InvestmentsMay 6 2014

Advisers wary of taking plunge with Woodford

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Most financial advisers plan to steer clear of the stampede into Neil Woodford’s new equity income fund in the coming days, according to a straw poll of the industry.

His new firm, Woodford Investment Management, is predicted to gather up to £10bn in one month in an unprecedented buying frenzy.

But two thirds of advisers told Investment Adviser they wanted to see a track record before putting clients in.

“It would be silly to jump in immediately,” said Alan Solomons, director at Alpha Investments & Financial Planning.

“I would be interested in knowing more about what he plans to do and how he will run the fund. He may or may not do precisely what he did at Invesco and that is something I would want answered.”

Many of the 10 advisers who said they are remaining circumspect cited examples of high-profile fund managers who failed to live up to their legacies in new ventures.

Minesh Patel, director of EA Financial Solutions, is a long-term supporter of Mr Woodford and his “phenomenal” track record, but said he is likely to “give it a bit of time before investing our clients” so he can conduct proper due diligence.

One in five of the advisers polled said they had no plans to invest at all.

Andrew Alexander, head of investments and product strategy at Three Counties, said he plans to stick with Mr Woodford’s protégé and replacement at Invesco Perpetual, Mark Barnett.

He said: “People are flocking to Woodford with the belief that it was he alone who determined the performance of the fund. If that’s the case, how come Mark Barnett consistently outperformed him? It’s a team-based approach and now he hasn’t got the team.”

However, not all advisers were holding back.

Ruth Whitehead, IFA at Ruth Whitehead Associates, said she had clients “queuing out the door” for the fund.

“Neil has a 20-year-odd history of fund management experience and there is no need to wait. He has been hugely accountable for a very long period of time, so why would there be a problem?” she said.

Mr Woodford officially left Invesco Perpetual – where he built up a formidable record in charge of its giant Income and High Income funds over 26 years – to join Oakley Capital last week.

He gained FCA approval to launch his new venture, Woodford Investment Management, out of Oakley on May 1.

His first fund will be called CF Woodford Equity Income, subject to FCA launch approval. In spite of early hopes it would debut this month, platforms have suggested the launch is now scheduled for June.