Wednesday 11 December 2019 10:22 am

Edinburgh Investment Trust sacks Invesco’s Mark Barnett over poor performance

Edinburgh Investment Trust has fired Invesco stockpicker Mark Barnett as its manager following poor performance, in a further blow to the former Neil Woodford protege.

Barnett, who took over the managing of the trust from Woodford in 2014, will be replaced by Majedie Asset Management in the first quarter of 2020.

Read more: Woodford protege Mark Barnett reassures investors after fund rating downgrades

The board of Edinburgh Investment Trust said it was ditching Barnett over prolonged investment underperformance caused by a number of stock-specific issues in his portfolio.

Chairman Glen Suarez said he was “disappointed by another weak result for the company” in interim results released today, which extend its “period of underperformance” beyond three years. 

In the six months to the end of September, the trust’s net asset value (NAV) fell 3.1 per cent, while the benchmark FTSE All-Share index returned 4.6 per cent, the results show.

The trust currently trades at an 11 per cent discount to its NAV.

His ousting from Edinburgh Investment Trust is the latest embarrassment for Barnett after a turbulent period in which his funds have been hit by poor performance, outflows, and negative publicity following the implosion of Woodford’s investment empire. 

Two Invesco funds managed by Barnett were recently hit by Morningstar downgrades over their exposure to smaller and illiquid companies, while Invesco recently scaled back his role by appointing a co-head of UK equities to work alongside him.

The Edinburgh Investment Trust board said it had intensified its scrutiny of the portfolio’s management since 2018, and had enlisted investment consultant Willis Towers Watson and Investec Bank to help find a new manager.

The board said the portfolio had suffered from large falls in the prices of some holdings, which were caused by stock-specific issues “rather than resulting from broad market movements”.

“Collectively these stocks have been a significant contributor to the weak performance of the company and increasingly has led the board to question the effectiveness of the investment process.”

Invesco said it was “disappointed” with the board’s decision but continued to support Mark Barnett’s investment strategy.

“At its core active equity investing is being prepared to take a longer view than the market,” said a spokesperson. 

“We believe there will be a revision of current market consensus and that we are on the cusp of this potential being realised.”

Read more: Is Mark Barnett repeating Neil Woodford’s mistakes?

Majedie chief investment officer James de Uphaugh will take over the management of Edinburgh Investment Trust from Mark Barnett, with Chris Field as deputy manager.

The trust will pay Majedie an annual management fee of 0.48 per cent of the trust’s market capitalisation up to £500m, and 0.465 per cent on amounts above that, lower than the 0.55 per cent Invesco had charged.