Invesco closes UK equities team as customer outflow impacts wider sector

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Invesco has closed its independent UK equities team, previously led by stock picker Neil Woodford, and merged it with its European division amid a decline in industry-wide interest in UK equities.

The US-based asset manager said the move to merge desks to create a single Pan European Equity Team will come into effect in January and is aimed at encouraging collaboration between departments based in Henley-on-Thames. Invesco added that its investment management team made the decision at Henry.

But the move is another setback for UK equity funds. The decision marks the end of an era for the Invesco UK equities team after it rose to prominence under former star equities investor Woodford, who worked at Perpetual before it was acquired by Invesco in 2000.

Woodford, who is being investigated by Britain's financial watchdog following the collapse of his $3.7 billion Equity Income Fund in 2019, rose to prominence in the active management industry after shunning technology stocks amid the bursting bubble at the turn of the millennium. Instead, he invested in old economy stocks such as tobacco companies to boost his performance as his competitors floundered.

Ben Yearsley, investment director at consultancy Fairview Investing, said: Invesco Perpetual has been a UK market for many people for probably about 15 years. They were synonymous with each other. Of course, that was Woodford's heyday. But after 10 years, its value seems to have completely disappeared.

Woodford oversaw approximately $33 billion across Invesco UK Equity Income and High Income funds, including funds in the running for asset manager St Jamess Place. However, these funds currently manage approximately $1 billion and $2.3 billion, respectively.

UK equity funds overall have suffered consecutive quarters of client outflows as clients continue to withdraw money from underperforming domestic equities to seek higher returns in global equities. Investors are also withdrawing from actively managed funds in favor of cheaper index trackers.

UK equity funds suffered net outflows of $1.3 billion in April, according to trade body the Investment Association.

This reflects wider unease about London's capital markets. A number of domestic companies, including Cambridge-based chipmaker Arm, have rejected the city in favor of listing in the U.S. for a higher valuation. London also suffered from a shortage of initial public offerings (IPOs), raising only $300 million compared to mainland Europe in the first quarter.

John Surplice, head of Emea Equities at Invesco, said the two teams had always worked closely together and shared many investment resources. He added that this move merely further formalizes this collaborative approach.

The Invescos UK team consists of seven fund managers, led by Martin Walker, who will co-run the newly merged European equities team with Oliver Collin.

The UK team oversees about $7 billion, while the European equities desk manages more than $8 billion, according to data from the end of March.

After leaving Invesco, Woodford started his eponymous company in 2014. He was forced to close his business in 2019 after problems arose when he made poor stock picks and tried to sell assets to satisfy customer withdrawal requests, leaving thousands of investors with losses.

The UK Financial Conduct Authority said in April that Woodford did not fully understand his responsibilities until the collapse of his share income fund. Woodford had a difficult decision to make.

This article has been edited to correct the spelling of Oliver Collins' name.

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