Mark Barnett Sacked from Second Investment Trust

The latest blow to the fund manager sees him sacked from running the Perpetual Income & Growth Investment Trust, which he has managed since 1999 

Holly Black 6 April, 2020 | 12:14AM
Facebook Twitter LinkedIn

Mark Barnett

Mark Barnett has been sacked as the manager of the Perpetual Income & Growth Investment Trust (PLI) after a prolonged period of underperformance.

The announcement by the board of the trust, is the latest blow to the manager who was removed from the Edinburgh Investment Trust (EDIN) in December 2019.

The beleaguered fund manager has also seen the ratings on his Invesco Income and Invesco High Income funds downgraded to Neutral by Morningstar analysts amid concerns about liquidity and the high exposure of the portfolios to unquoted companies.

Only last week, Invesco wrote down the value of the unquoted assets across its funds by a staggering 60%, a move which wiped another 5% off the performance of Barnett’s funds. The group has committed to reducing the funds’ exposure to unquoted companies to zero.

Richard Laing, chairman of Perpetual Income & Growth, confirmed that Barnett has been given notice as the manager of the trust after more than 20 years at the helm.

He said the decision had “not been taken lightly, particularly given the current market environment, but the Board has previously made it clear it was concerned with the company’s poor performance”.

Over one year the trust is down an eye-watering 36.9%, according to Morningstar data, while its benchmark the FTSE All Share, is down 24% over the same period. Over five years the trust has produced annualised losses of 10% compared to annualised losses of 0.64% from the FTSE All Share.

Laing said: "We gave Invesco time to build on the early ‘Brexit Bounce’ that was anticipated, but this proved to be short-lived. At the half year, performance was below the benchmark and this has continued in the second half to March 31. The Board is mindful of the market environment but felt compelled to announce the decision today to replace the manager.”

Board Searches for New Manager

Ryan Hughes, head of active portfolios at AJ Bell, says the announcement comes as little surprise “given the scale of the underperformance of the trust”. He adds: “It was clearly of little comfort to the Board that other value-focused investment trusts have suffered even more in the recent sell-off; they have clearly lost confidence in the manager’s ability to capitalise on any post-coronavirus bounceback, which will hopefully come once we emerge from the other side of this crisis.”

Indeed, analysis of the performance of investment trusts in the first quarter of the year, shows a number of rated trusts turned in a worse performance than Perpetual Income & Growth.

The trust’s board is now searching for a new manager and has asked potential candidates to indicated their interest by April 17.

Adrian Lowcock, head of personal investing at Willis Owen, thinks possible contenders for the role could include James de Uphaugh, who took over the running of the Edinburgh Investment Trust from Barnett, and renowned value investors Nick Kirrage and Kevin Murphy, who run the Silver-Rated Schroder Recovery fund.

“De Uphaugh has already proven he can impress the board of investment trusts and it would certainly be impressive if he secured a second mandate,” says Lowcock. “Meanwhile, Kirrage and Murphy have the expertise of running a value income strategy, along with the resources to support an investment trust.”

A Invesco spokesman said: "We are disappointed with the outcome of the Board's decision in respect of our role as portfolio manager. We understand the performance pressures that exist in today's market but since the half year results, we have embraced the Board's views on performance, with improved results in the latter part of 2019, consistent the principle-based approach we have always taken. We are disappointed we are unable to build on this, given the recent extreme voltility in financial markets."

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.

Facebook Twitter LinkedIn

About Author

Holly Black  is Senior Editor, Morningstar.co.uk