Investment guru Neil Woodford has proved he can rival his former employer, after his flagship fund broke through the £10bn mark for the first time.
Woodford made his name at Henley-based asset manager Invesco Perpetual, turning heads by delivering stellar returns to investors in its £11.1bn High Income fund.
"Neil Woodford puts bums on seats," said Hargreaves Lansdown senior analyst Laith Khalaf.
Since 1988, when he first took charge of the High Income fund, Woodford has averaged a 12.7 per cent return to investors each year. £10,000 invested in 1988 would have £296,300 of returns and delivered £42,614 of income, according to analysis by Hargreaves Lansdown. Khalaf added:
Woodford’s career track record demonstrates the significant value that can be added by a skilful active manager, and investors who have stuck with him for the long term have been very handsomely rewarded indeed.
Similar to many active managers, Woodford had a more muted 2016, with miners hit at the start of the year and financial firms dragging performance in the second half of the year.
Nevertheless, his equity income fund has delivered returns of over 30 per cent since its launch less than three years ago. And he has now decide to launch a second income fund called Income Focus, which has the flexibility to go on the hunt overseas for income returns.
With the level of management charges near the top of the agenda for many investors, Woodford's standard annual management fee is 0.75 per cent, cheaper than 80 per cent of the market, said Khalaf. He added:
"Given Woodford’s reputation and performance, you might naturally expect to have to pay a premium to get access to his skills and expertise, but in fact his funds are available to investors for a lower annual charge than many of his peers. It’s a bit like being able to pick up a Rolls Royce for the cost of a Fiat Panda."