Invesco Perpetual, the UK’s largest fund management group, and home to the UK’s most popular fund manager, Neil Woodford. is set to launch a new bond fund aimed at intrepid investors.

Strong track record: Invesco Perpetual’s Paul Read

The Invesco Perpetual Tactical Bond fund will be managed by the award-winning team of Paul Causer and Paul Read, who have more than 50 years combined investment experience and a strong track record of delivering returns to their investors.

Together they have co-managed the £5.5bn Invesco Perpetual Corporate Bond fund since 1995 — over the past five years alone the portfolio has achieved a 27% return for its investors.

Over the same period, the average corporate bond fund has delivered just 12%.

With the Tactical Bond fund, the managers will seek to achieve an attractive return over the long term for their investors by exploiting opportunities wherever they can find them, across the full range of bonds available to them — from government bonds to credit markets and cash.

But the highly unconstrained nature of the fund means it will not be managed to an income target and is not suitable for investors seeking a consistent level of yield.

Read said: ‘This fund will attempt to capture the best ideas that we have across our range and to apply them in a concentrated way. Over the long term, because we have the flexibility to move portfolios across the risk spectrum, we would hope that we can outperform cash and indeed the major government and credit markets.’

The fund will be able to alter where it invests very quickly, which means the risk level has the potential to fluctuate greatly. The fund may even go through periods of being fully invested in cash if the managers believe there are no attractive opportunities.

Looking ahead, Read said: ‘Although it is important to stress that the exceptional returns from corporate bond markets in 2009 cannot realistically be repeated, opportunities remain and underlying conditions are still supportive. However, the days of equity-like returns from credit markets have passed and we expect more modest returns from corporate bonds in 2010.’

What the experts think

Martin Bamford of Informed Choice, an independent financial adviser, reckons there are both positives and negatives that come with this launch. He said: ‘On the plus side, Read and Causer are undoubtedly two experienced and competent managers with a track record to back them up. I like the fact that the fund is unconstrained, allowing them to adapt and invest where they feel appropriate.

‘But the only downside to this is, depending on where, and in what they invest, the risk profile of the fund could change substantially. We will be watching this closely but we would not recommend it until it has at least a 12-month or possibly even two-year track record first.’

For his part, Alan Parsons, of brokers The Share Centre, is very upbeat about the new offering: He said: ‘This is the addition we have been waiting and hoping for from Invesco Perpetual. Both Read and Causer have a great reputation and are two of the most experienced corporate bond managers around. The great appeal of this fund is the flexibility it has, as bond funds are typically quite rigid in what they can and cannot do. But it will not be suitable for investors looking for a steady, regular income.’

Adrian Lowcock, of Bestinvest, another adviser said; ‘Read and Causer have an excellent long-term track record and we like their corporate bond fund. But we do not think there is any need for investors to rush into buying this fund. The key point is that the fund is not targeting a specific yield and it could take a while for the income to feed through. I imagine the returns made will be through a combination of capital growth combined with income. This is a fund to compliment a diversified investment portfolio but should not be bought as a core holding.’

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