Invesco Perpetual High Income vs Passive Funds

How does a £11 billion actively managed fund fare against a low cost ETF or tracker fund? We reveal who Invesco Perpetual High Income performs against a passive strategy

Karen Kwok 17 November, 2016 | 3:34PM

Fans of ETFs and tracker funds regularly accuse actively-managed funds of failing to beat the benchmark, insisting that investors would be better off ditching stock selection in favour of the whole index. The stats back up the claims – fees are the only reliable predictor of future returns, and post-charges, the vast majority of the 4,000 odd funds available to private investors fail to beat their passively-run alternative.

However, there are a few funds among the many worth paying for. The Bronze Rated Invesco Perpetual High income is one of them. One of the most popular and successful actively managed funds in the UK, the £11.4 billion fund has returned an average of 7% every year for the past 10 years.

Fund Loses Star Manager but Performance Holds

In 2013, IP High Income then fund manager Neil Woodford who had worked at Invesco Perpetual for 25 years left the firm. Over the following 12 months, many investors cashed in the High Income and Income funds which had each delivered a total return of more than 10% a year for the last decade. The funds saw total outflows of £6 billion and this loss alongside concerns about new manager Mark Barnett’s workload led Morningstar analysts to put the funds’ Ratings Under Review.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Franklin UK Equity Income W Acc1.86 GBP0.62
Invesco High Income UK Inc275.91 GBP0.60
LF Woodford Equity Income C Sterling Acc13.59 GBP4.06
SPDR® FTSE UK All Share ETF Acc44.33 GBP-0.01
Vanguard FTSE U.K. All Shr Idx UT Acc180.16 GBP0.22

About Author

Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk

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