INVESCO GLOBAL EQUITY INCOME Q1 2026 UPDATE
Joe Dowling, Fund Manager
For professional investors only.
How would you sum up 2025 for the portfolio?
2025 was another solid year for the portfolio. We delivered double‑digit returns and a dividend yield above the market. Overall performance was broadly in line with both peers and the wider market...but the important point is how we achieved it.
Our portfolio looked very different from the index. When you compare the top contributors in the MSCI World with ours, there’s almost no overlap. Broadcom is the only common holding. That really highlights how differentiated our approach remains.
What continues to anchor your investment approach, especially in a market like this?
Nothing fundamental has changed. We focus on bottom‑up stock picking...understanding businesses, cash flows, and valuations...and we build portfolios to be resilient across different market environments.
That matters because markets in 2025 were once again dominated by momentum. We’ve always said that valuation‑driven strategies tend to lag in those conditions, and this year was no exception.
One notable shift was that momentum moved toward more speculative companies...often with weaker cash flows or higher risk business models. Investor willingness to pay very high valuations for those stocks made us cautious.
Another clear signal of excess was fund manager cash allocations falling to the lowest levels ever recorded, despite higher interest rates. That suggests greed has been a more powerful force than fear.
Where have you been finding opportunity as a result?
We’re not dismissive of long‑term themes like AI, but we’re finding better risk‑reward elsewhere...in parts of the market that are currently unloved.
Our bottom‑up process has led us to be materially underweight the US, and we’ve been adding selectively in areas like healthcare. We think ex‑US stocks and healthcare provide useful diversification, particularly if we see a momentum unwind.
What were your biggest takeaways from 2025?
There are three that really stand out.
First, the importance of being different and open‑minded. A great example is AIA Group, the Asian life insurer. It may not be perceived by all as an exciting stock on the surface, but it has performed well, with a healthy dividend. At the right valuation, it outperformed many of the most popular global tech names this year.
Second, the importance of running your winners. Rolls‑Royce and Standard Chartered are good examples. Both were bought when sentiment was extremely negative, both were volatile, and both have turned into very meaningful contributors. Many great investments are uncomfortable when you first make them.
Third, the importance of being active. Share prices moved far more than underlying company cash flows at various points during the year, and those created opportunities.
Turning to detractors, what drove underperformance this year?
Two names stand out: 3i and Novo Nordisk.
In 3i’s case, a brief period of weaker like‑for‑like sales in France at its key subsidiary, Action, led to a very sharp sell‑off. The market reaction was extreme relative to the change in fundamentals, and valuations compressed significantly.
We understand the concern...retail models can turn quickly...but Action has benefitted from a scaled economics model where size strengthens competitiveness, and the majority of the business has performed very well.
Novo derated significantly before we invested, and it now trades on a much lower valuation with a strong dividend yield. While the long‑term category growth remains attractive, execution has been weaker than we expected, particularly around market‑share losses. As a result, we reduced the position as our conviction came down.
Finally, how would you describe your mindset heading into the year ahead?
We remain disciplined, valuation‑focused, and long‑term in our thinking. Markets won’t always reward that approach immediately but staying rational in speculative environments is exactly when the groundwork for future returns is laid.
Investment risks
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
As a portion of the strategy may be exposed to less developed countries, you should be prepared to accept large fluctuations in value.
The strategy may use derivatives (complex instruments) in an attempt to reduce the overall risk of its investments, reduce the costs of investing and/or generate additional capital or income, although this may not be achieved.
The use of such complex instruments may result in greater fluctuations of the value of a portfolio.
The Manager, however, will ensure that the use of derivatives does not materially alter the overall risk profile of the strategy.
Important information
This marketing communication is exclusively for use by Professional Clients in the UK.
It is not intended for and should not be distributed to the public. Data as at 07.01.2026, unless otherwise stated.
This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security, or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.
Views and opinions are based on current market conditions and are subject to change.
Issued by: Invesco Fund Managers Limited, Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire RG9 1HH, UK. Authorised and regulated by the Financial Conduct Authority.
Key takeaways:
2025 ended as one of the most momentum‑driven years we’ve seen, with speculative parts of the market pushing valuations to extremes. But beneath the headline strength, risks have continued to build. In this update, Invesco Global Equity Income Co‑Fund Manager, Joe Dowling, reflects on how the portfolio delivered another solid year, what really sat behind performance, and how the team is positioning the portfolio amid an increasingly narrow and sentiment‑driven market.
00:05 How would you sum up 2025 for the portfolio?
00:42 What continues to anchor your investment approach, especially in a market like this?
01:36 Where have you been finding opportunity as a result?
02:05 What were your biggest takeaways from 2025?
02:57 Turning to detractors, what drove underperformance this year?
03:50 Finally, how would you describe your mindset heading into the year ahead?
Joe Dowling is a Co-Fund Manager for the Global Equity Income & Growth strategy. Find out more about the fund and investment trust solutions, which are managed according to this strategy, below.
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