One of the City’s best-known stock-pickers has lost his grip on an investment trust he has managed for almost a quarter of a century, as COVID-19’s impact on the stock market hammers the performance of active fund managers.
Sky News has learnt that Perpetual Income and Growth Investment Trust (PIGIT) has notified Invesco that it intends to remove it as the manager of its roughly £500m portfolio.
The decision is likely to be announced as soon as this week.
It will represent a bitter blow to Mark Barnett, the Invesco executive who has managed PIGIT since 1999, shortly after its launch.
Mr Barnett, who has been a respected figure in the asset management industry for decades, had been on alert for PIGIT to move since Edinburgh Investment Trust removed him as its manager in December.
PIGIT’s ten largest holdings include BP and Royal Dutch Shell, the FTSE-100 oil giants which have been jolted by the recent slump in oil prices.
The investment trust’s value has slumped by 40% over the last 12 months.
It is now expected to choose a replacement manager during the coming months.
One source pointed out that PIGIT represented only a modest proportion of the overall assets that Mr Barnett manages at Invesco.
Mr Barnett, who also manages several of Invesco’s own, much larger UK equities funds, had hoped that the resolution of the Brexit impasse would pave the way for a strong run for London-listed shares.
However, the coronavirus outbreak has had a savage impact on the stock-picking strategies of many fund managers, with many listed companies now likely to need to raise fresh equity to survive.
In addition to that, funds oriented towards stocks typically paying handsome dividends have also been stunned by the flood of companies announcing that they would cancel or defer shareholder payouts because of uncertainty over the duration of the pandemic.
Last week, Invesco wrote down the value of unlisted investments managed by Mr Barnett by 60%, and said it would seek to offload them.
Mr Barnett’s prominence is partly a consequence of his historically close working relationship with Neil Woodford, who left Invesco to set up his own asset management operation in 2013 before seeing it implode last year.
An attempt by Kent County Council to withdraw £250m from Woodford Investment Management (WIM) last May triggered a decision by the fund administrator to prevent investors from pulling out their money.
WIM, which for several years was the most lauded new entrant into the multitrillion-pound UK fund management industry, subsequently announced that it would close.
Sky News revealed last month that Mr Woodford was canvassing support from wealthy investors about a comeback.
Last November, Invesco announced a shake-up in the stewardship of its flagship UK funds after billions of pounds of outflows.
The US-owned fund manager appointed Martin Walker, one of its senior fund managers, to the role of co-head of UK equities alongside Mr Barnett.
Mr Barnett’s performance looks more impressive when judged over a longer period, with the Strategic Income Fund – managed by Mr Barnett since 2006 – having delivered returns of 113% over the last decade.
Last autumn, Mr Barnett offered a mea culpa to his investors but insisted that he was determined to improve returns, saying that income generation had remained strong.
“At Invesco I am not just accountable to my investors,” Mr Barnett wrote in October.
“I am also accountable to teams of highly experienced and qualified professionals, as well as layers of experienced senior management.
“I am supported to make independent investment decisions, yes, but I am also accountable and well-challenged.
“I am the named portfolio manager, but I am not my own boss.”
Invesco declined to comment, while PIGIT could not be reached for comment.