Jonathan Brown, Fund Manager
Politics had a significant impact on the market once again this quarter, with Rishi Sunak’s government retreating on many of the decisions taken by his predecessor.
The market became more relaxed about the country’s ability to fund itself after many of Liz Truss’ tax cuts and spending increases were reversed. This had a dramatic impact on bond yields, which declined significantly, and the pound rebounded back to its pre-Trussenomic levels.
Meanwhile, economic growth is slowing in the UK and elsewhere, so a recession seems likely. However, we’re hopeful that strong company and household balance sheets, along with full employment, can help limit the severity of the downturn.
If we look at the valuation of equities, the UK market looks very cheap – both compared to its own history and to other major markets. So, although there are currently challenges across the world stage, we believe last year’s fall in markets could present a good opportunity for long-term investors.
In his Q4 video update, Jonathan reflects on the quarter and answers the following questions:
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.
The Invesco Perpetual UK Smaller Companies Investment Trust plc 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.
The use of borrowings may increase the volatility of the NAV and may reduce returns when asset values fall.
The Invesco Perpetual UK Smaller Companies Investment 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.
For professional clients in the UK only and not for consumer use.
All information correct as at 18 January 2022 unless otherwise stated.
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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 investment trusts, 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 on our website.
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.
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.