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Investors to see fees cut as Invesco merges trusts

Investors to see fees cut as Invesco merges trusts

The Invesco Income and Growth trust is to be merged with the UK Equity branch of Invesco’s Perpetual Select trust in a move that will provide investors with reduced fees and “greater flexibility”.

A stock exchange announcement, published today (December 1), showed the boards of the two trusts had agreed the terms on which shares in the Income and Growth trust would be rolled into UK Equity shares in the Perpetual Select trust.

The deal, which is subject to tax and regulatory approval, would see Ciaran Mallon, manager of the Income and Growth trust, appointed as manager of the Invesco Perpetual Select UK Equity class portfolio.

Investors will be offered the option of a cash exit and the merger would see the Invesco Income and Growth trust liquidated.

It comes after investors in the Income and Growth trust voted against the trust being wound down in September this year.

According to the board of the Perpetual Select trust, the proposed merger would provide a number of benefits to its shareholders, however.

The increase in size, from £48m to more than £200m, would enhance the profile of the trust alongside its profitability, while Invesco has agreed to reduce its management fee and scrapped performance fees to keep the fee structure in line with the Income and Growth trust.

Investors will now pay 0.55 per cent on assets up to £100m and 0.5 per cent over £100m, compared to a previous fee of 0.55 per cent on all assets, while a performance fee of 12.5 per cent of net assets above the benchmark plus 1 per cent will be dropped.

The board also described the onboarding of Mr Mallon as manager as a positive, noting he had a “considerable track record”.

Chairman of Invesco Perpetual Select, Graham Kitchen, said: “We are delighted to announce this combination with IVI, which will create a company with a significantly greater footprint. 

“With our innovative capital structure, we will be able to offer our new shareholders the choice of allocating between our UK Equity Income, Global Equity Income, Balanced Risk Allocation and Managed Liquidity share classes. 

“We will be creating an enlarged company with a unique proposition that offers a degree of flexibility that can only be of benefit in today’s uncertain times.”

The Invesco Perpetual trust is a multi-asset class investment trust with four independently managed share portfolios — the UK equity class involved in the merger is one of the four branches.

This provides investors with exposure to various asset classes, including global equity income, balanced risk allocation and managed liquidity, as the structure permits quarterly conversions between the share classes.

The merger will see Invesco lose its second trust this year, after the Perpetual Income and Growth trust, previously run by Mark Barnett, is to be liquidated after merging with Aberdeen Standard's Murray trust.

imogen.tew@ft.com

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