After a difficult few years for investment trusts, Invesco has carried out a number of mergers with its focus now on growth.
When Will Ellis took over as head of the investment trust business at Invesco four years ago, the division was still reeling from the loss of its biggest mandate.
Meanwhile the whole sector was about to be gripped by a turbulence which led to widening discounts and a shift away from the vehicles by financial advisers.
The mandate the firm lost to Majedie was the Edinburgh investment trust, a mandate once £2bn in size and run by Neil Woodford.
Ellis said: “I came in just as that was being transferred over. I have worked at Invesco for 20 years in different divisions, so when I came into the investment trust department it was very much a case of there was a lot going on.”
In those four years, Invesco has conducted a number of mergers of investment trusts it runs, taking the number of products down to four with total assets of £1bn.
Ellis said: “We had some trusts that do quite similar jobs, such as City Merchants and Enhanced Income, so we worked with the boards of those trusts and saw an opportunity to merge those.
"We also had a trust which had four sleeves to it, a UK equity sleeve, a global equity sleeve, a liquidity sleeve and a volatility managed sleeve. Working with the board of the trust we decided to reduce that to just a global equity sleeve, and then we merged that with a UK equity trust so the product is now a global equity trust.”
He said with the various mergers and management changes complete, “our focus now is to interact with the market to see how we can grow by having our strategies available to a wider range of clients, including through the investment trust channel".
One of the merged entities, Invesco Bond Income plus, became the first trust in the UK to be able to issue new equity in 2024 -most of the others are buying back shares, rather than issuing.
Ellis said: “We have noticed that the buyers of this trust tend to be buying quite a lot of shares, they are bigger buyers, and we think this is because they view Invesco Income Plus as an income product.”
It’s a channel that has struggled to grow in recent years, with discounts on investment trusts widening and the number of trusts in the market reducing due to mergers.
At the same time as market sentiment has been impacted by market volatility, structural issues have also played a part, with the increased outsourcing of the investment management function to model portfolio services and other multi-asset options.
This particularly impacts investment trusts because centralised investment propositions typically have a larger minimum investment size than financial advisers, and most investment trusts would not be liquid enough to invest in.
