Neil Woodford to leave Invesco Perpetual
Star fund manager Neil Woodford is to leave Invesco Perpetual in April 2014 after 25 years, a move that will cause concern for thousands of investors in the group's income funds.
Private investors have ploughed billions into Woodford's funds after he achieved consistent market-beating returns. The Invesco Perpetual High Income, for example, has £13.9 billion invested in it, while the Income fund is worth £10.6 billion.
The High Income fund returned an average of 12.2% a year during the last 10 years (to the end of September 2013), while the Income fund has returned 12% a year, according to Morningstar.
Mark Barnett, manager of the firm's UK Strategic Income Fund, is the man chosen to step into Woodford's shoes. He will replace Woodford as the group's head of UK equities, and will also take control of several of Woodford's funds, including: the Invesco Perpetual High Income and Invesco Perpetual Income funds, as well as the Invesco Perpetual UK Equity Pension Fund.
The handover to Barnett will occur during a six-month transition period prior to Woodford's departure.
But Ciaran Mallon, current manager of the Income & Growth Fund, has already begun to manage the UK equity elements of Woodford's Invesco Perpetual Monthly Income Plus and Invesco Perpetual Distribution funds.
In a statement, Invesco Perpetual said: "Both [Barnett and Mallon] are experienced and expert fund managers who have the same active, valuation-driven investment approach and long-term focus as Neil. The team will continue to strive to deliver good long-term returns for investors."
Mark Armour, chief executive of Invesco Perpetual, added: "We have planned for succession for many years and have built a world-class investment culture that develops and supports gifted and experienced managers."
Woodford himself said: "I leave the company on good terms and remain fully committed to my fund management responsibilities at Invesco Perpetual until my departure.
"My decision to leave is a personal one based on my views about where I see long-term opportunities in the fund management industry. My intention is to establish a new fund management business serving institutional and retail clients as soon as possible after 29th April 2014."
Independent financial advisers urged investors not to panic. Patrick Connolly of Chase de Vere, said: "This is terrible news for Invesco Perpetual and will be a cause for concern for many investors who trust their investments and pensions with Neil Woodford.
"It will be impossible for Invesco Perpetual to replace Woodford with somebody of similar standing because, particularly in the world of UK equity income funds, there is nobody of similar standing. However, there is no reason for investors to panic. Woodford is still running the same investment funds today as he did yesterday and this will continue until next April.
"We would advise investors not to invest new money in Woodford's funds. Those with existing holdings should review how much they currently hold with Woodford and if necessary look to diversify into other funds. Suggested alternatives include Artemis Income, Threadneedle UK Equity Income and Rathbone Income."
Darius McDermott of Chelsea Financial Services added: "If as rumoured, Neil's intention is to start a new asset management business, I imagine it will generate an incredible amount of interest – not to mention assets – from launch. However, I very much doubt he will be able to take on £33bn, so investors face a hard choice.
"No single alternative fund will be able to deal with the switches that will probably result from this announcement, so I'll recommend a few! Artemis Income, Rathbone Income and Threadneedle UK Equity Alpha Income."
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