Invesco Perpetual Monthly Income Plus Accumulation Units

Hearing the different views of fund managers is one of the most interesting aspects of my role. Presently, few areas divide opinion as much as banks. The highly regarded duo of Paul Reed and Paul Causer, who manage Invesco Perpetual's Monthly Income Plus Fund alongside Neil Woodford, are currently positive on the outlook for the banking sector.

Since the financial crisis in 2008 many banks have strived to reduce debts, cut costs and strengthen their balance sheets. The regulatory environment for banks is also changing in an attempt to prevent a repeat of the crisis. Paul Reed and Paul Causer's optimism didn't pay off in 2011 as bonds issued by banks suffered, partly from ongoing concerns over how and when the euro zone crisis will be resolved. Nevertheless they maintain their conviction, believing the efforts banks are making to clean up their balance sheets will pay off over the long term.

Recently the duo has been using volatile markets as an opportunity to top up favoured holdings that are offering attractive yields. In the financials arena they have added to bonds issued by Commerzbank, one of Germany's leading banks, and AXA. They have also purchased bonds issued by Brenntag, a German chemical company, and Enterprise Inns, the public house operator. The latter's bonds are rated as high-yield, which means they are less secure than 'investment grade' bonds. High yield bonds usually pay a higher yield to compensate investors for taking higher risk and the managers have approximately 45% of the portfolio invested in this area.

Elsewhere, around 20% of the portfolio is invested in equities, with this portion managed by Neil Woodford. Interestingly, he doesn't like the banking sector believing the added risk of investing in their shares is too great. He uses the same approach as on his Invesco Perpetual Income and High Income funds. The equity portion remains focused on companies offering the potential for reliable growth in a challenging economic environment. This includes companies with resilient sales and earnings, often achieved by offering goods and services consumers are unlikely to cut back on in tougher times.

During 2011 Neil Woodford's exposure to tobacco companies, including British American Tobacco, was beneficial as they fared well in a volatile environment. Exposure to BT also helped as the share price rose strongly. Neil Woodford is also positive on the pharmaceutical sector with GlaxoSmithKline and AstraZeneca both featuring among the fund's top ten holdings. He believes one factor behind their continued success will be increased demand for their products from Asia and emerging markets.

We believe this fund provides investors with access to three of the best fund managers in their respective fields. It currently offers a yield of 6.25% (variable and not guaranteed). Please note the fund's charges can be taken from capital which could increase the potential for the capital value to be eroded. Please remember that any investment should be made for the long term and it will fall in value as well as rise. This fund remains on the Wealth 150 list of our favourite funds in each sector.