Advisers have returned a mixed verdict on whether now is the time to hold or sell Invesco Perpetual Income guru Neil Woodford’s Income and Higher Income funds.
Sanlam Private Investments has axed Neil Woodford’s £11.9bn Invesco Perpetual High Income fund from its income fund White List and placed a sell rating on both of the manager’s flagship offerings after questioning his pragmatism.
The SPI White List, formerly the Principal White List, cut Woodford’s £9bn Income fund in July 2012 for the first time in a decade. The White List calculates the best 14 funds in the sector, based on consistent total returns and risk over five years.
Both Woodford’s funds now sit towards the bottom of the Grey List. SPI says Woodford’s defensive views on the market, coupled with the large number of assets, have led to the fund becoming focused in many of the largest stocks in the market.
Woodford’s funds have lagged behind their peers in the IMA UK Equity Income sector in the past 12 months but he remains one of the most successful managers in the sector over the longer term having beaten the average return over three and five years.
Hargreaves Lansdown head of research Mark Dampier says: “He has a defensive stance and if you think the market will struggle these funds are the funds for you. I don’t think size is an issue and he will always bounce back. I would diversify the fund with a couple of other funds like the Marlborough Multi-Cap Income fund and the JO Hambro Capital Management UK Equity Income fund.”
Skerritt Consultants head of investments Andy Merricks says: “From my view he is not really an active manager as he is limited in what he can invest in because of the size of these funds.. Whether it is short or longer term, there are still better options out there for investors. Look at Unicorn UK Income as an example, it has produced double the returns Woodford has in the past few years.”
Whitechurch Securities investment manager Ben Willis says the firm will continue to hold Woodford’s income funds.
He says: “You have to accept that investing in these fund is a long-term view. Size is an issue that prevents him investing in certain areas but he has always performed in the end and that is all investors care about.
“You need to mix the large super-tanker income funds with more nimbler offerings to get the right diversification.”