The board of the trust announced today (April 6) it had served Invesco its notice of termination following an “extended period of underperformance” against the company’s benchmark.
In November last year the chairman of the trust warned Mr Barnett about the trust's chronic poor performance and said the board would be closely monitoring the progress in the foreseeable future.
The board said the decision had not been taken lightly — particularly given the current market environment — but noted it had previously made it clear it was concerned with the company’s poor performance and that this had continued over the year to March.
Mr Barnett ran Perpetual Income and Growth as part of his role as head of UK equities at Invesco. The trust has lost 37 per cent over the past year while its benchmark, the FTSE All Share, lost 24 per cent.
Compared to its peers in the AIC UK Equity Income sector it is the absolute worst performer over the past five years.
Chairman Richard Laing said it was a “considered decision” following “regular rigorous reviews'' and “many challenging discussions” with Mr Barnett and Invesco.
He said: “We gave Invesco time to build on the early ‘Brexit bounce’ that was anticipated, but this proved to be short-lived. The board is mindful of the market environment, but feel compelled to announce the decision today to replace the manager.”
Invesco said it was disappointed with the outcome of the board’s decision, adding it had embraced the board’s views on performance with improved results in the latter part of 2019, consistent with the principle-based approach it had always taken.
The spokesperson added: “We are disappointed that we were unable to build on this, given the recent extreme volatility in financial markets.
“These are extraordinary times as we all are aware, and in our opinion require the experience and expertise of portfolio managers who have weathered severe cyclical shocks.”
The board is now searching for potential new managers and has hired consultancy firm Mercer to lead the search alongside Winterflood Securities.
This is the second trust to ditch Mr Barnett as manager in just five months. In December, he was sacked from the Edinburgh investment trust and replaced by Majedie Asset Management’s James de Uphaugh.
His open-ended funds took a beating last week when Invesco wiped 5 per cent off the value of the High Income and Income funds as it wrote down the value of its unlisted holdings.
The unquoted positions, which account for about 8 per cent of either fund, took a 60 per cent haircut in the valuation due to the fall in the equity markets due to the coronavirus crisis.
The embattled fund house later indicated the firm was looking to sell its unquoted positions in full, moving the cash redeemed from the sale into publicly listed equities.
Mr Barnett took over the management of most of his funds when he replaced former star fund manager Neil Woodford as head of UK equities at Invesco in 2014.
He deployed the same value style of investing as Mr Woodford, and had major investments in many of the same companies as his former boss, including chronic underperformers such as Stobart Group and Provident Financial.
However last November he shrugged off the comparisons following the collapse of Mr Woodford's business, telling investors that under his stewardship the funds had “chartered a very different course” and that the portfolios were now “very different”.
He also denied facing the same liquidity problems as Mr Woodford.
imogen.tew@ft.com
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