Our view on this Fund
Paul Causer and Paul Read expect growth to remain subdued and low inflation to persist. In this environment they expect fixed interest returns in 2013 to be positive but unspectacular, with income forming the bulk of returns. They continue to believe financials are the main area of relative value in investment-grade corporate bonds, with rising capital levels, ongoing structural reform and implementation of new, more conservative banking regulations remaining supportive of the banking sector over the medium term.
Information from the fund manager
Please note: The information in this box has been provided by, and is issued by, the fund manager and not Hargreaves Lansdown. Hargreaves Lansdown accepts no liability for the reliability or accuracy of the data provided by third parties.
HL sector comment: GBP Corporate Bond
Our view on this sector
Many commentators currently see the bond market as overpriced and anticipate a "great rotation" from bonds into equities, especially if any inflationary pressures mount. A recent weakening in bond prices, coupled with the upturn in equity markets, could be evidence this is already underway. Yet it is unlikely to be this simple. Any economic or political shocks could see a retreat back into the perceived 'safe haven' of government bonds such as gilts and US Treasuries. Central banks also remain "buyers at any price" through quantitative easing, where newly minted money is used to buy up bonds. In this environment we believe any talk of a bond bubble is misplaced, especially for corporate bonds whose yields still typically range from 3-7%, depending on the risk. Although they are unlikely to provide much in the way of capital growth, the income they provide is still relatively attractive, especially compared to the paltry rates available on cash.
HL group comment: Invesco Perpetual
Our view on this Fund Management Group as a whole
Invesco Perpetual was formed by the merger of Invesco and Perpetual in December 2000 following the acquisition of the two companies by Amvescap (now Invesco Ltd). It is one of the largest investment managers in the UK and offers a diverse range of funds across a number of sectors. The group trades as Invesco Ltd outside the UK and is listed on the New York Stock Exchange.
Invesco Perpetual believes there are no short cuts to long-term investment success. The group has excelled in managing UK equities, headed by the highly acclaimed Neil Woodford.