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Invesco defends performance of £11bn 'dog' funds

Invesco defends performance of £11bn 'dog' funds

Invesco has defended the performance of six of its equity funds after they featured on the latest “dog” list of chronic underperformers.

Data compiled by wealth manager Tilney showed the Invesco funds in question held £11bn of client capital combined.

A “dog” fund is defined as one which has underperformed its sector for each of the past three years, with the total level of underperformance being 5 per cent below the index or worse. 

Invesco had six such funds on the list, more than any other fund house.

The underperformers include the Invesco Income, High Income and Strategic Income funds, all UK mandates and all run by the firm’s head of UK equities Mark Barnett.

Invesco’s Income and Growth fund, which is also a UK equities mandate, also made the list. This fund is run by Ciaran Mallon. 

Jason Hollands, head of communications at Tilney said the underperformance of the funds run by Mr Barnett reflected the fact that his value style of investing had been out of favour with the market in recent years. 

But a representative of Invesco defended the performance of its UK equity fund range.

They said: “UK equity markets have experienced continued volatility over the last 12 months as a result of domestic political uncertainty and other geopolitical and global economic factors. 

"The UK stock market continues to be undervalued in our view with many UK domiciled companies trading at very low valuations relative to their global peers.

"The market’s preference for predictability of revenues and earnings has produced a divergence in valuations that we believe is extreme. Moreover we believe that a reversion to traditional valuation metrics will occur."

They added: "Whilst recent performance has been challenging, our investment process remains robust and we continue to believe in the long term value of the UK equity market."

The company said it had "seen evidence" that markets were beginning to value UK companies on the basis of their long term fundamentals and there had been increased mergers and acquisitions activity. 

"We expect volatility to continue whilst the outcome of Brexit negotiations is unclear. We retain full confidence in the positioning of our UK equity portfolios," it stated.

There were twenty UK equity funds on the list, down from 59 in the previous edition. 

Embattled fund manager Neil Woodford had two of those, including the now suspended Woodford Equity Income fund, which was the absolute worst performer in the sector, returning £80 for every £100 invested over the past three years. 

The St James's Place UK High Income fund, also managed by Mr Woodford, though he has been fired as manager of it since, also made the list. 

A representative of Woodford Investment Management said: "Neil will continue to focus the fund’s portfolio towards the few areas of the market which continue to offer valuation appeal and to the economic regions that appear to have enough internal momentum to withstand the growing global headwinds.