Woodford reaction: Resignation ‘bigger than Anthony Bolton’

The resignation of Invesco Perpetual’s Neil Woodford has been compared with that of former Fidelity manager Anthony Bolton in the early 2000s in terms of significance, as experts react to the news.

Earlier this afternoon Invesco announced that Mr Woodford was leaving the firm in April 2014 to set up his own asset manager.

‘Bigger than Bolton’

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Tim Cockerill, investment director at Rowan Dartington, compared the news to the initial news from Fidelity in the early 2000s that Mr Bolton was set to retire from his ultra-popular UK equity fund.

“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,” he said.

He said it was “hard to estimate” the level of magnitude of any investor exodus from Mr Woodford’s roughly £33bn of investment products.

“On the one hand, there is likely to be a very strong exodus following him to his new company - but until that is set up and investors know what he is offering, there is little reason to move.

“On the other hand, the size of outflow could potentially depress some the stocks’ values within the fund, so exiting sooner might be best.”

A notable flood?

Brian Dennehy, managing director at FundExpert.co.uk, said “a large trickle could turn into a notable flood”.

“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 said Mr Woodford’s replacement on the funds, Mark Barnett, ran an “outstanding fund” but his £256m of assets contrasts “hugely” with Mr Woodford’s level of assets.

Mr Dennehy added that investors with more than 10 per cent of their portfolios invested with Mr Woodford should consider reducing their exposure.

Remaining invested

Mark Dampier, head of research at Hargreaves Lansdown, advised investors to stay put.

“We believe investors need not consider selling the fund now and I myself will be remaining invested,” he said.

For new investors we would, however, we would suggest waiting until the new manager has taken over the fund and have suspended it from the Wealth 150 for the time being.”

A ‘huge loss’

However, Paul Surguy, head of managed funds at Sanlam Private Investments UK, told Investment Adviser it was a “huge loss” for Invesco.

“I assume they will lose a lot of money from this. It is inevitable. It is likely they will lose billions just based on what happened with Richard Buxton, when his fund lost more than half of its assets,” he said.