CAUTIOUS OPTION
Mick Gilligan, director of fund research at Killik & Co, points cautious investors in the direction of one of the established stars of the fund management sector. Invesco Perpetual Income is ranked second out of 80 funds in the IMA UK Equity Income sector over three years to 30 May 2008. Over the period, it has returned 40.15 per cent, compared with a sector average of 19.64 per cent.

‘Neil Woodford has managed the fund since October 1990. Woodford, who has a strong long-term record, also manages Invesco Perpetual High Income and the equity components of the Invesco Perpetual Monthly High Income and Invesco Perpetual Distribution funds. The portfolio is constructed with a combination of top-down and bottom-up considerations. Woodford’s top-down macroeconomic view identifies some broad themes, and stock selection is carried out with a view to benefit from these themes.

‘This fund still has a zero weighting in bank equities. We don’t think we have seen the full impact of real estate write-downs on the banking sector yet, and the portfolio is very defensively positioned in that regard. In fact, the whole of the portfolio is positioned for difficult times and has been for the past couple of years.’

Invesco Perpetual Income has an initial charge of five per cent and an annual management fee of 1.5 per cent.