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Invesco v Woodford – The Gloves Are Off

It’s been a bit of a week for Invesco Perpetual, one way and another. Fresh from the news that its former star manager Neil Woodford is to launch his first fund on 2 June  – the CF Woodford Equity Income Fund – Invesco has opted to get its retaliation in first by announcing its own forthcoming launch. And guess what, the new Global Distribution fund bears some interesting similarities to Mr Woodford’s own fund.

All of which is not so very surprising, considering that Woodford is expected to take perhaps a billion pounds’ worth of Invesco Perpetual’s AUM with him when his new fund launches. The new fund itself will be worth around £1 billion, according to industry estimates, but it would be no surprise if his existing £3.7 billion worth of holdings on behalf pf St James’s Place were also to feel the benefit of an investor migration.

The Invesco Team

The similarities between the Woodford and the Invesco funds? Firstly, that they both aim to deliver capital growth and income – although Woodford intends to focus on equities whereas the Invesco fund can hold both equities and bonds. And secondly, that Invesco is putting its very top level of managers on the job. Paul Causer and Paul Read have an enormously impressive 19-year track record at the Invesco Perpetual Corporate Bond fund – having scored a 90% gain in a difficult 10 year period – and they will be bringing together the combined skills of the group’s global equity team.

The Old/New Contender

But the main media spotlight, as you’d expect, is on Woodford’s new venture. The star manager’s high income fund clocked up an extraordinary 2,365% cumulative return during his 25 years at Invesco Perpetual. So it was no surprise that last autumn’s news of his impending departure prompted a surge of demand from adviser clients to switch existing assets into the new group’s funds at the earliest opportunity.

This is that opportunity. The fund will be personally managed by Neil Woodford, adopting the same investment approach as previously at Invesco Perpetual. Woodford says he will focus on valuation, and on identifying companies that can deliver sustainable dividend growth, and those that he believes will be dividend payers of the future. But he insists that he will invest in a company only when he is convinced of the compelling long-term opportunity. No speculative or intuitive movements there, then.

Woodford stresses that the new group intends to offer its clients a high level of price transparency. It will, for instance, absorb fund-related expenses into its annual management charge (AMC), meaning that its AMC will be all there is to pay.

“We are able to keep our fees low, through the use of modern technology,” said Craig Newman, chief executive of Woodford Investment Management, at the press conference where the launch was announced. He added that the fund would also be “encouraging investors to use fund platforms, execution-only brokers and financial advice channels, rather than buying directly from us. Many investors are still needlessly paying higher fees as a result of buying directly from fund management companies in the past.”

It’ll also help that, like Invesco itself, Mr Woodford is staying away from the City of London. Instead, the new fund group is based near Oxford, where Woodford says he intends to leave the CEO stuff to Mr Newman and to concentrate solely on fund management.

What's On Offer

The CF Woodford Equity Income Fund will have four share classes, as follows:

CF Woodford Equity Income Fund Fees

Share classes and fees

 

 

A
Inc & Acc

C
Inc & Acc

Z
Inc & Acc

X
Inc & Acc

Initial

None

None

None

None

Annual

1.00%

0.75%

0.65%

1.50%

Ongoing charge

1.00%

0.75%

0.65%

1.50%

Exit

None

None

None

None

More information is available from: www.woodfordfunds.com

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