Invesco Bond Income delivers positive H1 return amid market volatility
Invesco Bond Income Plus Ltd on Thursday posted a positive return in the first half of 2026 despite volatile bond markets reacting to ongoing conflict in the Middle East.
The Jersey-based investment company focuses on high-yield bonds. Invesco Bond said its net asset value was 171.46 pence at June 30, down from 172.87p at December 31.
NAV total return for the six months that ended June 30 was 2.8%, while share price total return was 3.0%.
Invesco Bond issued 43.5 million shares during the period, raising net proceeds of £74.8 million. The company said the increase in scale would improve liquidity and spread the fixed costs of running the company across a larger base.
Invesco Bond said markets were dominated by geopolitical conflict in the Middle East, which pushed oil prices higher and revived inflation concerns. Investors subsequently reduced expectations for interest rate cuts, while government bond yields rose and bond prices fell.
Portfolio Managers Rhys Davies and Edward Craven said returns were driven by income rather than capital gains. European high-yield bonds returned 2.0%, with income of 2.6% outweighing a negative price return of 0.6%.
The managers said the portfolio remained cautiously positioned, with investment-grade credit accounting for about a quarter of the portfolio. High-yield exposure increased to 69% at June 30 from 66% at December 31, while investment-grade exposure fell to 25% from 28%.
Key positive contributors included Ineos, French fashion house Isabel Marant, gaming company 888.com and Saffron Building Society.
Meanwhile, key detractors included Spanish auto-parts maker Grupo Antolin, telecommunications company Virgin Media O2 and Thames Water Finance.
Revenue return per share increased to 6.34p from 6.26p a year ago, while profit after tax rose to £12.1 million from £11.4 million. Income increased to £18.2 million from £14.7 million, helped by higher interest income.
Invesco Bond declared interim dividends totalling 6.125p per share during the period. The company said its revenue return per share comfortably covered the dividends and confirmed it remained on course to meet its full-year dividend target of 12.25p.
Looking to the second half, Davies and Craven said high-yield markets would be shaped by developments in the Middle East and their consequences for energy prices, inflation and interest rates, alongside international trade developments.
The managers said default rates were expected to remain relatively benign and that the portfolio was positioned to withstand volatility while taking advantage of market dislocations.
"But for now, our market remains in a robust condition, in aggregate. Our job is to continue to do our research, to distinguish between companies with stronger and weaker fundamentals and business models, and to find attractive income for the trust from bonds that we feel will remain creditworthy even in weaker conditions," the pair added.
Invesco Bond Income shares closed flat at 170.50p on Thursday morning in London.
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