Edinburgh Investment Trust "in safe hands" with Mark Barnett

The board of Edinburgh Investment Trust has announced that Invesco Perpetual will continue to manage the trust, with Mark Barnett taking over the running of the portfolio with immediate effect.

The decision comes in the wake of news in October that Neil Woodford will leave Invesco at the end of April. Edinburgh IT's board has used his departure to review its options, including proposals for ongoing management from Invesco.

That has involved "careful consideration of [Invesco's] investment style and strategy for the portfolio, having regard to [Edinburgh's] twin investment objectives of providing a rising income and long-term capital growth, and an assessment of their management resources".

Edinburgh board chairman Jim Pettigrew explains: "Mark shares the same active, value-driven investment approach and long-term focus as Neil Woodford, and comes to us with an excellent track record built up over many years of managing money."

At Numis Securities, associate director Ewan Lovett-Turner says the trust is "in safe hands".

He continues: "We regard Mark Barnett highly as a manager and he has a similar valuation-driven approach to Neil, focused on stock-picking within a top-down macro framework, without being constrained by index weightings. As a result we do not expect and fundamental changes to the portfolio."

The board has also negotiated a reduction in Invesco's management fees, with a view to the implementation of "a simple, transparent and competitive structure".

As a consequence, from 1 April Edinburgh IT's management fee will fall from 0.6 to 0.55% of market capitalisation, and the performance fee will be removed.

The move to reduce charges is "positive for investors and shows the continued trend in the sector, with 12 funds removing performance fees in 2013," adds Lovett-Turner.

Barnett will also become head of UK equities in April, and will take over Woodford's flagship open-ended funds, Invesco Perpetual High Income and Invesco Perpetual Income in addition to his current responsibilities - the UK Strategic Income fund, Keystone investment trust and Perpetual Income & Growth trust (PIGIT).

At Killik, fund analyst Gordon Smith points out that this move "significantly increases the size of assets under his control", and that Killik will monitor any potential impact on returns.

But Andrew McHattie, managing director of The McHattie Group, says the workload is manageable. "He's a very capable manager and this is one more mandate to add to the list."

A more pertinent question, McHattie says, is whether Barnett will be able to differentiate between his trusts, particularly Edinburgh and PIGIT, as they are already similar and are likely to become more aligned under the same manager.

"It's rather strange to have three trusts with similar mandates under one manager," he observes.

Numis suggests that consolidation may be an option, though Lovett-Turner favours merging PIGIT and Keystone.

"In a post-RDR environment, size matters and bigger is better because it increases liquidity," agrees McHattie. But he adds that any consolidation involving Edinburgh is more likely once the trust's current expensive debts expire.