Change of manager for Invesco Income and Invesco High Income funds
15 May 2020 – Invesco has today announced that Mark Barnett, manager of Invesco Income and Invesco High Income funds, has left the company.
Chief Investment Officer, Stephanie Butcher, has undertaken a review of the company’s UK equity range following a period of underperformance and feedback from clients.
As a result, the company now wants to make a clear distinction between the Invesco High Income fund and the Invesco Income fund - in particular regarding the income objective.
There is also a proposal to merge the Invesco UK Strategic income fund with the Invesco Income fund – a proposal that will require the approval of both the Financial Conduct Authority and shareholders.
There will also be a change of manager, with Mark Barnett stepping down and leaving the company. James Goldstone and Ciaran Mallon will become co-managers of the funds.
Commenting on the news, Darius McDermott, managing director of Chelsea Financial Services, said:
“Unfortunately, this news can come as no real surprise to anybody. The Invesco Income and Invesco High Income funds have performed very poorly, and there is a sense of inevitability about the situation.
“We have some sympathy for Mark because the funds have been in redemption for some time and is very difficult to perform well, if you are constantly having to sell holdings.
“That being said, he has had five years to make changes and try to turn things around, and the fact that the funds still had legacy holdings in illiquid and unlisted companies has exacerbated his problems.
“James Goldstone and Ciaran Mallon are safe pairs of hands but are likely to face the same challenges in terms of redemptions, and the headwind of the value style of investment still being out of favour.
“We have had these funds on a generic switch rating for some time and our view does not change.”
Four alternative UK equity income funds to consider
Investors considering a switch out of these funds may like to take a closer look at these four options on the Chelsea Core Selection:
1. Man GLG Income
This fund has a value-driven approach. It invests no less than 80% in UK companies of all sizes, but can also invest in continental European companies that derive a substantial part of their revenues from the UK and also has the flexibility to invest selectively in corporate bonds.
2. Montanaro UK Income
This fund offers something very different from the standard UK equity income fund, given it focuses on small and medium-sized businesses. Each holding will also offer an attractive dividend yield or the potential for dividend growth. The fund's clear process and focus on research has worked consistently well over a very long period.
3. Rathbone Income
This fund gives investors exposure to a concentrated portfolio of companies. The manager is unconstrained in terms of sector weightings and is able to fully express his market views with the portfolio positioning. It invests predominantly in UK equities (80% or more), while up to 20% of the total may be held in cash and overseas equities.
4. TB Evenlode Income
This fund is a highly concentrated in a selection of quality companies. The managers believe the market fundamentally underestimates the value of high quality businesses because of its obsession with short-term factors. As a result, they take a much longer investment view than is typical of most funds today.
If investors are worried about the outlook for UK dividends and are looking to diversify income streams, they may also like to consider the VT Chelsea Managed Monthly Income fund.
It invests in income-paying funds, whose underlying assets may include UK and overseas equities, bonds, gold and targeted absolute return strategies. Assets such as property and infrastructure, which are renowned for their income-paying potential, are also expected to contribute to the fund’s yield.