Mark Barnett, one of Britain’s best known fund managers and a protégé of Neil Woodford, has been forced out of Invesco after years of poor returns and disastrous stock picks.
Investment manager Invesco said Mr Barnett and the business had “mutually agreed” his departure and he leaves behind more than £5bn of savers’ money across four British stock funds.
This follows his sacking from the £988m Edinburgh Investment Trust and £625m Perpetual Income and Growth Trust in the past year, with the trusts’ boards growing tired of poor returns.
He was best known for running the £3.3bn Invesco High Income and £1.5bn Income funds – both previously run by Mr Woodford – and took a similar “value” approach, buying companies that were out of favour in the hope the share price would rebound.
However, since taking over in 2014 the flagship High Income fund lost 23pc compared with a 8.5pc gain for the FTSE All Share index, a basket of all British companies. The fund had over £11bn in assets three years ago but poor performance and investor withdrawals meant it dwindled in size.
Both funds also had large holdings in small and unlisted companies which the manager thought would boost returns as they grew. However, this strategy, identical to that followed by Mr Woodford and the very reason for his downfall, never played out and the pair made a series of poor investments.
Earlier this year, Invesco reduced the value of its unlisted stocks by 60pc and committed to removing the holdings entirely from the portfolio – a shift away from Mr Barnett’s own investment ideology.
The news has not come as a surprise to fund analysts.
Jason Hollands, of investment manager Tilney, said: “The writing was on the wall for Mr Barnett for some time. He was moved from being head of UK equities to co-head last year and he was dropped as manager of the Edinburgh Investment Trust in December,” he said.
Ryan Hughes, of fund shop AJ Bell, added: “The news does not come as a surprise after the last couple years with performance suffering and questions being asked over the positions taken in the portfolios, particularly around illiquid small caps and unlisted companies.”
Looking ahead, he said investors will need to think about whether they remain in the Invesco funds, and further clarity will be needed from the new managers as to any portfolio changes that may be made.
Mr Barnett’s funds will will now be overhauled, with the Income fund merged with another former Barnett fund, Strategic Income.
The new merged fund and High Income will be run by Ciaran Mallon and James Goldstone. Martin Walker, Invesco’s head of UK equities, will manage the Perpetual Income and Growth Investment Trust until it is handed over to a new company.
Invesco’s Stephanie Butcher said: ““We remain committed to our value investment philosophy and are confident that in James and Ciaran we have the right leadership in place to capitalise on the value that exists in the UK market.”