Invesco Global Equity Income Trust plc Q2 2026 – video update

Invesco Global Equity Income Trust plc (IGET) Q2 2026 update

Joe Dowling, Fund Manager

Q1 was a challenging period for markets. How did the portfolio perform, and what were the main drivers?

It was a tough quarter. The trust delivered negative returns and underperformed the market, which also declined. Volatility was driven largely by geopolitical events, particularly tensions in the Middle East that pushed oil prices sharply higher and unsettled inflation and interest rate expectations.

How did the portfolio behave in that volatile backdrop?

This quarter was a reminder of why we focus on owning a diversified portfolio. We don't try to predict geopolitical outcomes. Instead, we invest in resilient businesses with strong balance sheets, good management and sensible valuations. Market stress can create uncomfortable short term moves, but it also test the durability of those business models.

On the negative side, the main detractors during the quarter were 3i Group and Prosus. And in both cases, we think the market reaction was somewhat disproportionate.

The 3i Group concern centered on Action, its key underlying asset, particularly around slightly slower trading in France, an increased competitive intensity. While that created near-term uncertainty, the business itself largely delivered against expectations, and we continue to believe in the long term value of the model.

Prosus, meanwhile, was driven largely by weakness in Tencent’s share price. That reflected Tencent's decision to invest more heavily through a new AI led CapEx cycle. We view that not as a negative, but as a deliberate reset to reinforce its long term competitive moat across games, advertising, WeChat and cloud. With the valuation now pricing in very little AI upside, we think the risk reward has become more attractive.

On the positive side, Aker BP benefited from higher oil prices following geopolitical tension in the Middle East. XPO delivered strong results alongside early signs of a recovery in US trucking and Dell stood out with a clear beat and raise. Dell benefited from underestimated demand for AI servers and demonstrated strong pricing power in what remains a constrained supply environment.

You made several changes to the portfolio this quarter. What were the key themes behind those decisions?

The key theme was adding businesses where the risk reward felt skewed in our favour,  and taking advantage of some of the market volatility that created attractive entry points.

Diageo is a good example. This is a world class portfolio of brands - Johnnie Walker, Guinness, Tanqueray and Don Julio, which has been trading at what we believe is a low valuation for multiple years.

What made this a compelling entry point is the leadership change. Sir Dave Lewis has a strong turnaround track record from Tesco, where he simplified the business, restored discipline and created significant shareholder value.

At Diageo, he's already identified complexity and customer service issues and taken the tough but sensible decision to cut the dividend to restore flexibility. With destocking pressures easing, we think this sets the business up well for a recovery.

Medline fits a different but equally attractive quality theme. It's the largest US provider of medical and surgical products and has compounded organic revenues at around 18% for decades.

Medline advantage lies in being cheaper, more reliable and easier to do business with than competitors. It typically wins hospital contracts on cost and service that increases profitability by cross-selling its own higher margin products. Customer retention is above 98%, which tells us these are long term, value creating relationships.

Overall, these additions reflect our focus on durable business models, strong cash generation, and valuations that we believe underestimate their long term potential.

AI continues to dominate market investor attention. How are you approaching it in the portfolio?

AI is clearly dominating market narratives, but our approach is to look beyond the headlines and focus on where AI genuinely strengthens long term business models rather than disrupts them.

LSE Group is a good example. The concern is often that AI could disintermediate financial data providers, but in reality LSE owns the underlying data indices, analytics platforms and clearing infrastructure that AI models need to function. Its clearing and index businesses are regulatory protected, highly recurring, and it controls a set of systemically important assets that are extremely hard to replicate. In our view, AI deepens the moat rather than erodes it.

The same logic applies to RELX. RELX owns proprietary databases across risk, legal, scientific and compliance markets where regulation creates very high barriers to entry. Importantly, we added to RELX following the broader software selloff as our differentiated view was that AI enhances rather than undermines its competitive position, and the valuation at that point was particularly attractive.

Finally, Compass Group, the world's largest contract foodservice company, is a good reminder that not every winner from AI is a technology company. Compass has also been added to the portfolio following a period of many investors selling it, again reflecting our differentiated perspective and the valuation opportunity. It has been labeled an AI loser, yet it serves many of the world's largest technology companies every day. As hyperscalers invest in data centres and people, those employees still need feeding. AI CapEx shows up in servers and chips, but the allocating that accompanies it is a recurring operating expense.

Overall, we think the market has become too binary. AI creates both winners and enablers, and we're focused on businesses where AI reinforces scale, data ownership and long term cash flows.

You’ve also highlighted opportunities in private equity. Why does that matter now?

Private equity matters right now because the environment has changed sharply, and that's creating opportunity for the right operators.

The traditional private equity model relies on cheap leverage and well-functioning exit markets.

Today, both are under pressure, particularly for subscale funds. That has led to forced sellers and stressed assets coming to market at attractive prices.

We view our holding Rosebank, as a beneficiary of this set up. The business is led by the former Melrose team, who have a strong track record of acquiring under managed assets, improving operations and exiting at significantly higher valuations.

During their time at Melrose, they returned almost twice the index across four out of five major deals. A good example is Rosebank's acquisition of MW components and CPM from American Securities.

These businesses have been refinanced out of positions of over-leverage, creating scope for reinvestment, operational change and cash flow improvement. We see meaningful potential for margin expansion and quality enhancement.

In our view, this kind of environment is where disciplined, operationally focused capital allocaters can create real value.

Finally, how are you feeling about the outlook from here?

While volatility may persist, we're encouraged by what we see. Valuations are more attractive. Balance sheets remain strong, and several of the headwinds we experienced this quarter are already easing. We remain confident that the portfolio is well positioned to deliver on its aim of generating an attractive level of income and capital growth for investors over the long term.

Investment risks

The value of investments and any income will fluctuate (this may partly be as a result of exchange rate fluctuations) and investors may not get back the full amount invested.

The product uses derivatives for efficient portfolio management which may result in increased volatility in the NAV.

The use of borrowings may increase the volatility of the NAV and may reduce returns when asset values fall.

The product invests in emerging and developing markets, where difficulties in relation to market liquidity, dealing, settlement and custody problems could arise.

Important information

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.

For more information, please refer to the following documents: the Key Information Document (KID), the Alternative Investment Fund Managers Directive document (AIFMD), and the latest Annual or Half-Yearly Financial Reports. These documents are available upon request using the contact details shown and on the Company’s website.

Further details of the Company’s Investment Policy and Risk and Investment Limits can be found in the Report of the Directors contained within the Company’s Annual Financial Report.

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.