Dublin-based sterling bond fund launches distribution share class
Invesco Perpetual has launched a distribution share class of its Dublin-based AAA-rated Invesco Sterling Bond fund, opening it up to UK-resident investors for the first time.
The UK Finance Act 2004 allows for a distributing share class to sit under the same unit trust umbrella as an accumulating share class. Without a distributing share class, the fund was tax-inefficient for Britons.
The key benefit of a distribution share class is that income is paid out as dividends on a quarterly basis. There is no drain on capital as distributions are taken from income and not subsidised from capital. It is also tax-efficient for UK investors seeking to mitigate their CGT liability as UK Distributor Status rules apply.
The minimum investment is £1,000 with £500 top-ups allowed. The annual management charge is 0.75%. Invesco is offering up to 1% discount on the full initial charge until 30 June.
Accumulation shares will continue to be available and offer compound returns so that income is accumulated rather than being paid out as dividends, gross reinvested income so no tax is deducted, there is also no income tax liability until redemption.
Paul Read and Paul Causer manage the Dublin-domiciled portfolio, which was launched eight years ago.
Read said: "This may be a good fund for those investors looking for a sterling-denominated investment in a relatively secure asset class with no currency risk. Investors can satisfy both their capital growth requirement and their income needs within the same fund just by switching between the accumulation (A&C) share class and the distributing (A-QD) share class when their circumstances change. This facility is free of charge. Additionally, unlike some other schemes, units in the fund can be jointly held by up to four named holders.
"The flexibility within the fund's investment remit enables us to manage the fund pragmatically and in the context of absolute risk and return."
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