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Hargreaves Lansdown pushes for in specie Woodford transfer

by Eleanor Lawrie on Dec 20, 2013 at 10:20

Hargreaves Lansdown pushes for in specie Woodford transfer

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 Hargreaves Lansdown, has been asking the asset management company whether they will provide a transfer window, which will allow investors in Woodford's Invesco Perpetual income fund range to move into his new fund when he leaves the firm at the end of April.

Known as an in specie transfer, this would enable investors to avoid a potential Capital Gains Tax (CGT) hit if the holding is outside of a tax wrapper.

The news comes after it was revealed that Woodford, who runs more assets under management than any other UK manager, would be setting up his new business in May in conjunction with Oakley Capital, an investment firm founded by entrepreneur Peter Dubens.

Mark Barnett will assume sole control of the funds on Woodford's exit.

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

'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 it 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 Wealth Manager.

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7 comments so far. Why not have your say?

Paul Renken

Dec 20, 2013 at 11:58

I think the decision ultimately lies with Invesco. They are the fund sponsor that Neil has left and the clients are invested with Invesco. Neil was an employee as manager of that fund, not the owner or sponsor. Teh funds invested are under the stewardship and responsibility now, as they always have been, of Invesco, not Neil.

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Martin Harrison

Dec 20, 2013 at 12:11

The terms of any "in specie" transfer would have to take into account the cost of selling stocks that Woodford decided not to retain, otherwise other investors in the new fund would be disadvantaged. Such sales are likely as the new fund will almost certainly be smaller and therefore likely to have a smaller number of holdings.

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Anonymous 1 needed this 'off the record'

Dec 20, 2013 at 16:28

Unbelievable cheek. Who do HL think they are?

If it happened, which would be ridiculous, think of the implications.

Are they going to compensate the clients for this 'advice' if Neil's new offering doesn't perform as well? What about if he does something non-UK. Will HL ensure the risk is right for the clients? What about if the Oakey lot went bust, are HL going to dip in to their pockets?

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Anonymous 2 needed this 'off the record'

Dec 21, 2013 at 09:14

I am not aware we know what the investment objective of the new fund will be (will it remain a UK fund? will it have more small caps than Neil Woodford's previous products? Will it suit all HL's clients currently invested in the IP income and IP High Income funds?).

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Dec 23, 2013 at 08:32

I think there is every chance NW wants to a blank canvas so he can start again and explore new ideas, otherwise what is he leaving for?

So, as Anonymous 2 points out, unless investors are prepared to follow him blindly just because of who he is, they might find his new product is not appropriate for them.

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Dec 23, 2013 at 14:05

Has Mr Woodford indicated whether or not his new fund will be a China Special Situations fund with generous fees? I believe they are all the rage for successful fund managers having mid life crises.

Has he said if it will be a close or open ended fund?

Has he be in early talks with HL perhaps an exclusive share class?

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Dec 23, 2013 at 18:58

Is it Xmas or April 1st?

I can't believe this is a genuine suggestion from HL.

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