Personal Finance

Why you should look beyond Neil Woodford

You would be forgiven for thinking that the only active fund manager worth considering for your cash is Neil Woodford.

A media storm that accompanied the launch of the star manager’s investment company last year has seen his flagship fund raise £6bn in just 12 months, while the investment trust he brought to market earlier this year was massively oversubscribed but is already raising fresh funds. He’s made money, too: The Guardian reports that the main fund returned 20 per cent in its first year to finish top of its Equity Income sector.

But new research suggests there are a number of other lesser-known managers who actually outperform Woodford over long periods. The Times says [2] research from investment platform TD Direct Investing found he was only the ninth most successful UK fund manager with more than £100m to their name over the past decade, having returned an average of 10.4 per cent each year.

This ranked below the top placed Harry Nimmo, a “celebrated small companies investor at Standard Life Investments, who has generated returns for investors of 14.15 per cent a year”. Other figures higher on the list include Daniel Nickols at Old Mutual, Anthony Cross and Julian Fosh at Liontrust Asset Management, and Richard Buxton of Old Mutual. All 25 of the managers on the list are stellar performers and as a whole they have returned an average of 9.8 per cent a year, far exceeding the 7.1 per cent for the FTSE-100.  

Nevertheless, Woodford’s name and track record – his Invesco Perpetual High Income Fund returned an astonishing 2,224 per cent in the 25 years between February 1988 and September 2013, according to the Investors Chonicle – continues to attract the most attention from investors.

The Daily Telegraph says that his Patient Capital Trust is raising more money from investors, despite having brought in £800m in a round that concluded just four months ago. Having dipped three per cent on the news, shares are back above 115p and represent a sizeable 11 per cent premium to the estimated value of assets held. This effectively means investors are paying 11 per cent more than each share’s underlying value for the privilege of being in the fund, a price some analysts believe is too high.

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