Neil Woodford manages approx £30b of UK equities, making him Britain’s most powerful fund manager. He has managed his two flagship funds, High Income and Income since the late 1980s, demonstrating a formidable long-term track record. In addition, since taking on the management of the Edinburgh Investment Trust in 2008, he has significantly improved its performance.
Neil Woodford has announced that after leaving Invesco Perpetual he intends to set up his own fund management firm.
Mark Barnett, who has worked closely with Neil Woodford for several years will take on the management of Woodford’s high profile funds next April. Although Mark Barnett lacks the experience of managing such large funds, he has an impressive track record in his own right. His £284m UK Strategic Income fund has outperformed Woodford’s High Income fund over the last 1, 3 and 5 years. Similarly, the Perpetual Income and Growth Investment Trust managed by Barnett has outperformed Woodford’s Edinburgh Trust over 1, 3 and 5 years.
The fund management style of Woodford and Barnett is arguably quite similar – they both favour a defensive approach to UK equities. In fact, 8 of the top 10 holdings in Woodford’s High Income fund also feature in the top 10 holdings in Barnett’s UK Strategic Income.
Investor’s dilemma is what to do? The options are to stay put and accept Barnett as the new manager, switch out of Woodford’s fund into a different fund, or follow Woodford to his new boutique.
In general, our view is that there is no need for any urgent action. In the case of the unit trusts, there is no benefit in an immediate decision; in the case of the Edinburgh Trust, it has not yet been announced if or when Woodford is stepping down, and care is needed to consider any change in the discount to net asset value.
Clearly, any decisions in connection with Neil Woodford’s departure from Invesco Perpetual depend on individual circumstances. If you would like advice, please do not hesitate to get in touch with us: either email matthew.clark@SeabrookClark.co.uk or telephone 01392 875500.
[No investment decisions should be taken based on the above article – it is for information only. Please contact us if you would like advice].