Woodford protégé mark barnett fired from £1. 3bn investment trust

Taha Lokhandwala 11 December 2019 11:00am GMT Embattled investor Mark Barnett has been fired from running the £1.3bn Edinburgh Investment Trust due to poor performance. Investment trusts,

unlike open-ended funds, have independent boards that can hand assets to another company if it sees fit. Mark Barnett, who works for American fund house Invesco, has run the trust since 2014

after taking over from his mentor and colleague Neil Woodford. He ran the investments in the same style as his predecessor, aiming to provide a growing income by investing in undervalued

British companies known as “value stocks, with a preference for smaller businesses. This style of investing has been out of favour for some time, particularly since the Brexit referendum in

June 2016. Since then, the trust’s share price has fallen by 10pc while the FTSE All Share index, a broad measure of the British stock market, has risen 32pc. Rival equity income trusts have

enjoyed share price total returns of 26pc on average. In Edinburgh Investment Trust’s latest interim results, chairman Glen Suarez, said he was once again disappointed by Mr Barnett’s

return with a period of poor performance that was well past the three-year benchmark generally used to measure managers. “Since 2018 we have worked hard to understand the causes of this poor

performance, while being cognisant of the long-term investment objective and the recent trends in the British stock market. Following a detailed assessment, thorough review, the board has

decided to change the investment manager,” he said. The trust will now be run by James de Uphaugh, of Majedie Asset Management, whose British company funds are tilted towards the “value”

investing. Mr de Uphaugh is responsible for nearly £4bn of investors’ money via two funds – Majedie UK Equity and Majedie UK Focus – and also runs a £150m smaller companies fund. The demise

of Woodford: where did it all go so wrong? The two funds share significant cross over with Edinburgh’s holdings. BP, Tesco, Legal & General and BAE Systems appear as top 10 investments

across the funds. This suggests the board’s decision is about Mr Barnett’s management as much as his performance, as it is unlikely the trust’s investments will change dramatically under the

new leadership. Over the past five years, neither Mr Barnett nor any of Mr de Uphaugh’s funds have beaten the British stock market average. A statement from Mr Barnett’s employer, Invesco,

said it remained convinced its investment approach would come good once the short-term pessimism around Brexit lifted. However, the fund house has recently sidelined Mr Barnett, appointing

Martin Walker to co-run the Invesco UK equities team. “We acknowledge that returns have been challenging but income generation remains strong,” the statement added, nodding to the Majedie

funds yielding less than the Edinburgh trust and not being run on an income mandate. Investor newsletter REFERRAL (article) Nonetheless, the news comes at an uncomfortable time for Mr

Barnett, who has faced criticism for his close association to Mr Woodford as well as his investment strategy and his fund’s poor performance. He is also at risk of being fired from another

investment trust. The board of the £800 Perpetual Income & Growth Investment Trust, which Mr Barnett has run for two decades, fired warning shots last month. The board said it was “in

discussions” with Invesco over how to improve performance.