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Invesco Perpetual bond star joins bears at Personal Assets

Invesco Perpetual bond star joins bears at Personal Assets

Personal Assets (PNL), the bearish global investment trust managed by Sebastian Lyon of Troy Asset Management, has hired star bond fund manager Paul Read (pictured) as a non-executive director.

Read has worked as a bond fund manager for over 30 years, starting his career at UBS before moving to Merrill Lynch and joining his current employer Invesco Perpetual in 1995.

He is best known for his long partnership with Paul Causer with whom he co-runs Invesco's fixed interest team. They run several funds including the £3.3 billion Invesco Perpetual Monthly Income Plus fund, recently with the help of Rhys Davies.

Although this is Read's first appointment to an investment trust board, he is no stranger to closed-end funds having co-managed the City Merchants High Yield (CMHY) and Invesco Perpetual Enhanced Income (IPE) investment trusts for over a decade.

Read's emphasis on preserving investors' capital as well as providing a high yield from bond investments will fit in well with Personal Assets. Its chairman Robin Angus is well known for his quarterly reports explaining why the company takes a cautious and sceptical view of the way stock markets have been kept aloft by money printing from central banks since the financial crisis.

This year Read and Causer have repeatedly expressed their concern at the elevated level of high yield bonds. In IPE's half-year report they said non-investment grade bond prices left 'little room for disappointment' and that the risk of a correction was high.

'Impatient capital'

Read's appointment was announced shortly before Personal Assets published its half-year figures with Lyon again warning investors that equity and bond valuations look elevated.

‘At a recent meeting we were asked what would drive us to increase our allocation to equities. The answer is simple: valuation.

‘Impatient capital is finding its way into inappropriate, low-return opportunities. Low market liquidity has exacerbated the rises in equities and bonds. When sellers start looking for the exits, a lack of liquidity will compound losses and provide opportunities for patient investors like ourselves,’ Lyon noted.

Low market volatility ‘belies a fundamental vulnerability’, according to the fund manager. He believes there are parallels between today and 2000, which marked the height of the tech bubble.

One company that has caught Lyon’ eye during the six-month period was BIC (BB), the French family-controlled manufacturer of disposable consumer plastic products. He likes the management's conservative approach and the cash on its balance sheet.

‘The shares have almost halved in price in the past two years and much of this was thanks to a reappraisal of what had been an excessively high valuation,’ Lyon noted.


The multi-asset investment trust, which has capital preservation at its core, grew its net asset value (NAV) per share by 0.6% to £400.90 over the six months to the end of October. During the period two interim dividends of £1.40 respectively were paid, with a third interim dividend of the same amount due to be paid on 11 January, followed by a fourth on April 2018, which will make the total for the year £5.60 per ordinary share.

At the end of October, it held had 43% in equities, 25% in US Treasuries, 20% in gold bullion and the remainder in cash.

Over the past five years, Personal Assets’ share price has risen by 24.7% which compares to 66.8% by the average fund in the Association of Investment Companies’ flexible investment sector. Over 10 years, the share price is up 89.1% versus a sector average of 128.2%. Over the two periods, Personal Assets’ NAV is up 24.6% and 84.5% respectively.

The trust currently trades at a 1.2% premium to NAV, which compares to an average discount of 5.6% across the flexible investment sector.

In addition to Read, Personal Assets has also appointed Iain Ferguson as a new non-exec. Ferguson, a former chief executive of Tate & Lyle, currently chairs Stobart Group, the transport and infrastructure support services provider.


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