Invesco’s Barnett battered by turbulent markets

A £4.6bn fund run by Invesco’s Mark Barnett, a former protégé of fallen star manager Neil Woodford, has been battered by the coronavirus rout, losing a third of its value.

Mr Barnett’s High Income fund, which was once managed by Mr Woodford, is among a group of big income-focused products that have been badly hit as stock markets around the world plummeted in response to the pandemic. 

According to data from Morningstar, the fund, which is the fourth-largest equity fund domiciled in the UK and is popular with British savers and pension funds, has lost 32.9 per cent year to date.

Ryan Hughes, head of active portfolios at AJ Bell, said the performance fall at the Invesco High Income fund was “certainly painful” and similar to other UK equity managers who follow a value strategy.

“With significant exposure to financials, airlines and the big oil companies, Barnett has suffered as these stocks have been marked down severely given the almost total cessation of global trade,” he said.

The fund also has been hit as investors fled income stocks on the expectation that companies would be forced to slash their dividend in the coming months as Covid-19 wreaks havoc on businesses around the world. British businesses including Rightmove, Persimmon and Whitbread have already announced plans to cut their dividends to help cushion the economic shock.

“It’s inevitable that many companies will now suspend or reduce their dividends and this will have a direct impact on those funds that are focused on paying out income to investors,” said Mr Hughes.

Invesco declined to comment. But the recent disappointing performance comes after a bruising few years for Mr Barnett. The income fund’s assets have fallen from a high of £13.1bn in 2013, when Mr Woodford quit Invesco to set up his ill-fated investment business, to just £4.6bn at the end of February.

Investors pulled more than £2.1bn from the fund between January 2019 and February 2020.

In January, Mr Barnett issued a plea to investors to stick with his funds after heavy outflows sparked fears that the under-fire stockpicker was vulnerable to a Woodford-style liquidity crunch.

According to Morningstar, UK equity income funds were down 28 per cent on average this year, compared with a fall of 24.75 per cent in the FTSE All Share.

Peter Brunt, associate director of equity strategies manager research at Morningstar, said: “Some of the higher yielding parts of the market, including energy and financials, have strongly underperformed, as have small and mid-caps, to which the average UK equity income fund is overweight, so the underperformance so far is not entirely surprising.”


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