Invesco Perpetual launches Global Financial Capital fund
Invesco Perpetual is launching a Global Financial Capital fund, managed by co-heads of fixed income Paul Causer and Paul Read alongside CIO Nick Mustoe, to tap into long term structural reform of the financials sector.
The fund will seek to deliver attractive total returns over the medium to long term by investing globally in capital securities and equities of banks and other financial institutions, as well as cash and cash equivalents. It will launch on 25 January with £2m in seed money and sit in the UK Investment Management Association Specialist sector.
At launch, the fund will be predominantly a fixed income vehicle, as this is where the team sees the most value. The equity portion of the fund, to be run by Mustoe utilising the expertise of the Invesco Perpetual management team, will be around 0-5% of the fund at launch but has the potential to rise to 40% of the portfolio.
Although the bond duo took a performance hit from their bank weighting last year (currently around 46% of their Tactical Bond fund), they believe a wealth of longer term opportunities will be created for financials by structural reform, regulatory change such as Basel III as well as the diversity of ways to play these themes. The team also highlights yields are at compelling levels for the sector, at values not seen since 2008-9.
Paul Causer said: “There is an exceptional investment opportunity here. As difficult as it is at the moment over a number of years we see the banks, especially in big developed economies, on a transformational path to becoming different types of institutions with lower leverage, greater levels of better quality capital as well as being more tightly regulated. Over a longer timeline banks will become safer and almost utility-like.