Stephanie Butcher faces envy. After being promoted to Invesco’s UK Chief Investment Officer in January, her challenge is to regain the reputation of the once highly regarded asset manager after being bruised for years.
Questions about Invesco’s future revealed that the Trian Hedge Fund, headed by Nelson Pelts, recently set up a stake close to 10%, but the ministry declined to speculate on the activist investor’s intentions.
“Improving investment performance across the UK fund range is my priority,” says Butcher.
We need a lot of improvement. Invesco has led the “Spot the Dog” list of underperforming UK investment funds that have been collected by asset manager Tilney Bestinvest over the past two years. Thirteen of Invesco’s funds with consolidated assets of £11.4 billion have been named and figured out due to consistent poor performance in Tilney’s update released in September.
Invesco’s problems began to accelerate in October 2013 when star fund manager Neil Woodford announced that he would leave Invesco and set up his own separate investment firm. Since then, investors have pulled £31.5 billion from Invesco’s UK-based fund, according to data provider Morningstar.
Mark Barnett, who has worked with Woodford for years, managed to manage a popular income-driven fund, but survived years of poor performance. He received more scrutiny as Woodford’s company collapsed. Previous team members owned significant redundant holdings in unlisted and non-current assets, resulting in a significant valuation decline.
Barnett left Invesco in May by mutual agreement.
Butcher is reluctant to talk about Barnett’s exit, but she says: “There have been a lot of changes that other individuals or other parts of Invesco believed could better run their funds. UK Fund [previously run by Mr Barnett] The acquisition by the new manager has been very good since then.”
When asked if Mr. Barnett should have pulled off his unlisted assets sooner, Butcher diplomatically avoids criticism of his former colleague.
“These have been funds with non-current assets for a long time without problems. However, the tolerance for im-liquidity for both customers and regulators has changed dramatically. When it became clear that the tolerance for our customers’ illiquidity changed dramatically, we took care of it,” she says.
“Clients have very different requirements than they were 10 years ago, and the requirements will be different again in 10 years. Businesses have to adapt to this,” she says.
Invesco has traditionally focused on value on equity investment strategies, a style that has underperformed, in part due to the unsatisfactory appetite of investors for technology stocks with strong growth prospects.
Butcher believes that it is more accurate to describe Invesco as “evaluation driven” rather than as a value manager.
“It’s an important distinction. There are no sectors we will not invest in We are very excited to own a technology company that understands valuation. Because spreads in company valuations are so extreme right now, it’s probably worth more lean than in the past,” she says.
Other adjustments are underway in the UK fund range.
Invesco’s 2019 Valuation Report concluded that the £6.7 billion Global Targeted Return (GTR) fund was one of three out of 55 funds that did not meet their performance targets. Veteran David Jubb stepped down from the team managing GTR funds in October. The GTR Fund provided a net return of 0.08% over five years through the end of September over five years.
“The GTR team was disappointed with the performance, but this strategy was one of the few that has successfully protected customers’ money amid the heat of the coronavirus crisis. We don’t think there’s a problem with GTR’s underlying investment philosophy, and we will continue to support the team as they go through tougher times,” says 48-year-old.
She emphasizes that Invesco has taken several steps to improve investment performance through honest conversations with customers.
“Customers were very honest and direct. We have learned a lot from these interactions. As a result, we have become a better business,” she says.
Initiatives to drive performance improvement include peer review in which a senior portfolio manager from one Invesco team is invited to criticize another team’s strategy.
“Peer review presents a real challenge for portfolio managers. Good fund managers want their views to be challenged,” she says.
As a result, the unique risk of the portfolio increases, indicating that portfolio managers are more focused on company-specific revenue drivers.
Like all other large asset managers, Invesco is committed to integrating environmental, social and governance metrics into the investment process. We developed an internal rating system to identify stocks that have the most room for improvement in terms of ESG issues compared to stocks that are already priced.
Still not a fan of exclusion or divestment, Ms Butchers says that ESG ratings are “only part of the debate” in every investment valuation, claiming that direct contact with the company can give you a much better understanding of how ESG looks. Problem.
“ESG data isn’t perfect. It’s hard to put a number on your company’s culture. The true value is sharing that information with the business and working together to improve it. We are aware of ESG ratings, but it’s not rating based,” she says.
Invesco UK Investment Team is working hard to improve gender, ethnicity and social diversity. “We are seeing a much wider variety of applicants now. We will be a better business by having more diversity of all types,” says mother of two children, three cats and 10 unproductive chickens.
Overseeing these changes while working from home required careful collaboration with the top leadership of all UK portfolio management teams and Atlanta-based Invesco.
Although the Henley-based UK division has historically been “very isolated” from the rest of Invesco, Butcher says better integration is underway.
“There are benefits to gaining from leveraging the wider Invesco platform and developing strong partnerships within your business,” she added, adding that the entire team is committed to the core principles of Invesco.
“We are long-term, valuation-focused, active managers, and we are fully focused on doing what is right for our customers. It won’t change,” she says.
Stephanie Butcher’s Resume
Born in Amersham in November 1971
1990-1993 Cambridge University Masters in History
Total undisclosed salary
1993-1997 Graduate Trainee and US Fund Manager, Lazard AM
1997-2003 European Equity Fund Manager, Aberdeen AM
2003-2020 Invesco European Equity Fund Manager
January 2020-Present Chief Investment Officer, Henley Investment Center and European Equity Fund Manager
Established in 1978 (American company established)
Assets $1.2 trillion
Number of employees 8,702
Headquarters Atlanta, USA
Title NYSE Listing
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