Although the board has vowed not to rush to make a decision over the future manager of the trust following last week’s shock announcement that Neil Woodford would leave, the team at Winterfloods said it suspects the board will act sooner rather than later to secure a new steward for the £1.3bn fund, and added that Barnett’s performance could convince them to stand by Invesco.
Recently, Barnett’s numbers have been slightly stronger than Woodford’s, though he has benefited from a bias towards mid caps and by adopting a less defensive stance than his colleague.
Barnett currently runs Perpetual Income & Growth, Keystone, and the UK equity portion of Invesco Perpetual Select. All three are investment trusts and in addition to these, Barnett manages Invesco Perpetual’s UK Strategic Fund and will take on Woodford’s flagship High Income and Income vehicles following his departure next year.
If Barnett does eventually take on Edinburgh IT, it will bring the number of closed-end funds under his control to four. In this scenario, Winterfloods’ team, which is headed up by Simon Elliott, said that efforts may be made to differentiate the vehicles’ mandates.
However before getting to this stage, Edinburgh’s board will have to take a decision on the trust’s future, and since Woodford’s exit date next April was set it has spoken only to say t will not be pushed to make a decision too soon.
“The Board will review carefully with its manager their proposed future arrangements for the management of the company and will make a further announcement in due course,” Jim Pettigrew, the trust’s chair, said at the time.
But the Wins team said that it would be “surprised” if the future manager of the trust was not decided on in the next six months. “We suspect the board will be sympathetic to Invesco’s proposals, particularly if they include Mark Barnett,” the team said.
They added: “There is a possibility Mark Barnett could be involved in the management of four investment trusts from May next year. In this case, we would expect efforts to be made to differentiate the mandates. Succession is never straightforward when a star fund manager is involved, as Fidelity can testify, however we believe Mark is an excellent choice to succeed Neil as Invesco Perpetual’s head of UK equities, given his experience, investment style and performance record.”
Investors have also been quick to stand by the trust while it makes a decision about Woodford’s successor, with many believing that Barnett would be a good fit for Edinburgh.
The trust slipped to a discount in the days that immediately followed Woodford’s resignation, however private client buyer Investec Wealth & Investment was among those that bought in, and it upped its stake before the trust returned to a premium.
Shares in the trust currently trade at a premium of around 0.6% to net asset value, and elsewhere, Brewin Dolphin also said that while it would be reviewing the funds it would not encourage investors to sell just because Woodford was to leave.
“In new lead, Mark Barnett, investors are inheriting a manager of the highest pedigree. His ability is no better demonstrated than in the performance of the Perpetual Income & Growth Trust, a UK focused equity investment trust. Since Barnett assumed control in 1999 the trust has delivered an annual return of 11.1% versus 4.3% from the broader UK equity market,” explained Brewins’ Ben Gutteridge, head of fund research.
