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Invesco 'confident' flagship bond fund can ride liquidity squeeze

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Invesco 'confident' flagship bond fund can ride liquidity squeeze

Invesco Perpetual has said it is ‘confident’ Paul Causer and Paul Read can manage the firm’s £5.5 billion Corporate Bond fund effectively, despite the fund’s large size and the regulator’s concerns over liquidity in the broader corporate bond sector.

The Financial Services Authority (FSA) recently sent a letter to fund houses to check if liquidity is sufficient in corporate bond funds and to see if they could meet redemption requests, as bid-offer spreads have widened and as investors have piled into these funds in the last six months.

Speaking exclusively to Wealth Manager, Invesco Perpetual said: ‘We have no plans to ‘soft close’ or otherwise attempt to restrict flows into the Invesco Perpetual Corporate Bond Fund.  

‘We are confident we can continue to manage this fund effectively and have achieved strong performance with large funds as well as smaller funds.’


Click here for Citywire Wealth Manager's pick of smaller fixed income funds, which prove that small can be beautiful.)

The group spokesperson added the issue of fund size is important and said it has considered it carefully over the years as assets have grown.

‘We constantly evaluate the ability we have with our larger funds to express our investment views and manage them effectively,’ the group said.

‘This will vary according to the specific asset class focus of a particular fund, our strategy at that time, liquidity conditions and net client flows.'

The spokesperson added: ‘Currently, in the context of our investment views and net client flows we do not believe that the size of our larger funds inhibit our ability to produce strong relative performance.’

M&G recently revealed it was taking steps to limit the size of Richard Woolnough’s £6.31 billion Corporate Bond fund and £5.16 billion Strategic Corporate Bond fund, although the group said this was not due to liquidity concerns but in order for Woolnough to more efficiently apply his investment process.

The Citywire Selection fund has returned 38.33% over five years to the end of June, versus the Markit iBoxx Sterling Corporates index, which has delivered 29.11%.

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