Fund buyers have hailed Mark Barnett’s comeback at Tellworth Investments as a “chance for a fresh start,” free from the shadow of his Invesco predecessor Neil Woodford, but it remains to be seen whether he can attract assets away from larger value style rivals.
The former Invesco UK equities head has resurfaced at Tellworth, the boutique set up by former Schroders duo Paul Marriage and John Warren.
Barnett (pictured) will join Tellworth’s nine-strong investment team this month and is reportedly gearing up to launch an income and growth strategy. The £800m fund group currently manages four equity vehicles, including the £415.3m Tellworth UK Smaller Companies fund run by Marriage and Warren.
Barnett left Invesco by “mutual agreement” last May after 24 years at the fund group following a review of its UK equities range spearheaded by then newly minted CIO Stephanie Butcher.
His £5bn worth of UK equity strategies, which he inherited from Woodford when he left to launch his own boutique in 2014, were handed over to Ciaran Mallon and James Goldstone, while his smaller Strategic Income fund was merged with the Income mandate.
See also: Mark Barnett leaves Invesco as CIO reshuffles UK equity range
Opportunity to start with a blank sheet of paper and free from Woodford unquoteds
Chelsea Financial Services managing director Darius McDermott said Tellworth is a “chance for a fresh start” for Barnett whose final years at Invesco were marred by torrid performance and heavy outflows.
“Mark had a bad time of it at the end of his time at Invesco – taking on huge funds that stayed in redemption over his tenure, coupled with his style being out of favour, was a combination that he and his investors never really recovered from,” McDermott said.
At the time of Barnett’s departure his Invesco High Income and Income mandates were lingering near the bottom of the IA UK All Companies sector, sitting on losses of 40% over three years.
AJ Bell head of active portfolio Ryan Hughes agreed rebuilding his career at Tellworth marks a chance for Barnett to prove he can still deliver strong returns “without the shadow of his previous roles hanging over him”.
“Taking on the funds at Invesco formerly managed by Neil Woodford was always going to be a difficult challenge for anyone and perhaps inevitably it played out that way, although I’m sure Barnett will admit that he made some mistakes along the way too,” Hughes said.
“The opportunity now, to start with a blank sheet of paper, no legacy holdings and no unquoted companies that couldn’t be sold will no doubt be an exciting one.”
Barnett will face stiff competition from Fidelity Special Situations and Jupiter Income
Barnett’s return to the industry at a time when value strategies are in demand following the Covid vaccine-led cyclical recovery, is also fortuitous, said Tilney managing director Jason Hollands.
“UK equities are back on investors’ radars once again and ‘value’ investing – a focus on cheap, unloved shares which is his signature style – is starting to look relevant after a long period in the wilderness,” Hollands said.
However, Hollands said the jury is still out on whether Barnett will be able to attract assets.
Though the number of value managers has thinned over the years due to the style being out of favour, Hollands notes there are a number of large, existing funds like the Fidelity Special Situations and Jupiter Income funds that have weathered the decade-plus growth rally much better than Barnett’s previous funds at Invesco.
The £3.2bn Invesco High Income and £1.4bn Income funds have consistently been named and shamed in Bestinvest’s Spot the Dog report, which highlights the industry’s biggest laggards over three years, since 2018.
Acclimating to boutique life
Another unknown is how Barnett will acclimatise to boutique life after spending decades at an asset management giant like Invesco, Hughes said.
While Tellworth’s decision to hire Barnett may come as a surprise to some, Hughes said Marriage and Warren are “shrewd investors”.
They “will no doubt see the opportunity to work alongside someone as experienced as Barnett as one that has the potential to really help grow the business from the strong start it has had in its initial focus on smaller companies and then taking on the Sanditon funds”.
On joining Tellworth Barnett said: “I am extremely impressed by the team at Tellworth and the quality business they have established over the past three years. We share an investment philosophy based on long term, bottom-up fundamental analysis and active portfolio management. I am excited to join the business and establish an income-focused franchise, which reflects my optimism on the significant potential for the UK stock market.”
