In a rare move for the investment trust industry, the fund house giant had resigned from management in April, but then called an extraordinary general meeting to oust members of the board as the management engagement committee began the process of finding a new manager for the fixed income portfolio.
A regulatory filing published on Wednesday morning announced chairman Donald Adamson and management engagement committee chair Richard Williams, the main fixed income expertise on the board, are to leave with immediate effect.
Williams’ exit was not part of the resolution.
Management fees have been revised to 0.80% on first £80m of net asset value, 0.70% on the next £70m and 0.60% thereafter. Performance fees have been ditched and Invesco has accepted a notice period of three months, down from 12 months previously.
The investment trust’s small discount switched into a premium on back of the news.
Bad publicity
Numis head of investment companies research Charles Cade told Portfolio Adviser that Invesco’s requisition to oust two board members over a reported fees dispute was bad publicity for the asset management giant.
“Ultimately if they’d had a vote, which was backed by shareholders to remove the board, and people had seen it was a matter over fees, there had already been some bad publicity and that would have just intensified,” Cade said.
Invesco argued their resignation had been a response to the conduct of Adamson in fees negotiations.
The ongoing charges figure (OCF) for the investment trust in the last financial year to September 2017 was 1.22% or 2.15% including the performance fee. The £119.5m investment trust is managed by by bond duo Paul Causer (pictured) and Paul Read.
“In the current environment, most people would recognise the fees were high,” Cade said.
He thought the resolution was good news for shareholders.
Board changes
The extraordinary general meeting had been called for 20 July. It will still go ahead so shareholders can vote for a replacement for Adamson and Williams.
Invesco will not vote its 16% stake in the company and the regulatory filing indicated the asset manager has agreed with the board it will not vote in future elections.
Invesco had initially put forward Hazel Adam and Howard Myles as replacements for Adamson and Williams. Cade expected different nominations would be put forward at the meeting.
An independent agency is looking at the recruitment of the new directors.
Peter Yates, chairman of the audit committee, will act as interim chairman of the investment trust until a replacement is voted in.
“Clearly having fixed income experience on the board does make sense,” Cade said about potential appointees.
No-one unscathed
Chelsea Financial Services managing director Darius McDermott said the “broadly unsavoury debacle” reflected badly on all involved, pointing out Adamson had been “very aggressive and outspoken” against Invesco.
“The job of the board is to protect its shareholders. The fact that it has become such a public spat hasn’t really reflected well on anybody, but it has led to a beneficial result for shareholders,” he said.
Adamson slammed Invesco’s “self-interested onslaught” in May, telling Portfolio Adviser the board was the only thing between the end investor and the rapacity of Invesco.
McDermott added it also “hasn’t been Invesco’s finest hour”.
“But they’ve retained the contract, the performance by shareholders was very strong, going forward as a shareholder you would generally be pleased.”
He said the board did not have to reappoint Invesco, indicating there is no lingering bad blood.
