Invesco Income Growth has outperformed the FTSE All-Share over the past 12 months, due to a switch f...
Invesco Income Growth has outperformed the FTSE All-Share over the past 12 months, due to a switch from technology to value stocks.
Trust manager Graham Kitchen's thematic investment approach has produced growth in NAV of 14% during the year to 4 July, in contrast the FTSE All-Share fell by 1%. Kitchen said part of the performance was due to selling out of some growth companies in the first part of the year and buying into value stocks. One stock he highlighted was Debenhams, which he bought at 145p and is currently priced at 220p. Kitchen said: "The shares were unbelievably cheap considering the sales performance of the company aligned with the fact it was moving away from clothes retailing, which is a very competitive market."
Other stocks he purchased included British Aerospace and Imperial Tobacco. Two longer term themes which the trust has benefited from are exposure to media and medium-sized financial stocks. Kitchen is overweight financials and in particular regional stockbrokers, such as Brewin Dolphin, Rathbones, Gerrard Group and BWD Rensburg.
He believes these kind of companies will reap the benefits of the long-term savings market given the increase in life expectancy and declining public pensions. While financials have provided some growth, as well as attractive yields, the media sector has provided well above average growth. For the year to 4 July the FTSE media sector has grown by 14.4% compared to a 4.9% decline in the FTSE All-Share.
Invesco Income Growth has 63 holdings with the top 10 making up 32.1% of the portfolio. At close of business on 4 July the shares of the trust traded on a discount to NAV of 12.9% yielding 2.5%. Over three years shares have risen by 51.2% compared to an average of 38.3% in the in the Standard & Poor's UK Income Growth sector.
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