Stock Analysis & Valuation Invesco Perpetual Select Trust plc - UK Equity Share Portfolio (IVPU.L)

• Previous Close: £165.00
• Sector Valuation Confidence Level: High

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	0.91	-99
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Invesco Perpetual Select Trust plc - UK Equity Share Portfolio (IVPU.L) is a UK-domiciled equity mutual fund managed by Invesco Fund Managers Limited, focusing on investments in the UK public equity markets. The fund employs a diversified investment strategy, targeting value stocks across all market capitalizations and sectors within the UK. Utilizing a combination of fundamental, quantitative, and qualitative analysis, along with a bottom-up and top-down stock-picking approach, the fund aims to outperform the FTSE All-Share Index benchmark. Formerly known as Merrill Lynch Asset Allocator plc - UK Equity Share Portfolio, the fund is listed on the London Stock Exchange (LSE) and caters to investors seeking exposure to UK equities with a value-oriented strategy. With a market capitalization of approximately £279 million, the fund operates in the competitive asset management sector, offering investors a blend of growth and income through its diversified portfolio and dividend distributions.

Investment Summary

The Invesco Perpetual Select Trust plc - UK Equity Share Portfolio presents a focused investment opportunity in UK equities, leveraging a value-oriented strategy. The fund's beta of 1.38 suggests higher volatility compared to the broader market, which may appeal to risk-tolerant investors seeking growth. With a diluted EPS of 0.12 GBp and a dividend yield supported by a dividend per share of 7.35 GBp, the fund offers income potential. However, its relatively small market cap and higher beta may pose risks in volatile market conditions. The fund's performance is closely tied to the UK equity market, making it sensitive to domestic economic fluctuations. Investors should weigh the fund's value-driven approach against potential sector-specific risks and broader market uncertainties.

Competitive Analysis

Invesco Perpetual Select Trust plc - UK Equity Share Portfolio competes in the crowded UK equity mutual fund space, where differentiation is often driven by investment strategy, performance, and cost efficiency. The fund's value-oriented approach sets it apart from growth-focused peers, appealing to investors seeking undervalued UK stocks. Its benchmark, the FTSE All-Share Index, provides a broad market exposure, but the fund's active management aims to outperform through stock selection. The fund's competitive advantage lies in Invesco's established asset management expertise and its hybrid analytical approach combining fundamental and quantitative methods. However, its higher beta indicates greater sensitivity to market swings, which could deter risk-averse investors. The fund's relatively small size may limit its ability to scale cost-effectively compared to larger competitors. Additionally, the rise of passive investment vehicles, such as ETFs tracking the FTSE All-Share Index, poses a challenge to active funds like IVPU.L by offering lower fees and similar market exposure. The fund must consistently demonstrate alpha generation to justify its active management fees and retain investor interest.

Major Competitors

• Scottish Mortgage Investment Trust PLC (SMT.L): Scottish Mortgage Investment Trust is a larger, growth-oriented UK investment trust with a global equity focus, contrasting with IVPU.L's UK-centric value strategy. Its significant exposure to tech and growth stocks has driven strong past performance but also higher volatility. The trust's larger AUM provides economies of scale, but its growth bias may underperform in value-driven markets where IVPU.L could excel.
• F&C Investment Trust PLC (FCIT.L): F&C Investment Trust is one of the oldest and largest UK investment trusts, offering globally diversified equity exposure. Its long-term track record and lower expense ratio make it a formidable competitor. However, its global mandate differs from IVPU.L's UK focus, appealing to different investor preferences for geographic concentration versus diversification.
• Witan Investment Trust PLC (WTAN.L): Witan Investment Trust employs a multi-manager approach across global equities, contrasting with IVPU.L's single-manager UK strategy. Witan's diversified manager lineup may reduce single-manager risk but could lead to higher fees. Its global focus competes with IVPU.L for investor assets but targets different market segments.
• Merchants Trust PLC (MRCH.L): Merchants Trust focuses on high-dividend UK equities, similar to IVPU.L's value orientation but with greater income emphasis. Its higher dividend yield may attract income-focused investors, but its narrower focus on income stocks could limit growth potential compared to IVPU.L's broader value approach.
• Law Debenture Corporation PLC (LWDB.L): Law Debenture combines UK equity investment with professional services, offering a unique value proposition. Its equity portfolio competes with IVPU.L's UK focus, but the added services business provides diversification. This hybrid model may appeal to investors seeking both equity exposure and alternative revenue streams.