Mark Barnett Leaves Invesco After 24 Years

Departure comes after a long run of poor perfomance at Invesco income funds and removal from two investment trusts

Holly Black 15/05/2020 16:20:00

Mark Barnett

Fund manager Mark Barnett has left Invesco after a long run of poor performance from his Invesco Income and Invesco High Income funds, and the removal of the manager from the Edinburgh Investment Trust and Perpetual Growth & Income Trust.

The manager leaves after 24 years at the firm, and the running of his two open-ended funds will be taken over by James Goldstone and Ciaran Mallon.

Stephanie Butcher, chief investment officer at Invesco, said: “After discussion with Mark Barnett, we have mutually concluded that this is the right time for him to hand over the leadership of these funds and leave Invesco.”

Barnett has been dogged by criticism since the collapse of the Woodford Equity Income fund in 2019. The manager worked alongside Neil Woodford for many years and the two shared many of the same investment holdings. Concerns mounted last year about the exposure to small and unquoted companies in Barnett’s portfolio and Morningstar analysts downgraded his funds to a Negative rating, having once held a coveted Gold Analyst Rating.

Investors fled as the funds underperformed, with assets in the Invesco Income fund falling from £8.3 billion to £1.5 billion under his tenure. The fund is down an eye-watering 36.47% year to date, compared to an average loss of 10.44% in its Morningstar Category, UK Equity Income. The fund has produced annualised losses of 16.17% over three years – some 9.58% behind its Morningstar Category average.

Jon Miller, director of manager research at Morningstar, says: "The Invesco UK equity team's contrarian investment style has faced headwinds, but bigger issues have been at play on Barnett's funds - an increasing number of stock-selection issues over a prolonged period and the need to find a way out of unquoted holdings. The latter was recently addressed but it won't be done overnight."

Writing on the Wall

The blows kept coming for Barnett as he was sacked from the Edinburgh Investment Trust (EDIN) in December and then from the Perpetual Income & Growth investment trust (PLI) in April.
Jason Hollands, managing director at Tilney, says the manager’s departure comes as little surprise, with the funds regularly featuring in the firm’s Spot the Dog report of consistent underperformers.

“In truth, the writing on the wall for the manager has been there to see for some time,” says Hollands. “Dire performance has fuelled a pattern of major outflows from what was once the firm’s flagship UK equity funds.”

Ryan Hughes, head of fund selection at AJ Bell, says there had been concerns around the manager’s positions in illiquid small and unquoted companies for some time. He adds: “While Invesco would have been hoping that steps taken to improve performance in recent months would have been sufficient, it is clear that making a clean break has been decided as the better course of action.”

Barnett’s departure comes as part of a wider shake-up of Invesco’s UK equities funds. The Invesco High Income fund’s objective is to be clarified to help investors betters understand its income aims. Meanwhile, the Invesco UK Strategic Income and Invesco Income funds are to be merged.

Barnett said: “I am extremely proud of my career at Invesco and my long-term track record of value creation for my clients. I wish James and Ciaran huge success in managing the portfolios in the future.”

About Author

Holly Black

Holly Black  is Senior Editor, Morningstar.co.uk

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