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Woodford v his rivals: who’s top over 10 years?

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by Jonathan Miller on Mar 05, 2014 at 10:41

This week we focus on the UK Equity Income sector, looking at alternatives to Woodford, whether you want experience, a track record of strong performance, or both.

The news that Neil Woodford has founded Woodford Investment Management, the firm he intends to run after leaving Invesco Perpetual at the end of April, has concentrated investors’ minds on whether to stick with Invesco, follow Woodford or look for someone new.

Two of the qualities investors most value about Woodford are his long experience and his long-term returns. We used those measures to slice the UK Equity income sector, and came up with the following results.

The Citywire Discovery graph above shows the percentile rank of managers’ 10 year risk-adjusted performance on the vertical axis. So the managers nearer the top have done better, because they have returned more against their benchmark, per unit of risk taken.

The horizontal axis shows their experience in the sector (expressed as a percentile rank). Those with greater experience are towards the right.

So if you want managers with both strong risk-adjusted performance and long experience, look at the top right hand corner.

Although Woodford scores highly for his more than 25 years’ experience, he is not the most experienced manager in the sector: Martin Cholwill of Royal London Asset Management has more than 32 years’ experience.

Clive Beagles of JO Hambro Capital Management comes top for 10-year total returns (217%). Woodford is in third place after Threadneedle’s Leigh Harrison. On a risk-adjusted basis, Woodford slips further down the ladder.

The one factor by which Woodford is clearly in the lead is market share (a whopping 37%), but what happens to that after May, is anyone’s guess.

Click through for the scorecards on Woodford and his competitors...

To learn more about Citywire Discovery click here.

Neil Woodford, Invesco

Experience (years): 25 years, 4 months

10-year risk-adjusted return ratio: 0.51

10-year total return: 196.0%

Market share: 36.9%

Neil Woodford is the best-known manager in the UK, and he has put his name on his new firm: Woodford Investment Management. He has set it up with Nick Hamilton, previously a head of product at Invesco. London-based Oakley Capital Management is providing infrastructure. Though tight-lipped about his plans, Woodford will launch an income fund and continue his unconstrained, fundamentals-based investment style.

Martin Cholwill, Royal London

Experience (years): 32 years, 6 months

10-year risk-adjusted return ratio: 0.60

10-year total return: 187.0%

Market share: 1.4%

Martin Cholwill has managed the Royal London UK Equity Income fund since 2005 but Citywire data includes his time on the AXA UK Equity Income fund, which he managed from 1981 until 2004. He favours mid caps and has a strict investment approach, screening companies for cashflow, a sustainable dividend and whether that dividend can grow.

Leigh Harrison, Threadneedle

Experience (years): 11 years, 10 months

10-year risk-adjusted return ratio: 0.62

10-year total return: 201.2%

Market share: 3.4%

Consumer services and healthcare have been the main drivers of Leigh Harrison’s consistent performance, balanced with the growth potential of the industrial sector. He currently manages the £2.5 billion Threadneedle UK Income fund with Richard Colwell. Holdings include Compass Group and ITV.

Harrison’s 10-year track record includes the Premier Income fund that he managed from 2003 to 2005. He joined Threadneedle in 2006.

John McClure, Unicorn Asset Management

Experience (years): 9 years, 9 months

10-year risk-adjusted return ratio: 0.63

10-year total return: n/a

Market share:0.7%

John McClure has somewhat less experience than other top performers in the sector, although it is still strong at nine years and nine months. He started managing the Unicorn UK income fund in 2004. He has more than 20 years’ experience investing in smaller companies, having run smaller companies portfolios at Granville and Guinness Flight before joining Unicorn in 2000.

Clive Beagles, J O Hambro

Experience (years):12 years, 7 months

10-year risk-adjusted return ratio: 0.66

10-year total return: 217.3%

Market share: 1.9%

Whereas Woodford is known for his large positions in pharmaceuticals and tobacco, Clive Beagles has huge underweights in those sectors. Last year he began buying miners for the first time since 2009, Rio Tinto among them. His main overweight is to financials, with holdings in insurers RSA and Catlin.

His 10-year track record comes from his tenure on the Newton High Income fund (2001-2004) as well as the JOHCM UK Equity Income fund from November 2004.

Adrian Frost and Adrian Gosden, Artemis

Experience (years): Frost 15 years, 10 months / Gosden 14 years, 1 month

10-year risk-adjusted return ratio: 0.48

10-year total return: 160.3%

Market share: 9.8%

Frost and Gosden (pictured) have a talent for selecting overseas companies and make full use of their maximum 20% global allocation.

The two have the same performance data, as they have both been on Artemis Income for more than 10 years, although Frost has slightly more sector experience than Gosden.

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  • Martin Cholwill
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  • Leigh Harrison
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  • Clive Beagles
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  • John McClure
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  • Adrian Gosden
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