Hold or Fold: Invesco Perpetual UK Growth vs SG UK Growth

The two funds under review this week are mixing it in that most competitive of all investment sectors, UK All Companies. The panel are happy to give the thumbs-up to one portfolio but the loss of a key player at the other sees it struggling to win fans

Invesco Perpetual UK Growth

What New Model Adviser® says:

The fund aims to achieve capital growth and invests primarily in companies listed in the UK. In pursuing this objective, the fund manager is allowed to include investments which he considers appropriate including the likes of transferable securities, money market instruments, warrants, collective investment schemes and deposits.

What Invesco Perpetual says:

‘In terms of the UK consumer, we believe that consumer spending will wane as higher utility prices and interest rates take their toll,’ says Ed Burke who runs the fund. In relation to developments during the third quarter of 2006, he adds: ‘We are maintaining the fund’s somewhat defensive stance due to our concerns about the uncertain outlook for the UK economy. We increased our exposure to several of our fund’s existing holdings early in the period, as the mid-July equity market decline provided numerous buying opportunities. For example, we added to our holdings in aerospace company Rolls Royce and later in the period, we added to some of our existing positions in the financials sector. We also continued to build on our position in the telecommunications sector.’

What the advisers say:

Peter McGahan, Managing director, Worldwide Financial Planning

On the quantitative side, the Sharpe ratio toddles in at a healthy 0.1086 which puts it in the second decile, while the standard deviation struggles in 10th decile and the overall performance is top decile. What a mish-mash! During the last five years, the fund’s discrete quarterly analysis has hopped around like mad. For example, the decile ranking has jumped from 10th to top so this is not a portfolio for the faint-hearted. Standard deviation over the last year has improved considerably. On the qualitative side, there is a robust process and the fund would be a suitable diversification among more conservative portfolios. The process combines a mix of economic and company-specific analysis that changes as market conditions dictate. The approach is pragmatic and flexible allowing the manager to adapt to market conditions without restriction. But with its 30th place in the sector overall it ranks a fold.

Gavin Haynes, Managing director, Whitechurch Securities