Invesco Perpetual and trust board trade blows in fund dispute

Paul Read is the co-head of Invesco Perpetual's fixed interest team

Invesco Perpetual and a popular investment trust that it manages have traded fresh blows, with the fund manager attacking the board’s “overly aggressive” approach towards fee negotiations.

In their first public statement on since quitting as managers of Invesco Perpetual Enhanced Income Limited in April, Paul Read and Paul Causer wrote a letter to the investment trust’s shareholders.

Henley-based Invesco, which has managed the investment trust since its launch in 1999, claimed it did not resign over a fee disagreement. Rather, the money manager said it quit because the behaviour of the trust’s chairman had made managing it untenable.

However, the investment trust insisted it had “behaved correctly” with chairman Donald Adamson hitting back at the contents of the letter.

"'Overly aggressive' is entirely inaccurate," Mr Adamson said.

As an investor in the trust, Invesco last month joined forces with Practical Investment Fund and GAM Star Credit Opportunities in a bid to oust trust Mr Adamson and Richard Williams, the chair of its management engagement committee.

But GAM, a 4pc shareholder in the investment trust, today withdrew its support for Invesco's motion.

Meanwhile the investment trust accused Invesco of “a cynical attempt to use concentrated voting power against retail investors".

An extraordinary general meeting has been arranged for July 20 to consider a requisition asking for Mr Adamson and Mr Williams to be replaced by Hazel Adam and Howard Myles. Such a move “is firmly against the interests of the company's shareholders”, the investment trust said.

In their letter Mr Read and Mr Causer detailed how Invesco had already agreed to a new management fee structure with the board earlier this year. This included cancelling of the manager’s performance fee, even though it was something Invesco was “in favour of keeping”.

“Our decision to resign was not about fees,” wrote the pair, who will continue to manage the fund over a 12-month notice period while a tendering process for the multi-million pound mandate is completed.

“Our decision to resign was due to the breakdown of our relationship, as manager, with the board and our concerns about board governance."

The letter added: “The manner in which the board engaged with Invesco in the fee negotiations was, in our opinion, overly aggressive, culminating in the issuance of a 48-hour ultimatum, served to us on the Monday of Easter week. Subsequent to our agreement to the revised fee structure, there was then an attempt to insert additional, material changes to the investment management agreement that had not previously been discussed.”

In response, Mr Adamson said: “’Material changes’ refers to our request to bring the notice period in line with that at other Invesco trusts, from 12 months to 3 months. In our view an entirely reasonable request."

He said: "The ultimatum was given only after over three months of complete stonewalling from Invesco. It was designed to give them an opportunity to remain as manager, to which they offered written agreement, subsequently abandoned with no consideration for shareholder interest at all."