One Of UK's Biggest Fund Management Names To Leave Invesco Perpetual

Tom Burroughes

16 October 2013

The UK wealth management industry attempted to digest the impact of one of the most high-profile departures by a fund boss in recent years – the planned exit by Neil Woodford next April from , announced yesterday.

Woodford is to leave Invesco Perpetual on 29 April 2014, with fund responsibilities transitioning to Mark Barnett and the Invesco Perpetual UK equities team, the firm said in a statement. He leaves a firm where he has worked for 25 years – a long period in what is sometimes a revolving-door industry.

“Neil will remain responsible for all funds for which he is the named manager through a transition period during the six months prior to his departure. At the end of the transition, Mark Barnett will be named manager of the Invesco Perpetual High Income Fund and the Invesco Perpetual Income Fund. Mark will then succeed Neil as head of UK equities,” the statement from the firm said. “With immediate effect, the UK equity components of the Invesco Perpetual Monthly Income Plus Fund and the Invesco Perpetual Distribution Fund will be managed by Ciaran Mallon alongside the existing fixed income managers Paul Causer and Paul Read.”

Reaction

“This is the biggest news to hit the fund management industry since Antony Bolton stepped down from managing Fidelity Special Situations, but in reality it is considerably bigger given how much money he manages,” Tony Cockerill, investment director at Rowan Dartington, said in a note.

“Most of Woodford’s money, totally over £30 billion (around $48 billion), is invested with him because of who he is and his success. However, whether there is much outflow before investors know what he is proposing to do, is harder to estimate,” he said.

He said that Mark Barnett, who is replacing Woodford, is an “excellent manager”.

Cockerill said funds associated with Woodford – the Invesco Perpetual Income fund and High Income funds are already on hold at Rowan Dartington’s system, while Mark Barnett’s UK Strategic Income remains a “buy”. Cockerill recommended investors to take time before making a firm decision.

Brian Dennehy, managing director at FundExpert.co.uk, said that the Woodford-run funds had an outstanding reputation but would not become “poor funds overnight”.

“If investors hold no more than 10 per cent of their portfolio value in Woodford funds, there is no need to panic. If more than 10 per cent is held, alternatives should be considered,” Dennehy said.

“Neil Woodford’s success over the last 15 years has to a large extent been based on one huge bet, what we have called the biggest and longest bet in fund management history - a consistently large overweight in defensives, in particular utilities, tobacco, and pharmaceuticals. Would any other manager have had the foresight to begin this strategy? And the fortitude to continue with it over such a prolonged period? I don’t think so,” he continued.

As for his replacement, Dennehy said that Barnett, who runs the Invesco Perpetual UK Strategic Income fund, has an “outstanding” fund but pointed out that it is a fund of just £265 million of assets under management. “This contrasts hugely with £13 billion for Invesco Perpetual High Income and £10 billion for Invesco Perpetual Income, both managed by Neil Woodford. And the Top 10 holdings for Mark Barnett do appear to reflect 'the hand of 'Woodford' What happens without that guiding hand? It is a huge unknown for investors,” he added.

Morningstar, the fund ratings firm, said it has placed the Morningstar OBSR Analyst Ratings of the following funds under review: Invesco Perpetual Income; Invesco Perpetual High Income; Invesco Perpetual Monthly Income Plus, and Invesco Perpetual Distribution. All four funds previously held a Morningstar OBSR Analyst Rating of Gold.