James Goldstone, Fund Manager

Inflation remained the headliner in the final quarter of 2022.

While energy prices abated from late summer and weakened further on warm winter weather, they were still significantly above the levels that had persisted for years. Furthermore, food prices were, and still are, up sharply.

In response, the Bank of England raised interest rates twice during the quarter from 2.25% to 3.5%.

While inflation remains a concern looking into 2023, there is reason for optimism that it will moderate over the course of the year.

The UK equities market also looks attractive relative to other markets. Firstly, more than 75% of corporate earnings in the FTSE All Share Index are derived internationally, so the market offers exposure to a global opportunity set rather than to a narrow set of UK-only businesses. Secondly, our analysis shows UK equities to be cheap across a blend of valuation measures – both relative to their own history and, in particular, the US market.

In short, although there are currently challenges for markets, we believe there are opportunities to be found.

In his Q4 video update, James reflects on the quarter and answers the following questions:

00:21 - What has been happening in the UK equity market over the last quarter?

01:35 - How did the UK Equity Share Portfolio perform over the quarter?

04:30 - What changes have been made in the portfolio over the last quarter?

05:39 – What is the outlook for UK equities?

Investment risks

The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

When making an investment in an investment trust/company you are buying shares in a company that is listed on a stock exchange. The price of the shares will be determined by supply and demand. Consequently, the share price of an investment trust/company may be higher or lower than the underlying net asset value of the investments in its portfolio and there can be no certainty that there will be liquidity in the shares.

The use of borrowings may increase the volatility of the NAV and may reduce returns when asset values fall.

The Invesco Select Trust plc uses derivatives for efficient portfolio management which may result in increased volatility in the NAV. In addition, some companies are suspending, lowering or postponing their dividend payments, which may affect the income received by the product during this period and in the future.

The Invesco Select Trust plc UK Equity Share Portfolio invests in smaller companies which may result in a higher level of risk than a product that invests in larger companies. Securities of smaller companies may be subject to abrupt price movements and may be less liquid, which may mean they are not easy to buy or sell.

Important information

All information correct as at 18 January 2023 unless otherwise stated.

This article is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.

Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.

For more information on our products, please refer to the relevant Key Information Document (KID), Alternative Investment Fund Managers Directive document (AIFMD), and the latest Annual or Half-Yearly Financial Reports. This information is available using the contact details shown.

Further details of the Company’s Investment Policy and Risk and Investment Limits can be found in the Report of the Directors contained within the Company’s Annual Financial Report.

If investors are unsure if this product is suitable for them, they should seek advice from a financial adviser. For details of your nearest financial adviser, please contact IFA Promotion at www.unbiased.co.uk

Issued by Invesco Fund Managers Limited, Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire RG9 1HH, UK. Authorised and regulated by the Financial Conduct Authority.