Invesco Perpetual’s Mark Barnett (pictured) has helped catapult the firm to top dog status in Tilney Bestinvest’s Spot the Dog report, which names and shames asset managers with the highest number of consistently underperforming funds.
The Henley-on-Thames fund house has gone from having no ‘dog funds’, which are funds that have underperformed for three to five consecutive years, relieving some of the pressure from Aberdeen Standard Investments, which had been the worst offender for the last several reports, mostly joining Fidelity International.
Brexit hits Invesco Perpetual funds
Three of Invesco Perpetual’s laggards are run by UK equity manager Mark Barnett. He inherited the mandates from Neil Woodford when he left to set up his own boutique investment firm in 2014.
Invesco Perpetual told Portfolio Adviser in a statement that Barnett’s contrarian approach to UK equities following the Brexit vote had contributed to recent underperformance.
Invesco Perpetual High Income, the largest of Barnett’s funds, is one of seven ‘beast’ funds in the report that are over £1bn in size.
The fund is fourth quartile over one and three years and third quartile over five years against the IA UK All Companies sector. Currently sitting at £9.15bn, it has returned 0.19% year-to-date.
| Invesco Perpetual dog funds | Size | 3-year return on £100 | Relative 3-year return | 1st year return | 2nd year return | 3rd year return |
| Invesco Perpetual UK Strategic Income | £418m | 110 | -17% | 98.42 | 112.04 | 99.33 |
| Invesco Perpetual Income | £4.3bn | 110 | -16% | 96.78 | 114.13 | 99.78 |
| Invesco Perpetual High Income | £9.2bn | 113 | -14% | 97.73 | 114.17 | 101.31 |
| Invesco Perpetual Income & Growth | £483m | 121 | -8% | 103.63 | 115.34 | 101.08 |
| Invesco Perpetual Japan | £316m | 136 | -9% | 102.66 | 122.34 | 107.85 |
Source: Bestinvest
Invesco Perpetual chief investment officer Nick Mustoe said their UK equity funds had suffered in the period since the UK vote to leave the European Union.
“The strategies managed by Mark Barnett are weighted toward stocks that generate income from UK sourced revenues (rather than foreign income generators), an approach that has lost favour in a climate of political and economic uncertainty,” Mustoe said in a statement. The fund house said by its estimate company valuations have declined 30% for each pound earned in the UK.
Mustoe said the negative market reaction was excessive, often indiscriminate and created buying opportunities for UK stock pickers.
More Invesco funds in the dog house
Barnett’s trio of funds are joined by Ciaran Mallon’s Invesco Perpetual Income & Growth fund, another UK equities fund, and the Invesco Perpetual Japan fund, co-managed by Paul Chesson and Tony Roberts.
The five Invesco Perpetual funds in the doghouse represents 45% of the total £33.6bn assets managed by the named and shamed funds in the Bestinvest report.
Other dog funds
Previous top dog Aberdeen Standard Investments still had five funds in the dog house, although only one was a repeat offender. The Tilney-owned investment group said that “frustratingly” the level of assets within the ASI funds has gone up.
The second spot belonged to JP Morgan with one dog fund worth over £3.5bn (JP Morgan US Equity), followed by Janus Henderson with two funds (Janus Henderson European Selected Opportunities and Janus Henderson World Select).
Fidelity fell from second to fifth in the rankings, which Bestinvest said was helped by the change in management for Fidelity American, a previously flagged dog fund.
The Global sector once again contained the highest number of dog funds with 19 vehicles spotlighted for consistently poor performance. In contrast, the Global Emerging Market sector holds no dog funds.
UK Equity funds from across the IA UK All Companies and IA UK Equity Income sectors were close behind with the number of dog funds surging from two to 18 since the start of the year. Meanwhile, Majedie UK Smaller Companies fund was the only dog fund in the UK Smaller Companies sector.
