Central banks continued to raise interest rates during the third quarter in an attempt to dampen inflation. Although inflation remains high, there are signs we may be near the peak.
The UK equity market is currently trading well below its historic valuation trading range, making it one of the cheapest global markets, and many small companies have seen their share prices fall significantly to trade at valuations around those reached in the global financial crisis.
Therefore, despite the headwinds that the UK economy currently faces, Robin believes there are reasons for optimism within the UK smaller companies sector.
In his Q3 video update, Robin reflects on the quarter and answers the following questions:
00:16 - What has been happening in the UK markets over the quarter?
02:20 - What is your view on inflation and the impact on businesses in which you invest?
02:59 - How did the fund perform over the quarter?
04:12 - What changes have you made to the portfolio over the quarter?
05:25 - What is the outlook for UK smaller companies?
This investment trust is managed by Jonathan Brown and Robin West, members of Invesco’s UK equities team. Click below to learn more about the trust and the team.
Invesco UK Smaller Companies Equity Fund (UK)
UK equities team
The 2025 equities outlook is improving. Balance sheets look healthy, and many stocks are attractively valued, though geopolitical risks remain. Find out more.
Markets were relatively volatile during the quarter, with investors being pulled between the negatives of geopolitics and weaker industrial demand, and the potential benefit of lower interest rates.
Better inflation data prompted a strong start to the quarter, however, there was a sharp sell-off in August as positivity around interest rates was swamped by fears of a US recession. These fears gradually dissipated, and markets largely recovered by the end of the quarter.
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.
The Invesco UK Smaller Companies Equity Fund (UK) invests in smaller companies which may result in a higher level of risk than a fund that invests in larger companies. Securities of smaller companies may be subject to abrupt price movements and may be less liquid, which may mean they are not easy to buy or sell.
The Fund 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 the fund. The Manager, however, will ensure that the use of derivatives within the fund does not materially alter the overall risk profile of the fund.
All information as at 13 October 2022 unless otherwise stated.
Where Invesco has expressed views and opinions, these may change. This marketing material is not intended as a recommendation to invest in 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. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities.
This is marketing material and 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.
For the most up to date information on our funds, please refer to the relevant fund and share class-specific Key Investor Information Documents, the Supplementary Information Document, the Annual or Interim Reports and the Prospectus, which are available using the contact details shown.
