Mark Barnett’s funds have been named and shamed as some of the largest laggards across the Investment Association universe as they continue to be hammered by redemptions following the suspension of the Woodford Equity Income fund.
The number of funds appearing in Chelsea Financial Services’ “Redzone” report, which spotlights the worst performers over three years, spiked this year. There are now 230 laggards in the danger zone, up from 188 in 2019 and 187 in 2018.
All three of Barnett’s Invesco funds made it into the Redzone, while his Invesco High Income and Income funds featured in the top 10 underperformers by assets under management.
Though Barnett was not the worst performer during the period, his £5.7bn Invesco High Income fund was the largest straggler in Chelsea’s list and was only one of three IA UK All Companies funds analysed that lost investors cash.
“Given the large increase in investor assets this year, we also thought it pertinent to highlight the largest funds in the Redzone as presumably they will also have the largest number of disappointed investors,” Chelsea Financial Services managing director Darius McDermott explained.
Barnett funds bombarded by outflows
Invesco High Income returned -0.5% over the period and was the third worst fund in the IA UK All Companies sector on a three-year view.
Its losses were surpassed by another Barnett fund, Invesco UK Strategic Income, down 1.5%, while his Invesco Income fund, which also featured in the list of largest underperformers, delivered a meagre 0.5%.
Barnett’s trio of open-ended funds have been bleeding cash quicker since the suspension of his Invesco predecessor Neil Woodford’s equity income fund.
Data from Morningstar shows investors yanked £1bn from Barnett’s Invesco funds in the final quarter of 2019, £450m which flowed out during November when the research house downgraded his High Income fund.
Portfolio Adviser reached out to Invesco but did not hear back in time.
HL and M&G funds among losing laggards
Behemoth funds from Hargreaves Lansdown and M&G also featured in Chelsea’s list of lumbering laggards.
The HL Multi Manager Income & Growth fund, which stands at £2.7bn, ranked fifth on the list, while Tom Dobell’s M&G Recovery fund came in at number 10.
The HL MM Income & Growth fund is one of six of the D2C group’s own funds that held Neil Woodford’s equity income fund, which suspended trading last June. At the time of the suspension it held 13.3% in the beleaguered fund, but that position had fallen to 10.9% by the end of December.
Over three years the HL multi-manager fund has returned 11.7% over three years against the IA UK Equity Income sector average 19.7%.
Dobell’s M&G Recovery fund generated returns of 2.2% over the same period. His £2.2bn fund, which has underperformed the wider UK stock market since early 2012, was finally dumped from Hargreaves’ Wealth 50 list long after other research houses, including Chelsea, had axed the fund.
Number of global laggards doubles
The IA Global sector had the highest number of funds in Chelsea’s Redzone with 48 funds named and shamed in the report, up from 22 the year before. Funds lagging behind accounted for four times as many assets at £17.6bn compared with £4.6bn in 2019.
McDermott said the sector’s woes were down to the fact that a number of managers have been underweight the US, put off by expensive valuations and a prolonged bull market.
IA North America was the second worst-performing sector, with 26 funds worth £11.7bn featuring in the Redzone, followed by the UK All Companies sector with 20 funds and £15.7bn worth of assets.
