Star manager Neil Woodford’s Invesco Perpetual Income and High Income funds have been given a ‘sell’ rating in the influential Sanlam Income Study.
The report, previously known as the Principal Income Study, placed the funds in its Grey List, saying it would ‘prefer managers who are able to be more pragmatic in the face of swiftly changing circumstances’.
It said the Income and High Income funds’ respective £9.2 billion and £12 billion size, and Woodford’s defensive style, meant they had become ‘very focused in many of the very large stocks in the market’.
Andrew Merricks, head of investments at Hove-based Skerritt Consultants, agreed that size was a problem for Woodford. ‘The size of his funds is larger than the GDP of some smaller sized countries. He cannot sell so he has to take a longer term view – he’s not an active manager, really,’ he said.
The Invesco Perpetual High Income fund has returned 31.9% over three years, beating the FTSE All Share’s 24.2%. The Invesco Perpetual Income fund has returned 30.7% over the same period. However, Woodford’s defensive style has hurt performance over recent months, with both funds lagging the FTSE All-Share over 2012.
Woodford’s Invesco Perpetual High Income fund is a Citywire Selection pick. Citywire head of research Jonathan Miller said: ‘Neil Woodford has shown that he can get the big calls right. This has helped his strong long term performance even if at times the fund has appeared pedestrian.’