Barnett ousted from PLY: Justified or a 'Doctor Doom' moment?
Could spell bottom for value, say experts
Today's news (6 April) that Mark Barnett and Invesco will no longer be running the Perpetual Income and Growth trust (PLY) comes as "little surprise" to many investment professionals given its underperformance over recent years, but will likely be viewed as an attractive prospect for fund managers given its shareholder base and 'dividend hero' status.
Others, meanwhile, have questioned whether the removal of Barnett from the £620m trust resembles the sacking of well-known contrarian manager Tony Dye in 2000, who avoided tech stocks during the run-up to the bursting of the dotcom bubble.
PLY, which has been managed by Barnett for more than 20 years, has underperformed both its FTSE All-Share benchmark and its average peer in the IT UK Equity income sector over one, three, five and ten years, having been the single-worst performing UK equity income trust over the last half a decade. Over the last three months alone, it has lost 41.9%, according to data from FE fundinfo.
Invesco and Barnett relieved of Perpetual Income and Growth management duties
It is the fourth trust Barnett has ceased managing, having handed over management of the Invesco Perpetual Select UK Equity (IVPU) and Keystone investment trusts (KIT) to colleague James Goldstone in 2016 and 2017 respectively.
In December last year, Barnett was ousted from running the Edinburgh investment trust (EDIN) following performance-related concerns from the board for several months.
The research team at Winterflood said most of the trust's long-term underperformance has been dragged down by torrid returns since 2016, as he increased his exposure to cheap UK domestics after the EU referendum.
While his value style of investing has remained out of favour, it pointed out that stock-specific disappointments also "began to pile up".
"The clock has been ticking on Mark Barnett's management of Perpetual Income & Growth for some time," it said. "While his long-term track record meant that the fund's board was prepared to give him as much time as possible to address the slump, there has been no discernible evidence of a turnaround in performance."
Ben Yearsley, co-founder of Fairview Investing, agreed the move from the board came as little surprise, given that performance has remained poor due to the value investing style being out of favour and a series of poor company choices.
However, he questioned whether the removal of Barnett from the trust is "a sign that value is at the bottom", or whether it is "simply that Barnett's performance has been woeful".
"Is this reminiscent of Tony Dye being sacked in 1999/2000, maybe?" He queried, referring to the manager often known as ‘Doctor Doom', who got sacked for underperforming in the run-up to the tech bubble, as he insisted the sector was on the verge of crashing.
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