The Lemon Fool

Restructuring Proposals
15 February 2024

Overview from the Chair – Victoria Muir

As described in the announcement of 14 December 2023, the Invesco Select Trust Plc Board has undertaken a review of the Company and its strategy, with the objective of broadening the appeal of the Company as well as improving liquidity and narrowing the discount at which the Company’s shares trade. Consequently, the Board intends to put forward proposals to the Company’s Shareholders, to simplify the Company’s corporate structure and to introduce certain features that we believe will appeal to a broad investor base.

In recent years, the Company has seen a limited take-up of the conversion opportunities between the existing four share classes. The Balanced Risk Allocation Class and the Managed Liquidity Class now amount to, in aggregate, only circa 3.7% of the net assets of the Company as at 5 February 2024. Further, with demand from investors for larger, more liquid investment vehicles, the Board believes it could be increasingly challenging to market separately the Global Share Class and the UK Share Class in their current form, with the structure potentially presenting an additional hurdle for those looking to invest.
Proposals

The Board believes that the Global universe offers the broadest set of investment opportunities for equity investors whilst also providing diversification benefits for UK investors. Additionally, the Board has confidence in its award-winning Global Equity Income fund manager, Stephen Anness, to continue to seek out investment opportunities for the ongoing benefit of Shareholders. Accordingly, the Board has concluded that it would be in the best interests of Shareholders as a whole to consolidate the UK Equity, Balanced Risk Allocation and Managed Liquidity Share Classes into the Global Equity Income Share Class. As part of this consolidation the Board will undertake a 15% tender offer on the UK Equity Share Class. Additionally, given the Balanced Risk Allocation and Managed Liquidity shares classes offer significantly differentiated risk profiles and asset exposures to the Global Equity Income Share Class, the Board will provide those two share classes with the opportunity for a full cash exit through tender offers. The tender offer prices will be based on the NAVs of the respective share classes less the costs of the proposals, including those incidental costs of the tender offers, less a 2% discount.

Based on NAVs as at 5 February 2024 and on an assumption that the tender offers are subscribed in full, the consolidation would result in the Company having net assets of approximately £182million. As compared with any of the Company’s current share classes individually, the Board believes this should increase the appeal to investors and would be expected to have a beneficial impact on liquidity, and potentially on the discount of the enlarged Global Equity Income Share Class.

The investment objective and investment policy of the Global Equity Income Share Class will be retained, reflecting the Board’s confidence in Stephen’s investment process as well as the strength and depth of his team. In the recent Citywire Investment Trust Awards 2023, held in November, Stephen Anness and his team won ‘Best International Income Trust’¹. Additionally, in January 2024 Kepler Trust Intelligence awarded the Global Equity Income Share Class a ‘Kepler Growth Rating’².

In recognition of the increasing importance of dividends to Shareholders in the current economic environment, the Board intends, subject to Shareholder approval of the proposals, to enhance the current dividend policy of the Global Equity Income Share Class, which consists of three equal interim dividends and a `wrap-up’ fourth interim dividend. The new policy will involve paying at least 4%. calculated on the unaudited year end NAV, paid quarterly in equal amounts. The intention would be that these dividends would predominantly be paid from the Company’s revenues and topped up from capital reserves as required. The Board believes that this should provide both an enhanced dividend compared to current levels on the Global Equity Income Share Class and, once the relevant NAV is known, a smoother, predictable income stream to Shareholders.

If the restructuring proposals are approved, the Board intends to put forward a vote at the Company’s AGM in 2026 for the continuation of the Company. If the 2026 continuation vote is passed the Board will put forward a continuation vote at the AGM in 2031 and, if passed, at each fifth AGM thereafter.

The Board also intends to introduce a discount control policy in the enlarged Global Equity Income Share Class which will seek to maintain the discount at less than 10%, in normal market conditions. These proposals will require the approval of Shareholders. The Board has received indications of support for the proposals from those Shareholders it was able to consult through market soundings.

Declaration of Quarterly Interim Dividends

The Directors have declared fourth quarterly interim dividends for the year ending 31 May 2024 as follows. These dividends are payable on 10 May 2024 to shareholders on the register on 26 April 2024.

The shares will be marked ex-dividend on 25 April 2024

Global equity income
20 May, 2024
Invesco Global Equity Income relaunches as an ‘all-weather’ 4% yielder
Invesco hopes that investors will quickly ‘get’ the new Global Equity Income (IGET) investment trust that has emerged from the reconstructed Invesco Select Trust.
Gavin Lumsden

Invesco Select has relaunched under a new name and share price ticker of Invesco Global Equity Income Trust (IGET) following shareholder approval of its reconstruction last month.

The consolidation of Invesco Select’s four share classes into one creates a £200m quality growth portfolio under the management of Stephen Anness, Invesco head of global equities.

The company hopes that the simpler structure and the adoption of a 4% dividend, a 10% discount control policy and a regular continuation vote starting in 2026 will make the listed fund easier to market to investors.

Over five years, the trust is the second-best performer in the six-strong Global Equity Income sector with a total return on net assets of 85%. This beats the peer group average of 69% and the MSCI All Country World index return of 71%.

It lies behind the £2.6bn JPMorgan Global Growth & Income (JGGI) which has generated an underlying 111% over the same period. However, with its shares on a 15.6% discount compared to JGGI’s small premium of 0.7%, IGET offers a better re-rating potential than its big rival.

Anness believes his trust offers a similar ‘all-weather’ appeal having performed well in the very different market conditions of 2021, 2022 and 2023.

The manager, whose team of 10 looks after £14.3bn worldwide, including £9.8bn in global equity income funds, allocates around half of the portfolio to North America, with a quarter in Europe and 20.5% in UK-listed companies.

Around 70% of assets are in ‘dividend compounders’ such as US tech companies Texas Instruments and Broadcom (AVGO.O) which have a good history of growing dividends. However, the trust also holds low yielders with clear strategies for income growth, such as Nvidia (NVDA.O) which it bought into in 2022, as well as dividend recovery stocks such as Rolls-Royce (RR), which is expected to resume payments after a rebound last year.

With 90% ‘active share’ demonstrating divergence from the index benchmark, the manager is prepared to look ‘off piste’ for opportunities, making 3i Group (III), the Action-discount-retailer-powered private equity fund, his biggest position at 6.9%.

Anness says the portfolio is weighted to mid-cap stocks although he points out that on a global stage these include companies with market valuations of up to $30bn (£23.6bn).

Anness said: ‘Through our proven process we will continue to identify companies that can deliver solid cashflows at attractive valuations, and with the quality to weather volatility, providing investors with greater confidence in all market conditions.’

richfool wrote:Anyone wanting to keep track of IVPG, it has now been reincarnated as IGET (Invesco Global Equity Income Trust), along with a 4% dividend yield policy.

Arborbridge wrote:

richfool wrote:Anyone wanting to keep track of IVPG, it has now been reincarnated as IGET (Invesco Global Equity Income Trust), along with a 4% dividend yield policy.

IGET fed up with all these changes (this one started off as IVI) but have decided to stick with it. In fact this latest iteration does fit in with my own move to more international holdings. Happy to see how this goes for another year or so, alongside HINT and JGGI.

Arb.

PS the next task is putting it in the company data list for HYPTUSS

richfool wrote:

Arborbridge wrote:
IGET fed up with all these changes (this one started off as IVI) but have decided to stick with it. In fact this latest iteration does fit in with my own move to more international holdings. Happy to see how this goes for another year or so, alongside HINT and JGGI.

Arb.

PS the next task is putting it in the company data list for HYPTUSS

IGET what you're saying.

I did add this to my collection some months back, based on its more recent past performance and the knowledge of the impending amalgamation and increased dividend.

Maybe IGET some more, if all goes well.

IGOT: JGGI SAIN and MYI in the same sector, but not HINT.