. The fund’s ongoing charge is charged to capital. This has the effect of increasing the distributions for the year by the amount of the ongoing charge and constraining the fund’s capital performance to an equivalent extent.
Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. This marketing material is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities.
For the most up to date information on our funds, please refer to the relevant fund and share class-specific Key Investor Information Documents, the Supplementary Information Document, the Annual or Interim Short Reports and the Prospectus, which are available using the contact details shown.