Article Invesco Global Equity Income Trust plc - Q2 2026 update

See bottom of the page for Performance figures, Investment Risks and Important Information.   

The Trust delivered solid Q2 performance, outperforming the MSCI World index and peer group, in an exceptional quarter for global equities. More pleasing has been the ability to deliver strong returns for clients over the last 18 months, from an absolute and relative perspective. That period has been a tumultuous one for active investors, from the Trump tariffs of early 2025, the extreme concentration of ‘winners’ within the AI thematic and the Iran war earlier this year. Our philosophy of building a diversified portfolio, focusing on stock specific risk and making careful judgements on valuation has stood us in good stead. The market remains tricky- heavily Momentum driven and bifurcated into those businesses that are expected to win or be displaced by AI. Below we try to give some perspective on the key questions facing investors

Is the AI trade still investable—or are we now in the “capex risk” phase?

It is likely that AI remains one of the key themes within the stock market for the foreseeable future. Its impact on vast swathes of the global economy is hard to dispute. AI is already driving one of the largest capital investment cycles in history, and we believe the technology will have a profound impact on productivity, business models and economic growth. However, it is clear that investors need to be more selective than they were 12 months ago. In the early stages of the cycle, almost any company connected to AI infrastructure benefited from rising expectations and accelerating spending. Today, the conversation is shifting from how much is being spent to who will ultimately earn an attractive return on that investment. Increasingly, the winners are likely to be businesses with scarce assets, pricing power or a clear route to monetisation rather than simply exposure to AI spending. You then have the additional challenge of buying these ‘winners’ at an attractive valuation. Perception (and share prices) of AI winners and losers can change quickly and we’ve had experience of both. When we bought Dell at the end of Q3 2025, we felt the market underappreciated the pivot towards its AI division; subsequent earnings announcements and order backlogs have led to the share price going up over 150% since first purchase. We took meaningful profits on this position, see below. On the other hand, the perception of Microsoft has gone from the company that would own and monetise AI to being viewed as the company that is funding the AI infrastructure build-out while others may capture more of the economic value. We believe that its moat remains intact, but the market remains sceptical and the shares have de-rated.

How vulnerable is the market to a reversal in leadership?

The changing market structure of equity markets, in terms of end buyers (hedge funds, quants, retail investors etc..) and their short investment time horizon means that the market is vulnerable to significant rotation. A relatively small group of AI-related companies continues to account for a disproportionate share of market returns, creating an unusually concentrated market backdrop. That concentration is not necessarily a reason to be bearish, but it does mean investors should question how diversified their portfolios really are and the price they are being asked to pay for those very popular businesses. Historically, periods of narrow leadership have often been followed by broader market participation as earnings growth spreads beyond the initial winners. In fact, there are already signs of that process beginning. We have always sought to deliver a diversified portfolio, believing it to be the best way to perform in a range of market environments. Such is the intense focus on a relatively small subset of the market, we are now seeing opportunities emerge across a number of industries that we outline below.

Where are the most interesting opportunities today—and why are they being mispriced?

The market, as witnessed by increasing concentration, has been myopic in its focus. If we add the new mega IPOs to the AI Big 10 concentration below, we are approaching 50% of US market cap.

We have ourselves benefited from this theme (Dell, Texas, TSMC) and have subsequently taken profits. Over the quarter we’ve added stocks across a range of sectors, including financials, healthcare, materials and industrials. In many ways there is a potential golden time for active managers as so little attention is paid to some compelling businesses.

• Healthcare: Waters is a market-leading life-sciences, analytical tools company with mission-critical and high-switching-cost products. Accelerating earnings and the transformational Becton Dickinson Diagnostics acquisition create a compelling opportunity for sustained growth and margin expansion that the market has yet to fully recognise. Alcon is a global ophthalmology leader which we believe has the potential for attractive long-term growth driven by ageing populations and rising eye disease. Recent operational setbacks have created an opportunity to invest ahead of any potential future recovery in growth, margins and returns from its innovation pipeline.

• Financials: AIB is a leading Irish bank combining strong capital returns and a growing dividend with the benefits of a concentrated domestic market. Excess capital, buybacks and resilient earnings growth continue to support attractive shareholder returns, with an undemanding valuation.
• Materials: Amrize is a newly independent North American cement/ aggregates/ insulation leader with significant barriers to entry, proven management and exposure to powerful US construction themes (infrastructure, data centres, reshoring) where we believe the market underestimates its growth potential and ability to compound value beyond its traditional cement business.
• Industrials: Waste Connections is a founder-led waste-management compounder which in our view has durable pricing power, recurring revenues and a long runway for disciplined acquisitions. Temporary operational and industry headwinds have created an attractive entry point into a high-quality business which in our view has the potential for sustained double-digit earnings growth.

We have also exited our positions in Zurich, XPO, Herc and Recordati as we felt the risk/ reward opportunities were better elsewhere.

How should investors think about portfolio construction in this environment?

The biggest risk today may not be owning too little AI exposure, it may be owning too much of the same thing as everyone else. Many investors have become increasingly concentrated in a handful of stocks, sectors and factors, often through passive vehicles that have mechanically allocated more capital to recent winners. We think this is an environment where portfolio construction matters as much as stock selection. The objective should not be to predict exactly when market leadership will change, but to ensure portfolios are resilient across a range of outcomes. That means maintaining exposure to powerful structural growth themes like AI while also owning businesses and regions that can perform if leadership broadens. Diversification can feel frustrating when a narrow group of stocks is driving returns, but it is often most valuable just before investors need it. In our view, disciplined portfolio construction remains one of the best ways to navigate an increasingly uncertain and concentrated market backdrop.

Attribution commentary

Our strongest contributors were several holdings exposed to the ongoing buildout of AI infrastructure. Dell Technologies was the standout performer after raising its full-year sales outlook, reflecting continued strength in demand for AI-related servers. Texas Instruments also delivered an excellent return, supported by an improving industrial backdrop and a faster than expected ramp up in its data centre business. TSMC remained a significant contributor as demand for advanced AI chips continues to drive robust growth across its customer base.

Beyond our AI-related holdings, Rolls-Royce continued its strong run. Progress in its core civil aerospace business remains encouraging, while the Power Systems division is providing an additional source of growth. Viking Holdings also performed well, delivering another set of robust results as demand for luxury cruises remained resilient. Early booking trends suggest 2027 could be another healthy year for the industry.

The most notable detractor was AIA Group. The shares weakened following concerns around potential regulatory changes affecting insurance policy sales to Chinese customers through Hong Kong. While it remains difficult to assess the Chinese government's ultimate intentions, it is not clear to us that these measures are aimed at materially restricting this part of the market. The business serves an important social need and represents only a modest source of capital outflow. At current levels, the shares are trading close to trough valuation multiples and, in our view, already discount a highly pessimistic outcome. While we await greater clarity, investors are being paid to be patient through a dividend yield and ongoing share buybacks worth around 4.5% annually.

Another noticeable headwind to relative performance was our decision not to own Micron, whose shares rose an extraordinary 242% over the quarter! As AI related investment has surged, it has been met with supply bottlenecks creating highly unusual developments in the memory (DRAM) market and other related segments. 

Our investment philosophy

At Invesco Global Equity Income Trust (IGET), we believe in bottom-up stock picking. This means we choose investments based on the strength of individual companies not just trends or sectors. We look at how well a business is run, where it makes money, and whether it has the potential to grow.

This approach allows us to personalise and specialise our picks, avoiding overexposure to any one sector and ensuring a well-diversified portfolio. For you, that means a strategy designed to balance risk and reward across different market conditions.

Rather than chasing short-term trends, we focus on a company’s fundamentals – the basics of how a business is really doing, for example, its profits, cash flow, balance sheet strength and long-term growth prospects.

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