Invesco to launch split-uk capital investments trust - UKCIG

Invesco Perpetual has announced the launch of a new split- UK capital investment trust, the Invesco Perpetual Dual Return Trust plc.

The trust will invest predominantly in UK equities and be managed by Martin Walker, who has worked within the UK investment team for 10 years and who manages the Invesco Perpetual Children's Fund and the Invesco Perpetual UK Growth Fund


The trust will be launched in November/early December 2009 with the possibility of a second tranche of shares in February/March 2010.

It will have a seven-year life, with a capital structure comprising an equal number of income shares and capital shares, with no bank debt. It will be available at launch as an issue of units (one of each share class) for 200p, and which may be split into separate share classes and reassembled at any time. Invesco Perpetual will operate discount and premium control mechanisms for the trust.

"The Invesco Perpetual Dual Return Trust plc is reminiscent of the original days of split-capital investment trusts - the 1960s - and is designed to provide a simple, straightforward separation of returns between income and capital for shareholders with differing requirements and tax arrangements," explained Graeme Proudfoot, head of specialist funds at Invesco Perpetual. "While Sipps and Isas are designed to protect against both income tax and capital gains tax, it may make sense to consider the inclusion of income shares only in one or both of these wrappers, as all returns from these shares over the trust's seven-year life will be in the form of income. The capital shares could then be held outside of the wrappers so that any capital gains accruing could be mitigated by an investor's annual CGT allowance. Alternatively, holding units gives shareholders a conventional, ungeared exposure to our UK equities expertise within an investment trust structure over a seven-year life."

The fund's investment objective is to achieve a total return from a portfolio of predominantly UK equities. While the fund manager will have the ability to invest in fixed interest securities, it is expected that the portfolio will initially be 100 per cent invested in equities. The portfolio is anticipated to generate both capital and dividend growth. There will be no benchmark constraints, but performance will be measured against the FTSE All-Share Index.

Commenting on the investment rationale for the trust, Martin Walker said: "While there has been a rally generally in the stock market, what we believe to be high quality, dividend paying and often defensive stocks have been left behind. These stocks are now trading at valuations which are at absolute and relative lows. By exploiting the dual return nature of the trust's structure, income investors will have an opportunity to lock into good dividend yields, while those interested in capital growth can focus their investment on a geared exposure to some of what we believe to be the cheapest stocks in the market."