Invesco Perpetual fined £18.6m for risk failings on Woodford funds

Invesco Perpetual fined £18.6m for risk failings linked to Woodford funds

The Financial Conduct Authority (FCA) fined Invesco Perpetual £18.6 million for exposing investors to greater levels of risk than they had been led to expert.

According the the financial watchdog, Invesco Asset Management Limited and Invesco Fund Managers Limited broke the rules designed to limit the risks to investors on 33 occasions across 15 funds, which represented more than 70% of assets under management. The breaches were said to have taken place between May 2008 and November 2012.    

The losses from this risk taking amounted to £5 million, which Invesco compensated to the funds.

The compensation was made to three funds, two of which were managed by the firm’s former star manager Neil Woodford – the Invesco Perpetual High Income and Income funds, which he relinquished earlier this year to set up a boutique. The funds are now managed by Mark Barnett.   

The third fund is Invesco Perpetual Managed Income, which is now managed on team basis by chief investment officer Nick Mustoe. Between January 2008 and December 2010 the fund was managed by Bob Yerbury and the vehicle was impacted as a result of its investment in the Income and High Income funds.      

According ot the FCA, Invesco Perpetual did not comply with investment limits which are designed to protect consumers by limiting their exposure to risk.  

While it noted the £5 million compensation was paid promptly, it highlighted the losses could have been greater.

In addition, the watchdog said the firm did not clearly inform investors or explain the associated risks of its use of derivatives which introduced leverage into the funds, although the firm was allowed to use derivatives in this way.

Tracey McDermott (pictured), FCA director of enforcement and financial crime, said: ‘As a forward looking regulator the FCA takes action where we see risks to consumers, not just after they suffer losses. In this case, investors of all sizes trusted Invesco Perpetual to manage their money. 

‘They signed up for a certain level of risk but we found Invesco Perpetual’s actions were at odds with investors’ reasonable expectations.’


Monday, April 28th, 2014 EN

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