Invesco has announced the departure of Mark Barnett following a review of its UK equity business by new chief investment officer Stephanie Butcher which recognised the “disappointing performance” of the range. 
The asset manager announced it had been mutually agreed that Barnett (pictured) would leave after 24 years with the company, latterly serving as co-head of UK equities.
Barnett headed the asset manager’s UK equities team following the departure of former colleague Neil Woodford in 2016, but the role was split with the appointment of a co-head – Martin Walker – towards the end of last year.
His strategies have struggled in recent years against a difficult environment for his investment style and his bet on domestically focused, value names in the wake of Brexit.
The manager was thrown into the spotlight with questions surrounding illiquid holdings and the collapse of Woodford Investment Management last year. He has also lost several investment trust mandates in recent months.
Performance of Barnett vs peer group since 2000
Source: FE Analytics
New investment chief Butcher thanked Barnett for his commitment to Invesco and its clients but said it was the “right time for him to hand over the leadership of these funds and leave Invesco”.
“I have undertaken a comprehensive review of the UK equity range, recognising a period of disappointing performance and listening hard to client feedback,” she said. “When I became chief investment officer in January, I made it clear I would not shy from introducing change where I saw it necessary.”
A number of changes have been announced with immediate effect to ensure stability and that objectives are met, the asset manager announced.
Walker has been named head of UK equities and manager of the Perpetual Income and Growth Investment Trust, while James Goldstone and Ciaran Mallon will take over Barnett’s open-ended funds – including Invesco Income and Invesco High Income.
Butcher added: “It is a credit to the quality of our team that we have the experience and capabilities of both James and Ciaran, who have worked together for seven years, to take on these new roles.
“They are highly regarded investment professionals with long-term track records of managing portfolios, both individually, and in partnership with other fund managers.
“They place a high value on collaboration and their investment styles are highly complementary, reflecting the diversity of thought within the UK team, generating the best ideas and outcomes for our clients.
“We remain committed to our valuation-driven investment philosophy and are confident that in James and Ciaran we have the right leadership in place to capitalise on the value that exists in the UK market and deliver long-term investment results for our clients.”
The changes also include a reorganisation of the asset manager’s UK equity product portfolio “to help add further clarity, differentiation and focus”.
This will include a clear distinction between Invesco High Income and Invesco Income, with the former’s objective to be clarified.
Another of Barnett’s funds – Invesco UK Strategic Income – will be merged with Invesco Income, subject to regulatory and investor approval.
On his departure, Barnett said: “I am extremely proud of my career at Invesco and for my long-term track record of value creation for my clients.
“I wish James and Ciaran huge success in managing the portfolios in the future.”
Invesco chief investment officer Butcher added: “We remain committed to our valuation-driven investment philosophy and are confident that in James and Ciaran we have the right leadership in place to capitalise on the value that exists in the UK market and deliver long-term investment results for our clients.”
Ryan Hughes, head of active portfolios at AJ Bell, said the announcement will have come “as little surprise” given the performance and questions around positions in illiquid small caps and unquoted companies.
“While Invesco would have been hoping that the steps taken to improve performance in recent months would have been sufficient, it is clear that making a clean break has been decided as the better course of action for both parties,” he said.
Adrian Lowcock, head of personal investing at platform Willis Owen, added: “His close association with Woodford, a former protégé, and sharing investments in illiquid assets created extra challenges and pressures for the manager and the business.
“His departure and subsequent restructuring of the Invesco UK equity fund range give Invesco an opportunity to reset things.”
Ben Yearsley, investment consultant at Fairview consulting, said: “Value and UK domestic stocks have not been the place to have been invested for the last four years, so arguably he was fighting a losing battle.
“However, other traditional equity income funds have weathered the turmoil far better, so ultimately the poor performance has to be down to Barnett’s investment decisions.”
Nevertheless, it will take some time for the new managers of Invesco Income and Invesco High Income to turn around performance of the funds, all agreed.
Performance of funds over 3yrs
Source: FE Analytics
Over three years, the Invesco High Income fund is down by 40.36 per cent while the Invesco Income fund is down by 39.75 per cent.
“Looking ahead, investors will need to think about whether they remain in the Invesco funds and further clarity will be needed from the new managers as to any portfolio changes that may be made,” said Hughes.
Lowcock added: “This will leave the many thousands of investors who stuck it out with Barnett with a big decision to make.
“The fact is, there are other options out there that they can take now, who have proven track records, and this could, in the short term, result in further outflows from Invesco’s flagship funds.”