- Mark Barnett to be replaced as manager of Edinburgh Investment Trust
- Majedie Asset Management will be appointed as the trust's new investment manager
- The change is expected to take place in early 2020
The Board of Edinburgh Investment Trust has decided to replace Mark Barnett as investment manager. This follows a period of weaker performance and a detailed assessment by the Board of alternative investment managers. Majedie Asset Management is expected to take over the trust's management in the first three months of 2020.
Barnett remains at Invesco and continues to run the open-ended Invesco Income, High Income and UK Strategic Income funds, as well as the Perpetual Income & Growth Trust.
Why the change of manager?
The Board has stated that they are disappointed in the most recent results, and that they have worked hard to understand the underperformance of the trust.
Edinburgh Investment Trust has been through a weak period of performance, underperforming its benchmark the FTSE All Share Index, for several years. Over the past five years the trust's grown 12.6% compared with 37.0%* for the FTSE All Share, in share price terms, though past performance isn’t a guide to future returns.
| Annual percentage growth | |||||
|---|---|---|---|---|---|
| Nov 14 -
Nov 15 |
Nov 15 -
Nov 16 |
Nov 16 -
Nov 17 |
Nov 17 -
Nov 18 |
Nov 18 -
Nov 19 |
|
| Edinburgh Investment Trust | 13.4% | -0.3% | 3.3% | -4.7% | 1.2% |
| FTSE All-Share | 0.6% | 9.8% | 13.4% | -1.5% | 11% |
Past performance is not a guide to the future. Source: Lipper IM* to 30 November 2019.
This is in part due to Mark Barnett's value style of investing, which has been out of favour for some time.
We believe the Board understands all active fund managers go through periods of underperformance, and a focus on good long-term results requires shareholders to accept shorter periods of weakness when a manager's style is out of favour.
That said, they are concerned by a number of stock-specific issues too. This means the share prices of some companies have fallen because of issues that are specific to those companies, as opposed to broader market movements or the manager's broader style.
Majedie Asset Management – the new investment manager
Majedie is an independent equity investment management firm with a long track record investing in UK equities. Its team of portfolio managers run funds focused on both growth and income.
The trust will be managed by James de Uphaugh, supported by Chris Field as deputy manager. They will continue to aim to grow the trust's NAV and dividend over the long term. They'll invest in around 40 companies – this concentrated approach means each one can have a significant impact on performance, though it's a higher-risk approach.
Majedie will receive an annual management fee of 0.48% of the market capitalisation of the trust up to £500m and 0.465% above £500m. This is lower than current fee of 0.55% paid to Invesco.
What does this mean for investors?
It has been a disappointing few years for holders of the trust. Many of the companies Barnett invests in have been severely out of favour, and this has been a significant headwind for performance.
We also recognise all fund managers go through periods of poor performance and that different investment styles will come in and out of favour. Investing is a long-term endeavour and patience is a must.
We have rated the UK investment team at Majedie highly for many years. James de Uphaugh and Chris Field, along with other portfolio managers at Majedie, also currently run the Majedie UK Equity Fund.
Similar to Barnett, the managers at Majedie are prepared to invest against the herd, in unloved and undervalued companies. That said, they aim to manage balanced portfolios, and also invest in companies with the potential to consistently grow their earnings year after year. To that end, we don't think their style is as value biased as the one pursued by Barnett.
In addition, James de Uphaugh doesn't focus specifically on generating an income in his open-ended funds. He naturally invests in some higher-yielding businesses, but he doesn't aim to achieve a growing income, which is an objective for the Edinburgh Investment Trust.
Ultimately we expect the new managers to do well for investors over the long run, though there are no guarantees and there will be periods when their own style is out of favour.
Find out more about Edinburgh investment trust, including charges