Don’t put all eggs in one basket

Charlotte Richards

Unless you’ve been living under a rock during October, you all now know that Neil Woodford has announced he is leaving Invesco Perpetual.

Please note before you give up on me, this is not going to be yet ANOTHER blog about the effect Mr Woodford’s departure will have on the industry. In fact, it is more of what Mark Barnett, Mr Woodford’s successor, is going to do.

In a very timely nature, I had just finished writing this feature on the cult of the fund manager and if we are still seeing a reliance on certain fund managers. Now, without trying to spoil the ending – I’ll leave you to read it yourself – what I did find is that in the four random cases I chose, it seems the fund’s successor ultimately performed better.

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It’s worth noting they tend to do well after analysts and commentators have finished with their “sell all these funds immediately!!” scaremongering.

Of course, we will never know how managers would have done, especially through certain financial crises.

But what is clear that if, for example, after the departure of Jeremy Lang and William Pattisson from Liontrust, when analysts had put the fear of God into investors, you had taken out your money like they told you do, you would be kicking yourself for not cashing in on Anthony Cross and Julian Fosh’s brilliant performance over the past four years.

Looking at the evidence, maybe now instead of putting pressure on certain ‘star’ fund managers, the pressure may be on Mr Barnett to live up to what previous successors have managed to do.

But where did all this pressure come from in the first place? I for one hope that Mr Barnett smashes his new funds out of the metaphorical park like his fellow successors and silences his critics once and for all. Maybe then we won’t be so quick to judge.