Mark Barnett makes comeback with new income fund
29th March 2022 15:14
by Sam Benstead from interactive investor
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The fallen star manager is back picking dividend-generating UK stocks – but he won’t be touching private companies.
Mark Barnett has launched a fund at Tellworth Investments, one year after joining the boutique investment manager following 24 years at Invesco.
Barnett was often seen as the protégé of former star fund manager Neil Woodford. Following Woodford’s departure to set up his own Woodford Investment Management fund house, Barnett was placed in charge of the funds previously managed by Woodford.
He managed Invesco’s UK Equity Income and UK Equity High Income funds before leaving Invesco in May 2020. During his time running the funds, both underperformed the UK All Companies sector.
His new strategy – TM Tellworth UK Income and Growth – can invest in the entire UK stock market and will distribute income monthly to investors.
It will be part of the UK Equity Income sector and will have to deliver 10% more dividend income than the UK market.
Barnett said there were three key elements to his investment approach: macroeconomic analysis, company analysis and valuation discipline.
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He said: “Tellworth has a proprietary analysis tool called ‘The Thermostat’ which provides real time data about how the economy is performing, rather than relying on out-of-date official data.
“We ask if companies can produce free cash flow that translates into dividend income. I also spend a long time talking to company management teams.”
The fund will own between 40 and 60 companies and seek to hold each for between three and five years.
To fend off problems around liquidity that he faced at Invesco, there will be no unquoted stocks and it will not invest more than 20% in the shares of smaller companies, defined as being worth less than £500 million.
Writing in a blog post for Tellworth Investments this month, Barnett admitted that he had made investment mistakes in the past.
He said: “During the 25 years I have managed income funds, I’ve tried to adhere to an investment mantra that is summarised by the acronym K.I.S.S: Keep It Simple Stupid!
“I know that I’ve been guilty of ignoring this rule at times! But actually, it’s a pretty good rule of thumb for investing along with other aspects of life.
“Translating this mantra into an investment philosophy: the primary purpose of every investment is to produce a recurring stream of income. This is a fundamental tenet that sits behind every financial investment decision whether we are thinking about bonds, property or stocks.”
Tellworth Investments is a small fund house founded by former Schroders fund managers Paul Marriage and John Warren. The fund group currently overseas several investment funds, including TM Tellworth UK Select A Acc.
Barnett’s TM Tellworth UK Income and Growth is co-managed by Johnnie Smith and will charge 0.9% in annual fees for retail investors.
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