Differentiated exposure to global equities: Invesco Global Equity income

Invesco Global Equity Income (IGET) aims to generate a strong total return from a concentrated portfolio of c. 45 stocks. Managers Stephen Anness and Joe Dowling look for high-quality companies trading at attractive valuations, often selecting them after a period of weakness to benefit from potential re-ratings. This approach gives their strategy a contrarian tilt.

Following the completion of the trust’s restructuring, a new enhanced dividend policy was introduced, with IGET aiming to pay an annual Dividend of at least 4% per annum based on NAV at the end of the trust’s previous financial year. At the time of writing, IGET offers a prospective yield of c. 4.1% based on the last share price at close.

As IGET pays its dividend from a combination of income generated by its underlying holdings and capital reserves, Stephen and Joe have the flexibility to invest in low-yielding stocks. As such the portfolio is divided into three buckets: the first focusses on companies with the capacity to grow their dividend over time, the second includes companies with strong growth potential but low dividend yields, and the third one consists of companies facing temporary challenges but with a clear path to restoring their dividend.

Over 2024 Stephen and Joe allocated to overlooked areas of the market that were available at more attractive valuations and presented re-rating potential, such as mid-cap stocks. Conversely, IGET is underweight US technology large-caps, as they are trading at high multiples and the managers see potential for de-rating, which has been unfolding since the beginning of 2025.

IGET is modestly geared at 3.4%, as Stephen and Joe believe market expectations, concentration and borrowing costs are high. Meanwhile, the Discount has significantly narrowed to 0.5%, and the board has adopted a policy to aim to maintain it in single-digits.

Analyst’s View

In our view, IGET’s enhanced dividend policy broadens the appeal of the trust, offering an attractive yield that could appeal to income seekers, while also aiming to generate capital gains. The flexible mandate allows Stephen and Joe to invest in a broad range of stocks, ranging from higher yielders to those with strong capital appreciation potential, differentiating the trust from traditional income strategies.

Moreover, the managers’ contrarian approach and IGET’s mid-cap bias also differentiate the trust from global equity indices, with an active share of 89%. As such, we believe IGET could serve as a complement to a global index tracker or a more benchmark-aware strategy or even as a standalone option for investors concerned about valuations in some parts of the global equity market. The trust’s positioning may also mean that the trust could benefit in NAV terms if market returns continue to diversify away from US equities, in particular the mega-cap tech names.

We also believe that IGET could offer resilience in different market environments, as the portfolio is designed to be a core offering, without a strong tilt toward either the growth or value factor. As such, the trust could offer investors a smoother investment journey over the long term. For instance, over the past five years, the trust is the top NAV performer in its peer group, having outperformed its benchmark, the MSCI World Index while experiencing slightly less volatility, which may appeal to risk-averse investors.

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