Invesco Perpetual head of UK equity Mark Barnett has said no managers in the company have ever ‘operated solo’ in one of his first updates to investors on the transition into his new role.
He added that redemptions from the UK funds – excluding a few weeks in the immediate aftermath of predecessor Neil Woodford’s resignation in October – had remained at the ‘industry average’.
Barnett, AA-rated by Citywire, said: ‘Redemptions are running at what I would consider to be the natural rate for portfolios that are this mature.
‘You have to bear in mind that once you have a portfolio that has been around for 25 years, people’s circumstances change. People die and people get divorced or whatever. Apart from a few weeks from mid-October, redemptions have been running at the industry average.
‘What we have seen is a slowdown in buying activity, so that has affected the level of net redemptions.’
Outflows to date had largely been funded by selling down large-cap positions in sectors where he had pared back some of the conviction expressed by Woodford, primarily in tobacco and pharma, while attempting to take precautions against being front-run by the market.
‘We have not been using programmatic trading and have tried to be a bit cleverer about how we place these sales in the market – on funds this size you have to try to be a little less obvious.
‘We have used [redemptions] to de-emphasise holdings, all in stocks I like but not at the weightings at which I inherited them. It’s a work in progress but we haven’t been affected by redemptions as much as might have been expected.’
In terms of significant additions to the funds, Barnett said that he added that the most notable to date had been Legal & General and Babcock, long-term investments in his mandates, which had both been bought on price weakness.
‘Over the last few weeks and months there have been a couple of instances where we have been able to put money to work. We saw what happened with L&G at the budget and just a few weeks after that when the FCA hit the papers, when there was quite heavy volume.
‘Babcock has expanded into Europe so we were able to take advantage of issuance related to that.’
Over the last three years Barnett has returned 57.9% versus an average UK Equity Income manager return of 40.3%.