View more on these topics

Invesco Perpetual: Woodford leaving was a good thing

Woodford Neil WIM

When Neil Woodford announced he was leaving Invesco Perpetual to set up his own fund management business, the industry oscillated between eagerly anticipating his next venture and questioning how Invesco Perpetual would cope without arguably its biggest asset.

After all, the top dog of equity income, Woodford had spent the bulk of his career at Invesco Perpetual, no less than a quarter of a century, and at the time of his announcement was running almost £25bn in assets.

A year after Woodford decided to quit Invesco Perpetual his two funds, High Income and Income, had seen more than £5bn in outflows, The Financial Times reported, although chief investment officer, Nick Mustoe, says outflows from the two funds were “significantly less than some were anticipating and have stabilised”.

Indeed, Mustoe is unwaveringly upbeat in his reflections on the past year.

“We now have more money under management than we did when Neil left,” he says. “Everyone speculated we would lose a lot of assets, and we did lose some from the UK, but we gained assets in other teams.

Invesco Perpetual’s business has changed over the past couple of years, Mustoe says, transforming from being a UK-retail focused firm to finding its fastest-growing business in continental Europe, with sales up by 88 per cent over the past two years. Mustoe says in 2014 the combined retail net sales from the UK and cross border reached £5.5bn, £3bn of which went into funds managed by the Henley investment team, whose assets totalled £77.5bn at the end of December 2014.

“Neil leaving was a positive,” Mustoe continues. “It highlighted what good investment managers we have across the team. Mark Barnett has had a fantastic first year running Neil’s funds. The three main funds, High Income, Income and UK Strategic Income, are up 9 to 10 per cent over the past year, while the peer group has returned 0.5 per cent. All three funds are in the top 10 of the UK universe, which consists of 265 funds. This is an outstanding achievement for the past year.

In the year to 13 April, the £12.9bn High Income fund and the £6.9bn Income fund have returned 19.15 per cent and 18.81 per cent respectively against the IA UK All Companies average of 10.26 per cent, while the £1.1bn UK Strategic Income fund has made 16.19 per cent in the same sector, according to FE.

Mustoe adds: “We have reshaped the UK team and brought in good people, such as product director John Richards and Tim Marshall, an investment analyst who works with Mark Barnett. Life has moved on in a positive way.”

Invesco Perpetual is owned by global investment manager and NYSE-listed Invesco, which has around $800bn in assets. Invesco’s history dates back to 1935, while Perpetual was founded in 1973 and acquired by Invesco (then AMVESCAP) in 2000, cementing the group’s foothold in the UK. Invesco Perpetual is now one of the largest independent investment managers in the UK, with around £80bn in assets under management.

Mustoe joined the group five years ago, filling the well-trodden shoes of Bob Yerbury, Invesco Perpetual’s first CIO, who was retiring.

With three decades in the industry under his belt, Mustoe says he has “always been a fund manager”. Having been inspired by an economics teacher to start investing while still at school, he invested his university grant in the stockmarket and went on to join Phillips & Drew in 1985 as an equity fund manager. More recently Mustoe was CIO at Hermes and Pictet.

“My first passion is investing,” Mustoe says. “I love markets. I love the daily challenge of working out the daily opportunities and I always get to learn new things. My first thought when I get up is ’what is happening in the markets’.”

Indeed, Mustoe is lead manager on six funds; Global Equity Income (onshore and offshore), Managed Growth, Managed Income, Global Select Equity and the Select Trust Global Equity Income Share portfolio. The £913m Global Equity Income fund has returned 16.6 per cent in the past year, against the 15.45 per cent of the IA Global Equity Income sector, according to FE.

“Running global equities gives me the best view of the investment teams,” Mustoe says. “It is the best combination role.”

“I like the people management part of being a CIO. I like trying to manage talent, finding new people and trying to create the stars of the future. It’s a bit like picking investments, trying to weigh up the potential. You have to be very supportive. It is one of the successes of Invesco Perpetual. We are here to be long term and supportive. For me it is the perfect job.”

Mustoe says one of Invesco Perpetual’s strengths is that it has only had two CIOs.

“There is stability and people stay a long time,” he says. “A lot of the desk heads have been at Invesco Perpetual for more than 20 years, giving tremendous stability for the culture and how they invest. Even with all the new people added over time, the average time spent at the company is still nine years, which is unusual; the industry average is three years.”

The group has almost 50 funds in its UK open-ended range, plus around 70 funds domiciled offshore and 13 investment trusts. Performance has been strong across the board for the group’s retail offering, Mustoe says.

“Over three and five years 80 per cent of our assets are upper first quartile. It is what we are here to do, it is what our clients pay us for. To do this across nine investment teams is very pleasing. But we always have to be wary as investors. We can never be complacent. We always worry about what we are missing.”

Meanwhile on the fixed income side are renowned managers Paul Read and Paul Causer, who head up the fixed income team. Among their mandates, the £5.6bn Corporate Bond fund has not kept up with its sector over the past year, returning 5.34 per cent against the 9.7 per cent of the IA Sterling Corporate Bond sector, although it is second quartile over three years, according to FE.

This year marks the 20th anniversary of Invesco Perpetual’s fixed income range, (the Corporate Bond fund was the first portfolio launched in the suite), which Mustoe says saw record flows in 2014.

“2015 is an important year for Invesco Perpetual as we celebrate 20 years since the inception of our fixed interest franchise,” Mustoe says. “Under the leadership of Paul Causer and Paul Read the franchise has grown to become one of the most successful within the industry and 2014 saw record net inflows. The team is now 20 strong managing assets of nearly £30bn across a range of over 20 funds for our clients.”

More recently, in September 2013, the group launched a multi asset mandate, the Global Targeted Returns fund, after David Millar, Dave Jubb and Richard Batty joined the firm from Standard Life Investments. The £1.8bn fund has returned 7.97 per cent over the past year, while the IA Targeted Absolute Return sector rose 4.66 per cent, according to FE.

“We tend not to launch many funds,” Mustoe says. “But this fund has been very important for me and a great development for the whole investment team as we have taken a new approach.”

Recommended

Altmann-Ros-2010-700x450.jpg
3

Ros Altmann confirmed as pensions minister

Prime minister David Cameron has confirmed Ros Altmann is to be pensions minister, days after she told Money Marketing she had turned down the role. Prior to the election Altmann said she would be minister responsible for consumer protection and education. She said she did not want to be pensions minister because she thought she […]

Could Japan return to favour despite slow growth?

The ongoing economic reforms, continued loose monetary policy and a weak yen keep boosting earnings momentum across corporate Japan. The Japanese market gained further traction last week with the Nikkei 225 Stock Average closing above 20,000 for the first time in 15 years. Elsewhere the broader TOPIX index also surpassed its highest level since November […]

Zurich-building-2012-700.jpg

Zurich transfers annuity book to Rothesay Life

Zurich UK Life is to transfer its legacy portfolio of £1.2bn of annuities to specialist insurer Rothesay Life for an undisclosed fee. Under part seven transfer rules the transfer, of around 28,000 policies, is subject to a review process by regulators and courts before it can complete. Zurich has not actively promoted annuity sales since […]

Money-Cash-Coins-GBP-Pounds-UK-700x450.jpg
1

Pension savers stung by year one fees

People saving into personal pensions are being hit by charges of over 2 per cent in their first year of investing, research reveals. Analysis conducted by ComPeer and commissioned by Nutmeg shows schemes run by wealth managers can charge up to £2,220 on a £100,000 pot over the first year of investing. Investec Weath & […]

Three catalysts for European equities

By Rob Burnett, Manager of the Neptune European Opportunities Fund In recent weeks, the bear case for European equities has become more pronounced on the back of weaker-than-expected GDP data and deflation concerns. This softening in economic momentum has led some investors to question whether the ECB is behind the curve and indeed whether it […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. Trevor Harrington 14th May 2015 at 10:01 am

    As I said at the time – stick with it ! – Mark’s performance stats more than justified some loyalty.
    Thank you Mark.

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com