Invesco Bond Income performs below benchmark, sees 'jittery' markets
Invesco Bond Income Plus Ltd on Friday posted a lower return than its benchmark in the first half of 2025 and maintained a cautious macroeconomic outlook.
The Oxfordshire, England-based investment firm focuses on high-yield bonds. Invesco Bond said its net asset value was 170.32 pence at June 30, edging down from 170.87p at December 31.
NAV total return for the six months that ended June 30 was 3.4%, versus 3.8% returned by the firm’s comparator, the ICE BofA European Currency High Yield Index.
Still, Invesco Bond upped its total interim dividend to 6.125p per share, 6.5% ahead of the prior year’s 5.75p figure.
Fund Manager Edward Craven cited interest rates as a key influence on returns, rather than credit risk, which ‘dominated’ performance in 2024, according to Craven. The firm benefitted more from the government bond market, and did not gain as much from credit risk, which was reduced ‘in the face of high spreads’.
Craven noted strong performance for bonds held by insurer Aviva and satellite operator Eutelsat, which ‘was boosted by Europe‘s increased commitment to defence spending’, the fund manager said.
Meanwhile, key detractors included National Express Mobico, due to ‘problems in several of its transport businesses which date back to the pandemic period’ and Ineos Quattro, a chemical manufacturer with export sensitivity. Thames Water Utilities Finance was also ‘volatile’, as the firm faced potential insolvency.
Looking to the second half, Invesco Chair Tim Scholefield suggested that US President Donald Trump’s ‘dramatic shake-up of the US economy’ will set the course for high-yield markets, which Invesco expects to remain jittery over the remainder of the year‘.
‘The consensus outlook is broadly one of some weakening in economic growth followed by...a possible uptick in growth in 2026. This would turn out to be a largely supportive environment for high yield securities given that a protracted or deep recession would be avoided,’ Scholefield added.
Invesco Bond Income shares were down 0.3% at 173.05p on Friday morning in London.
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