Board warns Barnett about performance

Board warns Barnett about performance

The chairman of the £941m Perpetual Income and Growth investment trust has warned fund manager Mark Barnett that the present poor performance cannot continue.

The trust lost 1.2 per cent in the six months to the end of September 2019 in net asset value terms, compared with a gain of 4.6 per cent for the FTSE All Share. 

It is the worst performing investment trust over the past three years, losing 4.7 per cent, while the average trust in the AIC UK Equity Income sector has returned 18.7 per cent.

Mark Barnett runs the trust as part of his role as head of UK equities at Invesco. 

In the half year results statement of the trust, published yesterday (November 20), chairman Richard Laing wrote: “The Board is very sensitive to shareholder concerns about the continued weak results.

"We engage regularly with the portfolio manager, Mark Barnett, who continues to apply his consistent valuation based investment approach.

"We have also had a number of discussions with Invesco management about the continuing poor performance and about processes around individual portfolio managers.

"We note the recent appointment of a new Chief Investment Officer, Stephanie Butcher, and have met with her to discuss new initiatives to be put in place with the aim to improve portfolio performance. We will be closely monitoring progress.”

Mr Barnett succeeded Neil Woodford as head of UK equities in 2014, and has followed an investment strategy that bears similarity to that of his predecessor, in particular an exposure to the UK domestic economy.

Similarly to Mr Woodford, Mr Barnett believes Brexit’s impact on the UK economy will be much less severe than the market anticipates. 

The trust trades at a discount to its net assets of 14 per cent.

Investors pulled an average of £625m a month from funds run by Invesco in the twelve months to the end of August 2019, with the Income funds run by Mr Barnett shedding at least £7.5bn of assets in the three years to the end of August. 

One task facing Mr Barnett as manager of those open-ended funds is to deal with hundreds of millions of pounds of unquoted assets that are held within the funds and are also part of the Woodford Equity Income fund which is being liquidated.

As part of that liquidation, the administrators of the fund will be selling the portfolio of illiquid and unquoted assets, and that is likely to create downward pricing pressure on the holding Mr Barnett has in the same companies.