Invesco, a US-based asset manager, is merging its standalone UK equities team with its European division due to a drop in interest for British stocks across the industry. The move comes after the team, led by Neil Woodford, gained prominence and rose to fame for its successful investments in ‘old economy’ stocks such as tobacco companies. However, the team has since suffered setbacks, with customer outflows and underperforming domestic shares leading to the decision to merge with the European division.
The merger, which will take effect from January, aims to create a unified Pan European Equity Team based in Henley-on-Thames. Invesco stated that the decision was made by the investment management teams in Henley and is intended to encourage collaboration between the divisions. This move marks the end of an era for the UK equity team at Invesco, which had previously overseen significant funds under Woodford’s leadership before his departure to start his own firm in 2014.
Despite its previous success, Invesco’s UK equity team now manages a fraction of the funds it once oversaw, with investors pulling their money from actively-run funds in favor of cheaper index trackers or higher returns from global stocks. The wider industry trend of customer outflows from UK equity funds is reflected in the recent data from the Investment Association, which reported net retail outflows of £1.3bn in April.
London’s capital market has also suffered from a lack of domestic company listings and initial public offerings, with many companies opting to list in the US for higher valuations. Invesco’s decision to merge its UK equities team with the European division is seen as a strategic move to formalize collaboration between the two teams, which have historically shared investment resources and worked closely together.
The newly merged European equities team will be jointly led by Martin Walker from the UK team and Oliver Colin from the European team. The UK team currently manages approximately £7bn in assets, while the European equities desk oversees over £8bn, according to data from March. The decision to merge the two teams is part of Invesco’s efforts to adapt to the changing landscape of the industry and to streamline operations for better efficiency and collaboration.
While Invesco’s UK equities team led by Neil Woodford had a significant impact on the active management industry for many years, the decision to merge with the European division reflects the challenges faced by UK equity funds in the current market conditions. This move signifies a shift in strategy for Invesco as it aims to navigate the increasingly competitive and dynamic investment landscape while continuing to provide value for its clients.
Discussion about this post