Star manager Neil Woodford's new fund is the top performer in the Investment Management Association (IMA) UK Equity Income sector since its launch in June with a return of 7.4 per cent, according to data from broker Hargreaves Lansdown. This is against 0.5 per cent for the FTSE All-Share, CF Woodford Equity Income's (GB00BLRZQ513) benchmark, while the UK Equity Income sector average was 0.7 per cent. We count CF Woodford Equity Income as an IC Top 100 Fund.
The next best-performing fund in the sector was Majedie UK Equity Income Fund (GB00B7FRND86), which returned 5.8 per cent over this period.
Mr Woodford's former funds, Invesco Perpetual Income (GB0033053827) and High Income (GB0033054015), which are now managed by Mark Barnett, both delivered 4.68 per cent. These are no longer ranked in the UK Equity Income sector because their yields fell below the level required, but if compared with the funds in this sector they would come third.
"Six months is an extremely short time to judge performance, so we need to look back a lot further to get a better idea of just how successful these managers have been, said Laith Khalaf, senior analyst at Hargreaves Lansdown.
If you are invested in an equities fund you should have a long-term horizon of at least five years, and similarly judge its manager over longer periods.
Mr Khalaf's analysis finds that Mr Barnett, who started running Invesco Perpetual UK Strategic Income Fund (GB00B1W7J535) in January 2006, has returned 126.3 per cent for investors since that time. Over the same period Mr Woodford returned 119.4 per cent, the FTSE All-Share returned 66.4 per cent and the IMA UK Equity income sector returned 58.2 per cent.
"Both managers have significantly outperformed the UK market and their peers," said Mr Khalaf. "Over this period, Mr Barnett has just got the upper hand, although it is probably only fair to point out that for most of this period he was managing a much smaller amount of money which would have given him greater flexibility."
But Mr Woodford is now managing a smaller amount of money of around £8bn, while Mr Barnett is running in excess of £20bn, "a more challenging task" according to Mr Khalaf.
This comes as two senior executives at Woodford Investment Management announced their departure from the company. Chief operating officer Nick Hamilton, and chief legal and compliance officer Gray Smith are due to leave the company on Monday 15 December.
This follows Woodford Investment Management's hiring of Simon Osborne as head of compliance, Gavin St John-Heath as chief risk and operations officer and James Newman as head of operations. Craig Newman, chief executive officer at Woodford Investment Management, said the company needed to recruit further experienced specialists to ensure it met the standards required of the business, and the standards it wants to lay down on how a new fund business should operate.
"Essentially the legal and compliance (and also the risk and operations) parts of the business have been separated which is perfectly natural in a growing business," commented Mark Dampier, head of research at Hargreaves Lansdown. "The departures will make the headlines but overall it's clear to see the strengthening of the operations team is positive. There is no impact on the way Woodford manages the funds and investors should not be concerned."
