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Barnett passes Keystone to rising star Goldstone

Barnett passes Keystone to rising star Goldstone

Mark Barnett has relinquished another of his funds to rising Invesco Perpetual star James Goldstone, who replaces the manager on Keystone (KIT) investment trust which is marking the handover with a cut in its annual charge.

Goldstone, 39 (pictured below), will take on Keystone, a £230 million UK All Companies fund on 1 April, nearly six months after he filled Barnett's shoes on the UK portion of the Invesco Perpetual Select UK Trust (IVPU).

This will leave Barnett  to focus on the £1.4 billion Edinburgh (EDIN) and £912 million Perpetual Income & Growth (PLI) trusts, which have struggled since the Brexit vote last summer coincided with an investor rotation away from high quality growth shares on which Barnett and other UK equity income fund managers have relied.

Stepping back from Keystone will allay some concerns over Barnett's workload since he succeeded Neil Woodford, his mentor and star fund manager, as head of UK equities at Invesco Perpetual's base in Henley on Thames three years ago.

In addition to Edinburgh and Perpetual Income, Barnett is also responsible for £17.5 billion in Invesco Perpetual's open-ended income range, including its flagship Income and High Income funds, which he took on after Woodford quit to set up on his own in 2013.

For much of the time since then, Barnett held Citywire AAA and AA performance ratings but has seen these slip away since last June. He is currently unrated by Citywire for the first time in 54 months.

Keystone chairman Beatrice Hollond was conscious of the role the trust was playing in rewarding up-and-coming investment talent.

'Fourteen years ago the board took the decision to appoint a talented young fund manager called Mark Barnett [pictured]. Mark has produced outstanding returns for shareholders and the board would like to take this opportunity to thank Mark for his many achievements and for producing superior long-term returns for shareholders,' Hollond said.

'Over the last few years Mark's responsibilities have grown significantly and the board believes that the time is now right for him to pass the baton to one of the rising stars of his team,' she added in a stock exchange announcement on Friday.

Goldstone joined Invesco five years ago from Banco Espirito Santo and, according to Hollond, has delivered outstanding results on a UK equity pension fund since April 2014 alongside co-managing a European equity income fund.

Keystone claimed Goldstone's style of portfolio construction would 'give the company a distinctive position within the investment trust universe and sustain its longstanding attractiveness to discerning investors.'

This is arguably overdue. Although performance under Barnett has been good, with a 122% total return to shareholders over 10 years, with a similar portfolio and 3.1% yield just below the 3.4% from Edinburgh and Perpetual Income, there have been suggestions Keystone should merge with one of its larger stable mates.

The board also announced a cut in the annual fee the trust pays to Invesco. This will fall to 0.45% from 0.6% of the trust's market value, although Keystone shareholders will continue to pay a performance fee if Goldstone increases net asset value by more than 1.25% a year over three years against the FTSE All-Share index.

Performance fees have become unpopular with some investors in recent years, prompting Edinburgh to drop the manager incentive in 2014 after Barnett followed Woodford on the trust, although Perpetual Income, which he has run for 17 years, retains the arrangement.

Keystone is currently the lowest rated of the three with its shares closing last week on a 11.5% discount to net asset value. Edinburgh and Perpetual Income stood on discounts of 5.6% and 8.5% respectively.


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