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Woodford protégé Mark Barnett plays down threat of his fund’s implosion

Michael Bow
Invesco Perpetual fund manager Mark Barnett

Neil Woodford’s fund manager protégé Mark Barnett rushed to reassure investors that his fund at savings giant Invesco could stay open on Friday after £1 billion of redemptions prompted fears of another Woodford crisis.

Barnett was Woodford’s right-hand man when the fallen star worked at Invesco, and retained many of his top shareholdings and strategies there.

The association had led to a flood of investors moving their money out of his funds.

Today, he stressed he had cut the amount of hard-to-sell stocks and boosted liquidity in the run-up to Christmas.

Over £1 billion was yanked from Barnet’s Invesco Income, High Income, and UK Strategic Income funds between September and December, accelerating so quickly that £100 million was leaving his funds every week in November alone.

That took the total leaving his funds in 2019 to a mammoth £2.7 billion.

Woodford’s flagship Equity Income Fund was shut to redemptions in July after he could not meet a request to withdraw £200 million from a large investor due to his fund being locked up in hard-to-sell stocks.

The closure triggered a regulatory crisis and the collapse of Woodford’s empire.

Barnett wrote to customers today insisting there were no areas of the fund “wholly and unavoidably illiquid” and that liquidity of the vehicles was “very closely managed”.

“That a very small proportion of stocks may prove to be less liquid than others is inevitable. However, we continue to manage the funds, fully cognisant of the demands of a continually changing environment, with the aim of delivering the best possible outcome for customers,” he said.

He inherited Invesco’s High Income and Income Funds when Woodford left in 2014 to set up his doomed Woodford Investment Management firm.

Seeking to calm fears of a liquidity crisis, Barnett said the proportion of stocks which could be sold within a month had risen to nearly 70% of the £3 billion Income fund and 57% of the £6 billion High Income fund.

Invesco was sacked as manager of the Edinburgh Investment Trust, which Barnett ran, in December after falling short of benchmarks.

In November Morningstar cut the rating on his funds over its exposure to small and illiquid stocks. The downgrade is likely to have accelerated the withdrawals.