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Top trumps

Invesco Perpetual reached a significant landmark last year when it dethroned Fidelity as the UK’s biggest fund manager, with £30.56bn under management.

The group boasts an array of leading fund managers, headlined by arguably the UK’s biggest talent in Neil Woodford, who manages over 50 per cent of its funds.

However, chief executive and chief investment officer Bob Yerbury is taking nothing for granted as the group looks to secure its place at the top of the asset management table.

He says: “In a sense, the more pleasing thing is that performance has come across a number of funds in the range and although it is nice to have taken the top spot from Fidelity, the important thing is to make sure we keep moving forwards.”

Since October, Invesco has seen £2bn wiped off its funds under management as the credit squeeze continues but Yerbury is not so concerned. He says: “Since the debacle with Bear Stearns, we have seen a small recovery, with the FTSE creeping up, although some of the bank problems have not yet gone.”

Yerbury says the group’s UK performance has varied this year, with some funds proving more resilient than others to troubles in the bank sector, but the fixed-income and European offerings have been well served by a defensive strategy.

Hargreaves Lansdown investment manager Ben Yearsley says: “Invesco is one of the leading firms in the UK, particularly on the UK equity and fixed-interest side, with Woodford’s effort being supported by Ed Burke on UK growth and UK aggressive and Richard Smith on UK smaller companies. It also has Paul Causer and Paul Read who run an array of fixed-interest vehicles.

“Other areas like Europe and Asia are also solid offerings, with the US funds the only ones that really need looking at.”

Yerbury acknowledges the weaknesses in Invesco’s US performance. Its range of three funds has performed poorly in the long term and fund manager Ian Brady left the group in December 2007, replaced by Andrew Shard across its three funds.

Yerbury says: “I admit it does not look great but it is hard for any fund firm to be good at everything and it is important to recognise that we are looking to remedy the situation. Further additions to the team are likely in future.” Invesco has not been afraid to make changes should the market dictate, illustrated by its decision in February to merge its European growth fund into the European equity fund, to be managed by Jeff Taylor.

Chelsea Financial Services managing director Darius McDermott says: “Much of the range is strong and Invesco has not shied away from making changes if it sees it as the best move for the market.”

Invesco is looking at increasing its international range, which Yerbury says needs further improvement, despite having a number of strong offerings such as the world income fund. He says: “The international range has traditionally been the origin of the Henley business and unfortunately we have seen it fade in recent years and we would like to bring it back to the forefront of our offering.”

Possible launches include a focus fund, which would be an unconstrained portfolio of 40 stocks, while a global equity income fund has also been talked about.

Perhaps the biggest challenge that the group has to tackle in future lies in what to do with the billions of pounds run by Woodford in his income and higher income funds once he decides to leave the helm.

Yerbury says it is part of his job to have an intellectual capital plan but adds that Woodford is not going anywhere for the foreseeable future. He says: “Neil has been here 20 years and has been a fundamental fixture in helping us grow to the size that we have.

“People do need to realise that when it comes to trading activity in the UK, the average holding is held for six or seven months. Neil is at the other end of that scale and his turnover is phenomenally low. Neil’s fund management style has always been the same, whether he has run a couple of hundred million or the £15bn or so he currently runs across his two income offerings.”

McDermott says: “Every time I speak to Neil, he assures me that no changes will be taking place with regard to the funds and he is still young. However, the group has to look at succession, given the masses of inflows that come courtesy of Woodford and his funds.”

Yerbury says: “It was never our objective to top the UK fund management tables for funds under management as the plan has been just to develop the business in our own way and style. Investment funds can be misleading because of the size of the assets inside them, so our focus has always been on performance and if that is strong, the other components should come together.”

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