- The fund continues to have significant exposure to the IT sector
- Performance over the past year has improved, with stock selection adding value
- Recent purchases include Toyota and life science company Bayer
Nick Mustoe is an experienced manager who has the backing of a well-resourced team at Invesco Perpetual. However, his stock selection has been inconsistent over time and we currently feel there are superior managers in the sector with better track records. The Invesco Perpetual Global Equity Fund does not feature on the Wealth 150 list of our favourite funds across the major sectors.
Please note, the manager has the ability to use derivatives and to invest in emerging markets, both of which add risk to a portfolio.
Nick Mustoe has led the Invesco Perpetual Global Equities Team since December 2010. Over his tenure, the fund has risen 114.5% compared with 122.5% for the FTSE All-World Index and 100.7%* for the IA Global Equity sector. The fund’s performance relative to the FTSE All-World Index has been variable over time, as demonstrated by the below chart. When the line is rising, the fund is performing better than the index, and when it is falling, the fund is underperforming the index. It has underperformed overall.
Past performance is not a guide to future returns. Source: Lipper IM *to 31/10/17
|Annual Percentage Growth|
| Oct 12 -
| Oct 13 -
| Oct 14 -
| Oct 15 -
| Oct 16 -
|Invesco Perpetual Global Equity||36.85||0.87||6.08||19.24||17.03|
|FTSE All World||24.33||8.82||4.25||29.96||13.86|
Following two and a half years of weaker returns, the fund has performed relatively well over the past year. Our analysis suggests this can be attributed to an improvement in the manager’s stock selection. Around 18% of the fund is invested in the IT sector, which has been the strongest performing sector of the global stock market over the past year. The fund’s investments in Paypal, Cap Gemini and Nexon were all among the best performing investments in the portfolio. Elsewhere, a resurgence in the oil price was beneficial to investments in BP and Royal Dutch Shell, which are both top ten positions in the fund. Meanwhile, less exposure to mining companies held back returns as these businesses generally did well on the back of positive global growth expectations.
There have been a number of recent changes to the portfolio:
Bayer purchased – life science company with pharmaceutical, consumer health and animal health divisions: The manager believes other investors have underestimated the level of cash the company will be able to generate following its merger with Monsanto.
TE Connectivity purchased - provides connectors and sensors to many industries but mainly the automobile sector: The business is a beneficiary of the growth in electric cars, and factories becoming more automated. The manager feels the share price does not fully reflect the company’s potential for growth.
Kroton Educacional purchased – higher education provider in Brazil: The share price has been weak recently due to economic weakness in Brazil, which has impacted an educational support scheme for lower income students. However, the manager values the business's market leading position and healthy balance sheet, and feels it has strong growth prospects, not reflected in the share price.
Toyota purchased – Japanese car manufacturer, listed in the US: The manager feels the business has a strong balance sheet and a high-quality product. The purchase of Toyota was funded by the sale of Honda as the manager felt the former is better valued, with greater growth prospects over the long term.
Investments in PNC Financial Services, Alphabet, and United Phosphorous were sold on the back of strong share price performance, which left share prices looking expensive.