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Woodford’s back…. but will the assets follow him?

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We won’t be making a habit of having too many fund managers on the front cover of Money Marketing but make no apologies for this week’s choice.

“Star manager” is an over-used term but Neil Woodford is one of the very few fund managers to live up to such a billing and consistently deliver for investors.

He shocked the asset management world last year when he announced he was to leave Invesco Perpetual after 26 years to become head of investment at Woodford Investment Management.

At the time he said the move was triggered by a “personal view about where I see long term opportunities in the fund management industry”.

After joining Woodford IM last week following a period of gardening leave, he expands on these opportunities in this week’s MM.

Notably, he believes traditional asset management companies are shackled by legacy issues and bureaucracy which mean their cost bases are more expensive than they otherwise need to be.

The firm has yet to disclose its charges but if it is able to be genuinely disruptive to a fund management sector that has yet to really see the squeeze on prices many have been predicting post-RDR it can only be a positive thing for investors.

Woodford’s philosophy of long term investing and steering clear trendy fads that might boost short-term performance have made him very popular with advisers and investors over the years. His defensive stance and apprehension over the UK economy at a time when many are rushing to celebrate growth increases will also strike a chord with many.

His big overweight pharma call a few years ago, when many others were warning the sector was blighted by lucrative patents coming to an end, looks increasingly like it may end up being filed alongside his refusal to join the rush to tech stocks pre-2000 in terms of prescient decision-making.

Lots of advisers will be waiting for a track record to be established before moving client money into the new venture. But many others will follow Woodford across to his new firm based on an investment philosophy they understand and believe in and a record of getting big calls right.

The newly established firm faces plenty of challenges as it looks to establish itself in a heavily regulated and competitive marketplace, especially when it comes to buying in talent. But  it would be a brave person who bets against Woodford continuing to emulate previous successes.

Follow Paul on twitter @mcmillan_paul 

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