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Perpetual Income and Growth reaction to Edinburgh Investment Trust management change decision

PLI

Perpetual Income and Growth reaction to Edinburgh Investment Trust management change decision – The board of Perpetual Income and Growth (PLI) has issued a statement following the news this morning that Edinburgh Investment Trust (EDIN) was replacing Mark Barnett (Invesco) as its manager following a period of underperformance (click here to read more on this).

PLI said the following: “The board of PLI notes the announcement made today by EDIN concerning a change of its investment manager. EDIN is currently managed by Invesco Fund Managers Limited (Invesco) with Mark Barnett as its portfolio manager, which is a similar management arrangement to that of the company.

In the company’s recent half-yearly financial report the board made it clear that it was concerned about the company’s run of poor performance and is very sensitive to shareholder concerns about the continued weak results. The board engages regularly with Mark Barnett, who continues to apply his consistent valuation-based investment approach and who continues to believe that the company’s exposure to UK domestic stocks will benefit from clarity regarding the Brexit negotiations. This may be easier to assess following the outcome of the UK general election.

While the company’s long-term performance remains poor, performance, both in absolute and relative terms, has improved over the last three months. In light of this, and with the general election taking place this week, the board does not consider it appropriate to undertake a review of its investment management arrangements at the current time. However, the board has had a number of discussions with the management at Invesco about the continuing poor performance and about processes around individual portfolio managers and will be closely monitoring the situation, particularly with regards to the outcome of the upcoming General Election and the impact of this on the company’s portfolio and performance.”

[The 10-year NAV returns for the two trusts (PLI and EDIN) are still quite respectable but look at shorter time periods and it is obvious that Mark has been struggling – PLI is actually the worse-performing fund of the two, thanks to its greater small cap exposure than EDIN. EDIN’s share price has not leapt on the news – Majedie Asset Management has a reasonable reputation but returns on Majedie Investment Trust have been dire and it sits on the widest discount of any global trust – not a great advert. Hoping for an election/Brexit outcome favourable to PLI is fair enough but all the other funds have been hedging their bets over the last few years and look much the better for it. The fear might be that we get neither a decisive election result nor any sign of a resolution to the UK’s future trading relationships – what then?]

PLI/EDIN: Perpetual Income and Growth reaction to Edinburgh Investment Trust management change decision

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