Goodbye to Neil Woodford the man who made us all richer: As Britain's most successful fund manager quits, should you move your money?
Fund guy: Neil Woodford's departure is a blow to Invesco
Britain's most successful fund manager, who looks after more than £33 billion of savers’ cash, is quitting in April.
He became a star after correctly anticipating the dotcom crash by avoiding technology firms in the late Nineties, and then steered clear of banks before the credit crunch began.
Mr Woodford, who has a CBE, is also a hugely influential figure in the City, and recently helped prevent a merger of aerospace firm BAE Systems with EADS.
He also oversees or co-manages five other funds, including the 124-year-old Edinburgh Investment Trust, which holds more than £1.3 billion.
In the next six months, Mr Woodford’s biggest and most popular income funds will be handed over to lesser-known manager Mark Barnett, who has worked for Invesco for 17 years. He runs another income fund — called UK Strategic Income — but this only has around £300 million of savers’ cash.
Ciaran Mallon, who has only been at the firm for eight years, will immediately take over Woodford’s role running a portion of the company’s Monthly Income Plus fund and Distribution fund.
Mr Woodford says: ‘My decision to leave is a personal one based on my views about where I see long-term opportunities in the fund management industry.’
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Over the past ten years, Mr Woodford has grown savers’ money in the income funds by 215 per cent, while the average fund grew by 129 per cent.
Your £1,000 would have grown to £3,150 over this period.
From October 1990 to 2013, the Income fund has risen by a whopping 1,723 per cent, according to figures from brokers Hargreaves Lansdown.
And from February 1988 to October 2013, the High Income fund rocketed by more than 2,200 per cent, turning £1,000 into £23,265.
But one of the main reasons the funds have been so popular is because of the income that savers have been able to take from it.
While the rates on savings accounts have plunged, the High Income fund has delivered returns of 3.34 per cent a year. Income pays 3.38 per cent.
Patrick Connolly at wealth manager Chase de Vere says: ‘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 Mr Woodford with somebody of similar standing because, particularly in the world of UK equity income funds, there is nobody of similar standing.’
When a star manager leaves, it can cause major upheaval and money to rush out of the fund.
After Richard Buxton left Schroders earlier this year, the fund lost around half its value. And ever since Anthony Bolton left Fidelity’s flagship Special Situations fund, having run it from 1979 to 2007, the fund has never achieved the same stellar performance.
Although Woodford’s departure is a major blow, savers are being urged not to panic.
John Chatfeild-Roberts, fund selector at Jupiter Asset Management, says: ‘We have been happy long-term holders of the Income Fund and see no reason to make a hasty decision.
‘Mark Barnett has worked with Neil for many years and is a talented manager in his own right.’
Fund broker Chelsea Financial Services immediately downgraded its rating of Woodford’s funds to a ‘hold’ rather than a ‘buy.’ Darius McDermott, managing director of Chelsea, says: ‘The two equity income funds have been a core part of many investors’ portfolios for years. This will be a huge blow.’
Savers with money in the Income and High Income funds in particular should review how much cash they have invested and whether they want to move some into other funds.
Mark Dampier, head of research at wealth manager Hargreaves Lansdown says: ‘We believe investors need not consider selling the fund now and I myself will be remaining invested.’
But he urges new investors to wait until the new manager has taken over the funds before buying them.
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