A fund manager’s world is a fickle place

I certainly would not – despite the loads of money on offer. Although every word I write is put under the microscope by fussy readers, in-house lawyers and lawyers representing those companies I dare lambast (such lambastings are always merited, I hasten to add), such scrutiny is nothing compared to that which fund managers have to endure day in, day out.

Go on the internet and you can dissect the performance of individual retail funds (unit trusts, investment trusts or open-ended investment companies) to the nth degree – something you cannot do if you are looking to find performance numbers for a private client stockbroker or a discretionary investment manager (new kid on the block Nutmeg being the honourable exception).

With retail investment funds, you can analyse performance since launch, in the short and long term, and against both indices and opposition funds. There simply is no place to hide and if you are no good as a manager, you get found out, labelled a ‘dog’ fund manager, followed invariably by the sack.

Analysis of fund performance is not just conducted by investment advisers, savvy personal finance journalists and astute investors. I remember one long-standing fund manager – now retired – telling me that his chief executive would scrutinise individual fund performance on a daily basis. Managers failing to cut the mustard would then be ritually humiliated in front of their peers. (My in-house lawyers forbid me from revealing the name of either the fund manager or the chief executive but email me with your suggestions and I will confirm or deny.)

Of course the personal rewards in retail fund management can be astronomical but it is a cut-throat business and most managers fall by the wayside without ever really proving whether they were any good or not.

I do not have enough toes and fingers to count the number of fresh-faced fund managers I have met who, over a can of Red Bull, promised the earth, talked the talk, only then never to be seen again, with their departure only noticeable by the trail of exhaust and smell of rubber from their nearly brand-new Porsche Cayenne.

So when a manager survives for longer than a decade in retail fund management, and delivers more than half-decent investment performance to boot, my reaction is to stand up and salute him. They represent beacons of excellence in an industry not well endowed with excellence.

Investment adviser Bestinvest put out a super press release in the wake of Neil Woodford’s departure from Invesco Perpetual – an issue I will get to in a minute – reminding the world of some of these outstanding individuals.

Among its ‘10 big beasts’ were Aberdeen’s Hugh Young (the driving force behind Aberdeen’s transformation from split capital trust villain to a leading investment house), Axa’s Nigel Thomas (Mr UK), M&G’s Tom Dobell (Mr Recovery Man), Adrian Frost of Artemis (Mr Income) and Henderson’s understated but quite brilliant Richard Pease (a master at running European equity portfolios). These five managers alone have more than 110 years of experience running investment portfolios on behalf of investors.

If I had any surplus income, I would invest it across the funds that these individuals manage as well the funds run by Bestinvest’s other five big beasts: First State’s Angus Tulloch, Old Mutual’s Richard Buxton, Standard Life’s Richard Nimmo, Fidelity’s Ian Spreadbury and Schroder’s Andy Brough. If I had invested 10 years ago (sadly, again I had no money) I would now be on my way to my first Porsche Cayenne (second hand, naturally).

Of course Bestinvest’s ‘big beast’ list omits the biggest two of them all: Fidelity’s Anthony Bolton, who is on the cusp of retiring from fund management, and Neil Woodford, who will go it alone next spring and try and replicate his stellar performance at Invesco.

A lot has been said (much of it in the splendid pages of Financial Adviser) about Mr Woodford’s imminent exit from Invesco.

Should investors in his Invesco funds head for the exit? No, but many will.

Should investors stop putting new money into his funds for the time being? Probably yes.

And is his successor Mark Barnett good enough to replace him? Potentially yes.

But I would prefer to concentrate on Mr Woodford. I think he has shown Invesco commendable loyalty in giving them 25 years of his life – probably his best years – as a fund manager. Like Mr Young has done at Aberdeen, he has almost single-handedly transformed Invesco Perpetual from a boutique investment house operating out of sleepy Henley-on-Thames into a mainstream retail giant.

But more importantly, Mr Woodford has richly rewarded those fund investors who have stuck with him through thick and thin. He has delivered them stellar returns and enhanced their financial well-being.

Mr Woodford has richly rewarded those fund investors who have stuck with him through thick and thin.

When he goes next April, he should be applauded out of the building by every Invesco staff member (chairman down to the tea lady) and every adviser that has built a reputation on the back of recommending his funds. He should be given the freedom of Henley and Perpetual Park.

Advisers would then be wise to recommend the funds that this biggest of big beasts offers in his new incarnation. He will be chomping at the bit to prove himself all over again.

Jeff Prestridge is personal finance editor of the Mail on Sunday

You said

Norse in response to Kevin O’Donnell’s column about financial complaints (FA, 24 October).

For me the reputation of the financial services industry continues to be irrelevant, my referrals keep on coming. It is only the regulator, consumer bodies and journalists that lump everyone together under the title of financial services; it justifies their very existence. You go on and on about repairing consumer confidence, let it go. If you stop complaining about it, it will cure itself.

The public is ignorant and the most ignorant of all will not seek advice. Bad press is simply the justification that excuses their continued ignorance. I can live without those people, there is no competition and the advice gap will widen – good.