LONDON (Reuters) – Invesco said on Tuesday it would sell all the unquoted companies currently held in its UK equities portfolios and has marked down their value by 60% as a result of recent coronavirus-fueled market falls.
The U.S.-based manager said it would reinvest the money in publicly listed companies, valuations of which have been hit hard in recent weeks as fears about a global recession gripped markets.
“We recognize, of course, that a reallocation of capital from unquoted to publicly listed equity is a change in the fund composition,” it said in a statement on its website.
“However, these are extraordinary times which call for decisive and positive action to look after the best interests of clients in the short and longer term.”
The holding of unlisted or illiquid stocks in funds that allow daily access has faced criticism from investors, regulators and politicians in the UK after the high-profile collapse of Woodford Investment Management last year.
Run by Neil Woodford, formerly a fund manager at Invesco, the firm’s flagship fund was suspended from trading amid a liquidity squeeze that ultimately resulted in his company collapsing.
That put pressure on Invesco’s High Income and Income funds, which held some of the same stocks as Woodford.
In response to news of the decision to sell out of unlisted stocks completely, Juliet Schooling Latter, research director at Chelsea Financial Services, said she considered the move “drastic”.
“We understand Invesco’s wish to move away from these assets into more attractive parts of the market, but the amount of writedown is unjustified in our view,” she wrote in a note.
“While there may be investor appetite for the funds to hold fewer unquoted stocks, I would doubt that investors would want this at the cost of a 5% drop in the value of their investments.”
Reporting by Simon Jessop; editing by Carolyn Cohn