Mark Barnett, senior UK fund manager for Invesco – an investment management company based in Atlanta, Georgia – was hit by the downgrading of his £6.1billion High Income and £2.7billion Income funds
A former protege of fallen star stockpicker Neil Woodford has expressed his ‘regret’ after a ratings agency downgraded his funds, citing a fall in assets that is ‘all too reminiscent of the recent Woodford debacle’.
Mark Barnett, senior UK fund manager for Invesco – an investment management company based in Atlanta, Georgia – was hit by the downgrading of his £6.1billion High Income and £2.7billion Income funds, which hold investments from thousands of British savers and pension funds.
Morningstar said concerns about ‘high exposure to smaller and illiquid companies’ sparked the downgrade to a ‘neutral’ rating, along with ‘an increasing number of stock-selection issues’ that ’caused analysts to have a lower level of conviction in the fund’.
Mr Barnett issued a statement on the Invesco website saying that recently expressed ‘concerns around liquidity, and comparisons made to Woodford Investment Management are misplaced’, adding that his funds were ‘appropriately positioned, well diversified and able to generate liquidity should investors wish to buy or sell.’
He continued: ‘Over the past few years, the performance of the funds has been disappointing in capital appreciation terms and I regret some of the stock specific challenges.
‘Outside of idiosyncratic risk, my belief that selective domestic equities offer better risk-adjusted value than many highly rated international earners has further impacted relative returns.
‘This positioning will, I believe, prove correct in time.’
The FT reported that Mr Barnett also said: ‘I have made some mistakes and I am personally very disappointed by those individual stock failures.’
The statement continues: ‘But whilst the funds have lagged the wider market, I am proud that income generation remains strong.
‘The income offered in my portfolios is better-diversified, better-covered and offers better growth than the UK equity market.’
Mark Barnett took over running the funds from Neil Woodford (pictured) in 2014
Mr Barnett took over running the funds from Neil Woodford in 2014 and ‘has maintained a similar investment style to his predecessor, taking a contrarian approach and backing out-of-favour stocks,’ Morningstar reported.
They added: ‘When Barnett took over the High Income fund it had assets under management of £13.1 billion, today it sits at around £6.1 billion. The fund had been rated as Bronze by Morningstar analysts.
‘The Invesco Income fund has seen assets fall from £8.3 billion to £2.7 billion.
‘Such heavy redemptions are all too reminiscent of the recent Woodford debacle, where the toxic combination of poor performance, illiquid investments and investor redemptions led to the suspension of the fund and, ultimately, its closure.’
Mr Barnett said events at Woodford Investment Management (WIM) have ‘understandably drawn much comment from investors, the media and the wider market’, adding that ‘questions of comparison are perhaps inevitable’ as Mr Woodford had worked at Invesco and previously managed portfolios.
‘However, under my stewardship the funds have chartered a very different course and it cannot be overstated that the portfolios I manage are very different,’ he added.
‘We only have access to public data. However, based on the last reported holdings of the Woodford Equity Income Fund, at the time that WIM suspended operations, we believe that the overlap with my portfolios was less than 15%.
‘To non-investment professionals this figure may sound high. It is not.’