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How Mark Barnett is Changing Invesco Perpetual High Income

Invesco Perpetual High Income manager Mark Barnett is selling off some of his largest holdings as he implements his own management style and deals with outflows

Emma Wall 7 August, 2014 | 1:40PM

Invesco Perpetual fund manager Mark Barnett runs a lot of cash. When taking over management of the Invesco Perpetual High Income, Invesco Perpetual Income and Edinburgh Trust (EDIN) from Neil Woodford earlier this year, Barnett boosted his book by £21 billion.

Barnett already ran Perpetual Income & Growth (PLI) and Keystone Investment Trust (KIT), responsibilities he has retained, boosting the total assets under the management of Barnett to a cool £22 billion.

The sheer size of these combined portfolios have led to Morningstar analysts downgrading Barnett’s open and closed-end funds, at least until he has proved capable of running such a large amount of money. Going from £1.1 billion responsibility to twenty times that takes some adjustment.

“We still think manager Mark Barnett is a skilled UK equity-income investor, but his workload has increased considerably in recent months following the departure of Neil Woodford from the group,” said closed-end fund analyst Jackie Beard.

“This could impact negatively on those funds already under his management. On the announcement of Woodford’s resignation, Barnett was made head of UK equities. Barnett now manages four investment trusts as well as his three open-end funds. But we have concerns here, too. That scale of asset transfer to a new manager is unprecedented in UK equity fund management.”

Barnett’s style differs from Woodford, and he is running all the funds now under his management in the style that has proved very successful in his two smaller investment trusts.

Beard describes this as a fairly concentrated list of names, but less concentration in the largest holdings than his predecessor.

“While Woodford delivered excellent long-term performance when in charge of IP Income and High Income, he had the benefit of those assets growing over many years, making for a very different experience,” she added.

Because of this change in style – and the outflows that Invesco has had to manage – Barnett has made some key changes in the largest of the funds, IP High Income. Top holding GlaxoSmithKIine (GSK) has been reduced to a position of 5.9%, where it is 6.8% in Woodford Equity Income. Morningstar equity analysts think the stock is fairly valued.

Barnett has also reduced his exposure to AstraZeneca (AZN) to 5.8%, where it makes up a hefty 8% of Woodford’s fund. In the month of June Barnett also trimmed his holding of Imperial Tobacco (IMT) and BAE Systems (BA.). He has a total of 63 stocks in the portfolio, with the top 10 making up 48% of total assets in IP High Income. Woodford’s fund is 59 holdings, and the top 10 make up 50% of the fund.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
AstraZeneca PLC6,793.00 GBX-1.05
BAE Systems PLC576.60 GBX1.09
Edinburgh Investment Ord582.00 GBX0.00
GlaxoSmithKline PLC1,627.20 GBX-0.78
Imperial Brands PLC2,157.50 GBX-0.87
Invesco High Income UK Acc804.93 GBP0.49
Invesco Income UK Inc1,536.07 GBP0.51
Keystone Ord1,575.00 GBX-0.32
LF Woodford Equity Income A Sterling Acc86.35 GBP1.16
Perpetual Income & Growth Ord305.00 GBX0.00

About Author

Emma Wall  is former Senior International Editor for Morningstar

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