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Let Woodford investors switch, Hargreaves urges

Hargreaves Lansdown is pressing Invesco Perpetual to offer a free transfer for investors into Neil Woodford's new venture.

Let Woodford investors switch, Hargreaves urges

Hargreaves Lansdown is pressing Invesco Perpetual to offer the option of a tax-friendly transfer for its clients into Neil Woodford's new venture.

Mark Dampier (pictured), head of research at the online investment supermarket, has lobbied the fund management company to provide a transfer window, which will allow investors in Woodford's Invesco Perpetual Income and High Income funds to move into his new fund when he leaves the firm at the end of April.

Known technically as an in specie transfer, this would enable investors who don't hold the funds in an ISA or Sipp to move without incurring capital gains tax (CGT) on any profits.

The news comes after it was revealed that Woodford, who runs more assets under management than any other UK manager, will move to Oakley Capital, an investment firm founded by entrepreneur Peter Dubens.

Mark Barnett will assume sole control of the funds after Woodford leaves.

'In my view, they are going to have to facilitate something for clients. They have to put clients first,' said Dampier, who is also a personal investor in the funds.

'What is the point of Mark Barnett having to sell his fund only for Neil Woodford to buy it back again?' he added.

Dampier said Invesco would have to 'face up to the reality of the situation' and would earn 'kudos' for giving investors a limited period in which to switch in to Woodford's funds without punitive charges if they wanted to, as it was likely many would make the move anyway.

In response Invesco Perpetual chief executive Mark Armour said clients' best interests was its main focus, while drawing attention to Barnett's longevity at the firm and strong track record.

'Client response to our succession plans has been extremely positive. Mark Barnett is an exceptional fund manager who has the same active, value-driven investment approach and long-term focus as Neil,' Armour told Citywire.

'He has been a key member of the UK equities team for 17 years, with first-quartile performance over one, three and five years.  As always, our primary focus is to manage the transition and continue to look after our clients’ best interests.'

Dampier drew attention to Patrick Evershed's move from Rathbones to New Star 11 years ago as an example of where an in specie facility was offered to investors, although he acknowledged Woodford was a much bigger operation. 

Back then, in what was a first for the investment industry, Rathbones and New Star co-operated with the Inland Revenue to ensure that transfers from Rathbone Special Situations to New Star Select Opportunities were not seen as a way to 'avoid' tax.

12 comments so far. Why not have your say?

Anonymous 1 needed this 'off the record'

Dec 20, 2013 at 15:59

I'm enjoying this daily bulletin; better than crossroads.... I'd never heard of any of the protagonists, and am now looking forward to April so I too can double my money.

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Dec 20, 2013 at 16:14

I really do not see why there should be any concession, Mr. Dampier. It is not as though Oakley is taking over Invesco Perpetual.

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Dec 20, 2013 at 17:00

What happened to New Star funds? Were they a success for the folk who transferred from Rathbone?

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Rob Walker

Dec 20, 2013 at 17:29

A) We invest in funds, not managers. The fund has not devalued just because someone leaves.

b) What is the HL stance if Woodford drops dead tomorrow?

c) Does every fund offer this facility when it changes managers? If not, why this one?

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Michael Stevens

Dec 20, 2013 at 17:46

Let HL pay the charges? Will you Mr. Dampier do this and under right any loses in the new fund. There is no record that the new fund will perform better than other ones.

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Dec 20, 2013 at 17:55

'They are going to have to put clients first' - if that cap fits, wear it.....

Could HL be looking to secure preferential terms, to be able to offer NW's new product at a better price than anyone else?

What a bunch of cynics!

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Dec 20, 2013 at 21:33

Neil woodford,,s equity income funds have performed poorly in the past three years.

There are better managers in income sector(as can be seen from citywire income sector ratings).

I see no reason why neil woodford can do better under a new banner or why the new manager of invesco income fund,s will do worse than neil woodford.

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raymond cave

Dec 21, 2013 at 08:27

As I recollect New Star didn't shine so bright, my money stays with Invesco.

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Dec 21, 2013 at 10:03

Dampier and his crew havent got a clue go with what you think they never commit its all guess work.

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Artemis Gorgo

Dec 21, 2013 at 11:28

This story does not serve the fund management industry well as it displays the greed of all the players. The righteous 'I have the client's interest at heart' proselytization by the various parties is in the story is so shallow that it barely hides their greed and self interest. Oakley Capital and Mr Woodford clearly want as much capital to flow out of Invesco funds as possible - forget about loyalty from a veteran fund manager to his old firm where he prospered for many many years. Invesco want to protect as much as possible their vulnerable funds under management irrespective of whether the disloyal Mr Woodford could do a better job for their clients than their hurried-in substitute. And HL want to enhance their brand and ingratiate themselves with Oakley, a much smaller player than Invesco and therefore more willing to incentivise HL as a distributor. Nowhere in any of this is the best interest of the client at the forefront.

Rob Walker

"A) We invest in funds, not managers. The fund has not devalued just because someone leaves." Please say you didn't mean that - are you saying that you would invest in the invesco fund irrespective of who was managing it? Do you believe its track record is not related to who manages the fund? If the answer to both these questions is 'Yes' then do yourself a favour and buy a passive fund as you are either an Invesco plant or a danger to yourself.

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Dec 22, 2013 at 09:34

B&B by another name, why not just scrap CG entirely?

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Bryan Jefferson

Dec 22, 2013 at 12:02

Michael - write this 10 times 'underwrite' - 'underwrite' - 'underwrite' - 'underwrite' - 'underwrite' - 'underwrite' - 'underwrite'.

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