As In­vesco bond vet­er­ans step down from their funds, should in­vestors worry?

In­vesco En­hanced In­come and City Mer­chants High Yield are un­der new man­age­ment. We look at the likely con­se­quences for share­hold­ers

The Daily Telegraph - Business - - Business - RICHARD EVANS

WHEN very long-serv­ing fund man­agers step down from their port­fo­lios it is nat­u­ral for in­vestors to worry. When the change comes against a back­drop of up­heaval at the fund man­age­ment com­pany con­cerned those wor­ries can only deepen.

This is the po­si­tion in which share­hold­ers in two bond funds, In­vesco En­hanced In­come and City Mer­chants High Yield, find them­selves.

The very ex­pe­ri­enced and stable part­ner­ship of Paul Read and Paul Causer at the helm of both port­fo­lios has de­parted and their pre­vi­ous deputy, Rhys Davies, has taken over, him­self with the help of a newly ap­pointed deputy. These events have taken place against a back­drop of wide­spread change at In­vesco. How­ever, Mr Davies is not ex­actly a new boy.

He has worked at the firm for more than 18 years, his en­tire in­vest­ment ca­reer, and has been on the two trusts’ man­age­ment teams since 2014. In­vesco re­mains a very well re­sourced fixed-in­come in­vestor.

An­a­lysts at Nu­mis, the stock­bro­ker, said: “We do not ex­pect this to re­sult in any sig­nif­i­cant changes for ei­ther fund, given that Rhys is a long-stand­ing mem­ber of the team who has al­ready been in­volved in the run­ning of the two port­fo­lios for sev­eral years. “The In­vesco fixed-in­ter­est team is well re­spected and cur­rently man­ages sev­eral large open-ended funds in­clud­ing In­vesco’s flag­ship Cor­po­rate Bond, Dis­tri­bu­tion, Monthly In­come Plus and Tac­ti­cal Bond funds, which in ag­gre­gate have as­sets of more than £8bn.”

We will main­tain a hold stance on both trusts but will keep an eye on per­for­mance un­der the new man­age­ment.

Up­date: Aug­men­tum Fintech

As a pre­vi­ous in­vest­ment trust tip of the year we would nor­mally up­date on this fund in early Jan­uary but it is of par­tic­u­lar in­ter­est now be­cause of its hold­ings in tech stocks, all of them un­listed, in light of the pan­demic. So we will take a quick look at its full-year re­sults, pub­lished last month.

Scru­tiny of its hold­ings, which num­ber just 18, is worth­while. The op­por­tu­nity for some of them to shine in the face of coron­avirus is clear. In­ter­ac­tive In­vestor, the in­vest­ment plat­form, for ex­am­ple, op­er­ates on­line and pro­vides a means for peo­ple to save for long-term goals such as re­tire­ment. Bul­lionVault and WhiskyIn­vestDirect are also on­line ex­changes, this time for gold and whisky; the for­mer has ex­pe­ri­enced huge de­mand dur­ing the pre­cious me­tal’s strong bull run.

Monese is a dig­i­tal bank tai­lored to those who move be­tween Bri­tain and Europe and most cus­tomers use it for their main ac­count. It looks well placed to ben­e­fit from the rise of itin­er­ant re­mote work­ing in the postCovid world. Other hold­ings ap­pear to this col­umn to of­fer sim­i­lar prom­ise.

Tim Levene, one of the port­fo­lio man­agers, said: “Covid-19 has fun­da­men­tally changed be­hav­iours. This has ac­cel­er­ated the digi­ti­sa­tion of fi­nan­cial ser­vices, which has cre­ated sig­nif­i­cant op­por­tu­nity for dis­rup­tion. The op­por­tu­nity to cap­i­talise on the shifts in con­sumer and busi­ness be­hav­iour in re­gard to dig­i­tal fi­nan­cial ser­vices is greater than ever. In­cum­bent play­ers still con­trol more than 90pc of the global mar­ket and many of the fi­nan­cial ser­vices gi­ants of to­mor­row are yet to emerge.”

He said per­for­mance had been sus­tained de­spite the pan­demic and the port­fo­lio had achieved a re­turn of 18pc on in­vested cap­i­tal.

The fund il­lus­trated what it saw as the ad­van­tage of in­vest­ing in un­listed firms by point­ing out that just 4pc5pc of sales of “fintech” com­pa­nies over the past three years had taken place via a flota­tion; the rest had been takeovers of one form or an­other, deny­ing stock mar­ket in­vestors any chance to par­tic­i­pate di­rectly.

The trust of­fers some­thing truly dif­fer­ent and the wis­dom of its choice of hold­ings ap­pears proven by their abil­ity to with­stand the epi­demic. Hold.

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