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Invesco is ending its standalone UK equities team, previously led by stock picker Neil Woodford, and merging it with its European division, amid a sector-wide decline in interest in UK equities.
The US-headquartered asset manager said the move to merge the desks “to create one pan-European equities team” will come into effect from January and is aimed at furthering “collaboration” between the divisions in Henley-on-Thames to encourage. 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 equities team rose to prominence under its former top stock pick Woodford, who worked for Perpetual before it was acquired by Invesco in 2000.
Woodford – who is under investigation by the UK financial watchdog after the collapse of his £3.7bn Equity Income Fund in 2019 – shot to fame in the active management industry after shunning technology shares 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 collapsed.
Ben Yearsley, investment director at consultancy Fairview Investing, said: “Invesco Perpetual was probably the UK market for a lot of people for about 15 years – they were synonymous with each other. That was of course at the height of Woodford. But ten years later it seems like things have gone to shit.”
Woodford oversaw around £33bn of the Invesco UK Equity Income and High Income funds, including the money he used for asset manager St James’s Place. However, these funds now manage around £1 billion and £2.3 billion respectively.
UK equity funds have seen successive quarters of client outflows across the board as clients continue to withdraw money from underperforming domestic equities in search of higher returns from global equities. Investors are also moving their investments out of actively managed funds in favor of cheaper index trackers.
British stock funds suffered a net outflow from retail of £1.3 billion in April, according to the Investment Association, a trade body.
That reflects a broader malaise in London’s capital markets. A number of domestic companies, including Cambridge-based chipmaker Arm, have rejected the city in favor of a US stock market listing to achieve a higher valuation. London has also suffered from a shortage of IPOs, having raised just £300m in the first quarter, lagging behind mainland Europe.
John Surplice, head of Emea Equities at Invesco, said the two teams “have always worked closely together” and “share many investment resources”. He added that the move “simply further formalized this joint approach.”
Invesco’s UK team consists of seven fund managers, led by Martin Walker, who will lead the newly merged European equities team with Oliver Collin.
According to data from the end of March, the UK team oversees around £7 billion, while the European equities desk manages more than £8 billion.
After leaving Invesco, Woodford launched his eponymous company in 2014. He was forced to close the company in 2019 due to poor stock picks and difficulties in selling assets to meet clients’ withdrawal requests, causing losses to thousands of investors.
Britain’s Financial Conduct Authority said in April that Woodford had a “poor” understanding of his responsibilities in the run-up to the collapse of his stock fund; a decision that challenges Woodford.
This article has been amended to correct the spelling of Oliver Collin’s name.