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Invesco is shuttering its standalone UK equities team, formerly led by stockpicker Neil Woodford, and merging it with its European division amid an industry-wide drop in interest for British stocks.
The US-headquartered asset manager said the move to merge the desks “to create one Pan European Equity Team” will take effect from January and is intended to encourage “collaboration” between the divisions based in Henley-on-Thames. Invesco added that the decision “was made in Henley by the investment management teams”.
But the move is yet another setback for UK equity funds. The decision marks the end of an era after Invesco’s UK equity team gained prominence under its former star stockpicker Woodford, who worked for Perpetual before it was acquired by Invesco in 2000.
Woodford — whom the UK financial watchdog is investigating following the 2019 collapse of his £3.7bn Equity Income Fund — rose to fame in the active management industry after shunning tech stocks just as the bubble burst at the turn of the millennium. Instead, he invested in ‘old economy’ stocks such as tobacco companies — boosting his performance as rivals floundered.
Ben Yearsley, investment director at consultancy Fairview Investing, said: “Invesco Perpetual was the UK market for many people for probably about 15 years — they were synonymous with each other. That was, of course, at peak Woodford. But a decade later and it seems to have gone to pot.”
Woodford oversaw about £33bn across the Invesco UK Equity Income and High Income funds, including the money he used to run for wealth manager St James’s Place. However, these funds now manage about £1bn and £2.3bn respectively.
UK equity funds across the board have suffered successive quarters of customer outflows as clients continue to withdraw their money from underperforming domestic shares in search of higher returns from global stocks. Investors are also pulling their investments from actively-run funds in favour of cheaper index trackers.
According to the Investment Association, a trade body, UK equity funds suffered net retail outflows of £1.3bn in April.
That mirrors wider malaise for London capital markets. A number of domestic companies, including Cambridge-based chipmaker Arm, have snubbed the City in favour of listing in the US to fetch a higher valuation. London has also suffered from a dearth of initial public offerings, having raised just £300mn in the first quarter — lagging behind mainland Europe.
John Surplice, head of Emea Equities at Invesco, said the two teams have “always worked closely” and “share many investment resources”. He added that the move was “simply formalising this collaborative approach further”.
Invesco’s UK team comprises seven fund managers, led by Martin Walker, who will jointly run the newly merged European equities team with Oliver Colin.
The UK team oversees about £7bn while the European equities desk manages over £8bn, according to data from the end of March.
After leaving Invesco, Woodford launched his eponymous firm in 2014. He was forced to close the business in 2019 as a result of poor stock picks and problems when trying to sell assets to meet customers’ withdrawal requests — leaving thousands of investors nursing losses.
The UK Financial Conduct Authority said in April Woodford had a “defective” understanding of his responsibilities in the run-up to the collapse of his equity income fund; a decision Woodford is challenging.
