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What does Woodford’s new venture mean for UK fund management?

by Eleanor Lawrie on Mar 03, 2014 at 15:16

What does Woodford’s new venture mean for UK fund management?

As Neil Woodford’s new venture readies an income fund launch for May, industry insiders anticipate that the star manager could attract billions of pounds within months as rival managers lose out.

Woodford (pictured) announced his departure from Invesco Perpetual last October and it has since been confirmed that he will launch an eponymous fund business, backed by private equity firm Oakley Capital.

Some had suggested he would pursue his interest in small and unquoted companies. However, Woodford Investment Management’s (WIM) decision to launch an income fund that replicates the strategy he ran at Invesco suggests Woodford is aiming at the mainstream.

It is a logical decision, given that he has spent 25 years building up a loyal investor base and ran over £30 billion. With this in mind, WIM looks set to take a bite out of the assets of competitors with strong equity income franchises.

Mark Dampier, head of research at Hargreaves Lansdown, believes Woodfood will attract a lot of assets with the new fund, despite the half-dozen solid names operating in the UK equity income space, such as Artemis’s Adrian Frost and JOHCM’s Clive Beagles, both AA-rated by Citywire.

Dampier anticipates that Woodford has built up a ‘nucleus’ of people around him to drive growth, both internally and through external brokers.

Ben Gutteridge, head of fund research at Brewin Dolphin, stressed his firm rates Mark Barnett, Woodford’s replacement on the Invesco funds, as a strong fund manager.

Brewin will not encourage flows towards Woodford, although Gutteridge expects others in the industry will look to follow Woodford now they have the chance.

He thinks Invesco Perpetual might have retained more investors if there had there been more of a grace period between the end of Woodford’s tenure there and the launch of his new venture.

‘If they had got him out the door, people would have had more time to get used to Mark Barnett as a fund manager,’ he said.

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1 comment so far. Why not have your say?

tom tuite dalton

Mar 03, 2014 at 17:04

If looking to "buy history" investors should back Mark Barnett, since as Citywire's numbers show he has convincingly outperformed both the FTSE All Share Index and Neil Woodford over the last three and five years. Moreover he has the support of a long established successful business that is Invesco Perpetual. Follower of investment trusts most probably will already know this, given his exceptional performance record with Perpetual Income & Growth.

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