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Underperforming Invesco Fund Manager Mark Barnett Steps Down With Immediate Effect

written by Bella Palmer
fund-manager

Mark Barnett, the Invesco fund manager best known as a protégé of Neil Woodford, has left his 24-year role with the investment company with ‘immediate effect’. While Mr Barnett’s stock picking has underperformed for a number of years now, the abrupt nature of Invesco’s co-head of UK equities still comes as a surprise.

The “mutually agreed” decision does, however, tie in with a broad restructuring of Invesco’s UK equity business, instigated by new chief investment officer Stephanie Butcher, who took up the role at the beginning of the year. Two of the four open-ended funds Mr Barnett had been runner will also now merge.

On announcing Mr Barnett’s departure, Ms Butcher stated:

“I have undertaken a comprehensive review of the UK equity range, recognising a period of disappointing performance and listening hard to client feedback. When I became CIO in January I made it clear I would not shy from introducing change where I saw it necessary.”

That Mr Barnett’s performance came under scrutiny by a new CIO is far less surprising than the rushed manner of his departure. He followed a similar investment strategy to that of his mentor Woodford, whom he worked under before the latter left Invesco to set up his own fund management company in 2014. Both chased risky, illiquid growth companies and had a preference for the biotech and technology sectors.

Mr Woodford’s funds became unstuck after the illiquid nature of many of his holdings meant his funds were unable to cash out a rush of investors last year, after they lost patience with the strategy. While being part of the larger Invesco group gave Mr Barnett’s funds greater access to liquidity, questions were being asked of why Invesco was allowing him to follow a path so clearly demonstrated as high risk following the collapse of his mentor’s funds.

In the minds of many in the City, Mr Barnett and Mr Woodford remained closely connected despite not working together for 6 years now. Mr Barnett took over his mentor’s positions at the head of the Invesco High Income and Income funds after Woodford’s decision to go it alone. Many of the companies the Invesco funds are invested in are the same as those Mr Woodford’s failed funds held stakes in.

Investors in the funds were also clearly far from convinced. When Mr Barnett succeeded Mr Woodford as manager of the High Income fund, it managed assets of £13.1 billion. By the end of March this year, that had dropped to just £3.3 billion. A similar pattern was apparent in the Invesco Income fund, whose capital under management dropped to £1.5 billion from £8.3 billion under Mr Barnett’s leadership. The drops are a result of a combination of investor withdrawals and the falling value of holdings.

It’s been a bad few months for the fund manager after he was also removed as manager of the Edinburgh Investment Trust in December by its independent board, with the Perpetual Income and Growth Investment Trust, which he also managed, serving him his notice last month.

Mr Barnett’s own statement on the news that his time at Invesco has also come to an end read “I am extremely proud of my career at Invesco and for my long-term track record of value creation for my clients.”

That was followed by a brief acknowledgement of his years of service by Ms Butcher, who said “all of us at Invesco wish to place on record our appreciation of Mark’s profound commitment to both clients and colleagues over 24 years.”

The Invesco Income fund will now be merged with the much smaller £102 million UK Strategic Income fund also managed by Mr Barnett. Invesco also stated that it would create a clearer distinction between the High Income and Income funds. The former’s investment strategy and objective is to be “clarified to assist with investors’ understanding of the income objective and benchmarking of the fund’s income”.

James Goldstone and Ciaran Mallon will become co-managers of Mr Barnett’s funds. Martin Walker, who had run the UK equities business jointly with Mr Barnett, will become the sole head of the division.

The fourth open-ended vehicle that Mr Barnett had managed for Invesco, the UK Equity Income, is worth £6.6 million.

Invesco manages about $1.1 trillion in assets and is headquartered in Atlanta. Its British division is based in Henley-on-Thames in Oxfordshire.

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