Invesco UK Equity High Income: September 2025 fund update

• The fund has been co-managed by Ciaran Mallon and James Goldstone since May 2020

• The fund aims to generate a high level of income and capital growth over the long term

• The fund has marginally lagged behind the FTSE All Share index under Mallon and Goldstone’s tenure

• This fund does not feature on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits in a portfolio

The Invesco UK Equity High Income fund aims to generate a high level of income, greater than that of the FTSE All Share index, over rolling five year periods, as well as capital growth over the long term. The fund could form part of an income-focused investment portfolio, or part of a broader portfolio looking to add investments in UK companies.

Manager

Ciaran Mallon and James Goldstone have managed the fund since May 2020 when they took over from previous manager Mark Barnett.

Mallon began his investment career in 1994 at HSBC where he was an investment analyst. In 1999, he moved to United Friendly Asset Management to become a fund manager, before joining Invesco in 2005. He’s since managed several UK equity funds focused on income and provides UK ideas for the equity portions of a bond fund and multi-asset fund. The same investment approach is used throughout.

Goldstone began his career in 2001 at Credit Lyonnais working in pan European equity sales, before moving to UK focused equity sales roles at HSBC and Dresdner Kleinwort. He joined Invesco from Banco Espirito Santo in 2012. He’s also co-manager of a few UK equity income funds at Invesco, working closely with Mallon.

Process

The fund aims to generate a high level of income, greater than that of the FTSE All Share index, as well as capital growth over the long term.

The managers look for companies with a competitive advantage over their peers and aligned management teams who can allocate capital well. They like businesses to have strong balance sheets and be cash generative. They aim to build a fund made up of companies across a range of sectors, capable of flourishing in different economic environments.

While UK equity income funds mainly invest in UK companies, up to 20% can be invested in overseas companies. Mallon and Goldstone make use of this flexibility, with around 17.6% of the fund invested in companies listed overseas, such as the US and France.

The fund currently has one investment in a company, Allied Minds, not currently listed on a stock market, which accounts for 0.10% of the fund’s value. This amount can change over time as the fund’s size changes. Investors should be aware that investment in unquoted companies is higher risk, and they can be considerably less liquid (their shares are harder to buy and sell) than those traded on established stock exchanges.

The managers have made a number of changes to the fund’s investments over the last 12 months, including adding tobacco company Imperial Brands and energy business Shell to the portfolio. They’ve also reduced the size of the fund’s investments in retailer Tesco, and insurers Phoenix and Legal & General.

The managers have the flexibility to use derivatives which adds risk.

Culture

Ciaran Mallon and James Goldstone are based in Henley alongside the rest of the UK equities team. The team work together closely, creating a collegiate environment where challenge and debate is encouraged. The managers are given autonomy to invest the way they see fit but enjoy and make use of the resources that come with being part of a large organisation.

ESG Integration

The approach to ESG integration differs between investment teams at Invesco. However, all teams are supported by a centralised team of ESG professionals, located in three regions; the US, Asia and EMEA. The Global ESG team is responsible for ensuring ESG best practice is upheld across the firm including through investment team ESG integration, research, voting and engagement. The team also supports the distribution team with client engagement and advises the product teams on ESG innovation. Invesco also has dedicated ESG specialists within certain individual investment teams, who are closely connected with the Global ESG team.

Fund managers leverage insights from a wide range of third-party research and service providers and have access to Invesco’s proprietary ratings tool, ESGintel, which provides data and insights on a large number of companies across the globe.

The firm’s ESG approach, engagement case studies and headline voting records are all available in the annual Global Stewardship report. Invesco also offers a voting dashboard which allows a user to view how each fund voted on each resolution. However, no voting rationale is provided.

While consideration of ESG related investment risks is integrated across the firm, this fund is not managed to an ESG mandate and therefore the risk and reward of any investment in the fund is most important.

Investors should note that this fund invests 26.54% of its assets in companies involved with the extraction of oil, gas or coal. This could leave the fund vulnerable to fluctuations in commodity prices, regulatory changes aimed at reducing carbon emissions, and potential shifts in consumer preferences towards sustainable alternatives.

Cost

The fund has an annual ongoing fund charge of 0.87%. The HL platform fee of up to 0.45% a year also applies, except in the HL Junior ISA, where no account charge applies. The annual charge is taken from capital rather than income generated, which could boost income, but reduces the potential for capital growth.

Performance

Since Mallon and Goldstone became managers of the fund in May 2020, the fund’s grown 88.01% marginally behind the 88.12%* return from the FTSE All Share index over the same period. Past performance isn’t a guide to the future.

Over the last year, the fund’s grown 11.65%, slightly lower than the FTSE All Share index which generated a return of 12.58%.

Our analysis suggests that over this period, the fund’s investments in financial services business, as well as investing less than the benchmark in healthcare companies aided performance. On the other hand, the fund’s investments in utility companies, as well as consumer businesses sensitive to the economic cycle detracted from performance.

At the time of writing, the fund yields 3.57%. Income isn’t guaranteed, and yields aren’t a reliable indicator of future income.