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Should SJP put all its eggs in Woodford’s basket?

Advisers are concerned St James’s Place is relying too much on one star fund manager after its decision to move the management of mandates from Invesco Perpetual over to Neil Woodford’s new investment firm.

SJP announced last week it will switch management of its UK High Income, Income Distribution and UK Equity funds from Invesco Perpetual to Woodford Investment Management ahead of the star manager’s departure from Invesco later this month.

Advisers agree the three funds, with collective assets worth £3.65bn, should serve as an early boost to Woodford Investment Management.

Skerritts head of investment Andrew Merricks says: “Woodford’s new firm will kick off with more than many fund managers could dream of accumulating in their lifetime.”

But Merricks believes SJP missed the chance to diversify more of its UK equity exposure away from the star manager.

He says: “SJP will be geared up to make this transition as smooth as possible but you do wonder if it has become reliant on one manager. If you look at Invesco it has almost certainly been more a case of Woodford Perpetual for a while because it has become so dependent on Woodford.”

Worldwide Financial Planning IFA Nick McBreen questions how SJP will explain the switch to investors. He says: “How can SJP justify moving money to a brand new operation to clients? You have got to have a good research process that shows why you are moving over to a new, untested fund, regardless of whether it is Woodford or not. I cannot see how SJP would have come to this decision other than following an individual to attract attention.”

But Jonathan Davis Wealth Management managing director Jonathan Davis argues Woodford’s new venture should not hold too many unknown prospects for SJP.

He says: “Assuming Woodford will be running the same form of strategy he has been doing for so long then Woodford Investment Management is not an entirely unknown quantity.

“SJP may be putting its eggs in one basket but that egg has stayed good for many years.”

Including the £3.65bn being handed over to Woodford Investment Management, Invesco has lost mandates worth almost £8bn as part of the SJP fund overhaul. 

Threadneedle will take over two strategic managed funds with assets of £3.35bn. The mandate on the £719m SJP Global Equity Income fund has been handed to Manulife.

ADVISER VIEW

Nick McBreen

Invesco Perpetual is not going to fall apart just because Neil Woodford has left.

Seldom would any fund’s track record come down to purely one person and Mark Barnett has been doing a good job.

Nick McBreen is an IFA at Worldwide Financial Planning

 

EXPERT VIEW

Jason Hollands

There has been significant attention building around Neil Woodford’s self-titled venture.

At least one discount broker is actually taking out adverts in the national press to potentially market a fund that does not even exist yet.

So there is no doubt there is going to be a frenzy over the launch of Woodford Investment Management, which is no surprise given his reputation.

But investors should consider keeping money in Woodford’s former mandates at Invesco Perpetual as well as expressing an interest in the new funds.

There will inevitably be those who say you should follow Woodford to the new firm but it does no have to be an either/or decision.

A perfectly sensible thing for investors to consider might be to put some cash into Woodford’s new fund but this does not necessarily have to be funded by ditching their Invesco holdings. I do not think the two necessarily have to be wrapped up as one investment decision.

Jason Hollands is managing director at Bestinvest

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