EquitiesNov 14 2013

Where to next for Woodford’s investors?

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Mr Barnett joined Invesco Perpetual in 1996 from Mercury Asset Management and is the sole manager of a number of funds, such as the Invesco Perpetual UK Strategic Income fund and the Perpetual Income and Growth Investment Trust.

Since taking on the management of the UK Strategic Income fund in 2006, he has turned a £1,000 investment into £1,959. The Perpetual Income and Growth Investment Trust has seen £1,000 grow to £4,595.92 since Mr Barnett took the trust on in August 1999. Mr Richards adds: “Mr Barnett manages assets of more than £1bn and the performance of his Invesco Perpetual Strategic Income fund has outperformed Neil Woodford’s [Income and High Income] funds in the past four years.”

According to Adrian Lowcock, senior investment analyst at Hargreaves Lansdown, Mr Barnett favours companies with an ability to offer a growing dividend and focuses a great deal of attention on cashflows. He adds: “Mr Barnett sees himself as an investor, not a trader. He wants to buy long-term investment opportunities and then be patient, as he believes ‘value will out’. He wants to benefit from the long-term growth in cash flows and from there the associated dividend growth. Fundamentally, he believes the best long-term investments are companies able to grow their dividends.

“He expects to lose money when markets fall sharply and to underperform in sharply rising, liquidity-driven markets. Mr Barnett has beaten Mr Woodford since he took over management of the Invesco Perpetual UK Strategic Income fund, returning 49.9 per cent since January 2006 compared to Woodford’s Invesco Perpetual Income fund returning 35.3 per cent.”

While Mr Barnett will be taking on the lion’s share of Mr Woodford’s funds – Invesco Perpetual High Income and Income funds, as well as taking on the role of head of UK equities at the firm – Cairan Mallon has assumed responsibility for the equity portion in the Invesco Perpetual Monthly Income Plus and Distribution funds.

Investors, of course, have until April next year to make a decision on the incoming managers of these funds once Mr Woodford flies the Invesco Perpetual nest. It will be interesting to see what the majority decide to do.



Tobacco stocks were under pressure following major litigation against cigarette companies. Mr Woodford stuck with them.


When technology stocks were booming, Mr Woodford made the controversial call to avoid them. This decision paid off as they plummeted in value at the turn of the millennium.


Mr Woodford doesn’t always make the right calls, however, and his decision to avoid banks in 2008 saw his High Income portfolio lose 19.4 per cent for the year. The FTSE 100 index gained 28.3 per cent.