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Hargreaves Lansdown pushes for in specie Woodford transfer

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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.

'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 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.

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