Chairman and Fund Manager set to slug it out.

[forrado]

According to this Citywire piece posted on the AIC site at …
https://www.theaic.co.uk/aic/news/citywire-news/invesco-perpetual-seeks-to-oust-loan-fund-chair-in-fee-row

It appears that the chairman and a fellow director of Invesco Perpetual Enhanced Income (IPE) and the trust’s ex-fund manager, Invesco Perpetual are set for a showdown. Invesco Perpetual is attempting to sack the chairman and a director of a high yielding loan fund from which it resigned as fund manager last month. In an escalation of a row over fund management fees, the board of Invesco Perpetual Enhanced Income disclosed it had received notice on behalf of Invesco Perpetual and two other fund managers to summon a general meeting of shareholders.

Invesco’s resignation from IPE, whose star bond fund managers Paul Causer and Paul Read have run the £125 million investment company since launch 17 years ago, is highly unusual. It followed lengthy negotiations over expenses, centring on the performance fee Invesco is entitled to when its managers generate annual returns over 7%.

This is the first time I can recall an attempt by a fund manager to so publically terminate the services of an investment trust chairman. It is more common for it to be the other way round. Such a proposed action, whether successful or not, calls into question the supposed independence of a board of directors. After all the fund manager has only been hired by the board, acting on behalf of the shareholders, to provide a service.

By way of disclosure; I declare that I am not a shareholder (or have I ever been) of this trust.

[Dod101]

That is weird as you say. It is usual for the boot to be on the other foot. Invesco obviously must have a significant shareholding in IPE and they clearly regard the trust as being in their stable. This sounds like the investment manager industry ganging up against the client to fight back against the reduction in fees we see in many trusts at the moment. I have no interest in any of this but will certainly follow developments with interest.

Dod

[Dod101]

To follow up on this, in The Times today there is a report that Invesco is indeed the biggest shareholder in the IT and it together with two other shareholders has requisitioned a shareholders' meeting to try to oust the chairman and another director. At the time of the last Annual Report Invesco Perpetual are shown as holding 16.9% of the IT but whether that is clients funds or it own shareholders funds is not shown. An interesting situation whichever way round it is because there is a clear conflict of interest. I hope the Chairman sees them off.

Invesco apparently resigned as investment manager.

Dod

[Vince56]

Here is an article about it from Citywire.
Vince
http://citywire.co.uk/investment-trust- ... -news-list

[forrado]

According to a recent opinion piece in the Financial Times under the heading …

‘David’ takes aim at ‘Goliath’ Invesco in row over fund fees
Falling out between trust and manager is ‘line in sand’, say analysts

It appears the major nominee shareholders, like Charles Stanley, Hargreaves Lansdown, Brewin Dolphin, are starting to line up behind the Chairman of IPE as a result of his “a small company facing a self-interested onslaught from a large and powerful group” call-to-arms appeal. From within the Chairman's supporting ranks could be heard such comments as:

“It shows investors getting sick of high fees. The board is realising they have to obtain value for money for investors due to high scrutiny.”
“Ten years you would not have witnessed this, but investment trusts are being forced to be more assertive.”
“In the past, investment companies were automatically the lower cost vehicles but they have lost their competitive edge.”
“A greater accountability and need for justification for fees are putting pressure on boards.”
“Performance fees, no one understands them, they are not transparent and they don’t exist on other funds. People always say it aligns a fund manager with a client’s interest but the only thing it lines is the fund manager’s pocket.”

Not surprisingly, notable by their absence throughout the discourse was Invesco, who as the FT noted declined to comment.
Due such adverse publicity I can't help but wonder if Invesco with now be taking the opportunity to reconsider their actions in the matter.

[Dod101]

Well I hope they do. It is a bit like the postponed AGM of Stobart.

Anyway if Invesco have isolated themselves it is their own fault and I hope that the IT comes out of it well.

Dod

[Hariseldon58]

Note to self;
Avoid investments managed by Invesco.

[melonfool]

I hold this - I was only alerted by the voting papers which came today.

I'm a bit by it all. I am considering selling though as I don't need this sort of drama.

Mel

[Dod101]

I hold this - I was only alerted by the voting papers which came today.

I'm a bit by it all. I am considering selling though as I don't need this sort of drama.

Mel

I have no holding but I would vote with the IT if I did.

Dod

[melonfool]

I have no holding but I would vote with the IT if I did.

Dod

I'm confused by the whole thing but I have voted the way the papers suggested I did which was *against* all resolutions - against deposing the two established people and against inserting the new people. Is that "with the IT"?

I did do a little research on it, but it's a bit bewildering to me. It looks to me like party A is trying to remove performance charges and opening up a tender for new providers and the current provider (party B) doesn't want to bid without the performance bonus. All I can say is - as a customer, reducing charges seems like a good thing generally.

Mel

[Dod101]

Mel

Sounds as if you have voted as I would have. Certainly is generally in the interests of the IT shareholders to have reduced charges and that is the way that things are moving generally at the moment. Invesco insist that they agreed to reduced charges but resigned anyway! There is probably more to this than meets the eye although it could just be frayed egos.

Good luck!

Dod

[forrado]

It appears that Invesco Perpetual have won the day according to this report on the Trustnet site ...

Invesco Perpetual reappointed to Enhanced Income Trust after fee row
https://www.trustnet.com/news/820009/invesco-perpetual-reappointed-to-enhanced-income-trust-after-fee-row

As a consequence of the agreement, chairman of the board Donald Adamson and chairman of the management committee Richard Williams announced they will stand down with immediate effect, a month before a general meeting in which Invesco intended to remove both from the board.

Chairman of the audit committee Peter Yates will lead the board until a replacement is found, which is expected to occur in September.

Apparently David didn't get the backing to defeat Goliath.

[richfool]

Well I suppose if investors are not happy with the situation, they can still vote, - this time with their feet, and invest in another product.

[melonfool]

I sold a few days ago - it just felt too insecure to me.

I've bought FCRL, just for some stability. I'll look at High Yield again next time I add to the ISA.

Mel