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Post by Fletchsmile on Jun 11, 2015 15:12:33 GMT 7
Neil Woodford has an excellent track record as a fund manager, and I'd been investing in his funds for a couple of decades. Some people advocate low cost ETFs as the best way to approach investing. However, while the Neil Woodfords of this world cost a little more they generate superior performance over time. This performance relative to the market is often referred to as "alpha", and he certainly generated alpha. So when he left Invesco Perpetual to set up his own company people wondered what would happen to the Invesco Perpetual funds he used to be involved in, as well as should they move to his new funds instead Per the article below, it seems the new guy, Mark Barnett has done relatively quite well ======================================================== www.hl.co.uk/funds/fund-news-and-investment-ideas/fund-news--and--alerts/invesco-perpetual-income-funds-research-update-2015-05-22Performance has been good over Mark Barnett's short tenure with the Invesco Perpetual High Income and Income Funds outperforming the peer group by 8.9%* and the Invesco Perpetual UK Equity Pension Fund outperforming by 7.4%. Although please remember past performance is not a guide to future returns.
He has built a good long-term track record managing the Invesco Perpetual UK Strategic Income Fund and the Perpetual Income & Growth Investment Trust. Our analysis suggests returns have been led by the manager's strong stock picking along with good sector positioning. While we believe Mark Barnett will do a good job managing the Invesco Perpetual Income, High Income and UK Equity Pension Funds, we currently feel there are superior alternatives within the IA UK All Companies and IA UK Equity Income sectors. The funds are therefore not currently being considered for inclusion on the Wealth 150 list of our favourite funds across the major sectors.================================================================Myself I waited a few months, to see how the new CF Woodford Income funds were doing, just to be safe, then when everything looked OK switched my Invesco Perpetual Income fund into the new CF Woodford Income fund. While the new guy has done well, Neil Woodford has continued to do better. Happy I switched, and happier still I didn't go for a low cost ETF with average market performance Over 1 year to 10 June, the new guy has returned 11.8% vs around only 8% for the market. On the other hand Woodford has done even better returning 17.7% Over 6 months to 10 June, the new guy has returned just under 8% vs just over 8% for the market. On the other hand Woodford has returned over 11% |
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Post by Fletchsmile on Jun 16, 2015 12:48:03 GMT 7
Another article on Neil Woodford's outperformance - top equity income performer over 1 year
Useful also to see which sectors he favours
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Neil Woodford is top equity income performer with 20% return
Former Invesco Perpetual star manager’s new fund, Woodford Equity Income, has in less than a year produced a return of £11,960 per £10,000 invested
Neil Woodford, one of Britain’s most successful fund managers, has been named as the best performer in the UK equity income sector after his new fund delivered an investment return of nearly 20% in less than a year.
Woodford Equity Income, which he set up after quitting Invesco Perpetual, has returned 19.6% to investors since 19 June 2014, which means £10,000 invested at launch is now worth around £11,960.
Financial services company Hargreaves Lansdown said the average UK equity company had returned 9.3%, while the FTSE All Share index was up 6.5%. The performance has been attributed largely to avoiding oil and gas stocks and investing in US shares, which have benefited from a strong dollar.
“Woodford’s stock selection has been particularly strong in smaller growth companies and large high-yield companies,” said Laith Khalaf, an analyst at Hargreaves Lansdown. “Small caps contributed particularly positively to performance, accounting for around 40% of performance, despite making up only 15% of the fund. This is particularly impressive against a backdrop in which small cap growth stocks as a whole have actually lost money.”
He added that the fund had benefited from exposure to healthcare, financial firms and consumer goods stocks. Woodford holds no bank shares but has taken positions in Allied Minds and Provident Financial, among others, which have performed well. Woodford Equity Income has generated some £5.7bn from investors, which puts it in the 10 largest retail funds, according to Khalaf.
In a statement, Woodford said the portfolio of the fund reflected his cautious view of the global economy. He said it was difficult to say whether there is one feature which has dictated its success and that it is too early to say their strategy has worked.
“However, some sectors of the market, which are not represented in the portfolio such as oil, gas and mining have tended to perform poorly,” he added.
“Turnover has been characteristically low, reflecting our long-term investment horizons. We have continued to build exposure to several core holdings, focusing particularly on those that have displayed periodic share price weakness. This includes GlaxoSmithKline, Drax and Rolls-Royce.”
Woodford has also backed Royal Mail and engineering outsourcing business Babcock International. Between 4% and 5% of the portfolio is made up of early-stage businesses, some of which are unquoted, he said.
“Our strategy and outlook for the fund have been consistent since launch,” Woodford added. “We see a challenging future for the global economy, corporate earnings and indeed for equity markets, which have been inflated by successive and substantial injections of liquidity through quantitative easing.”
His replacement at Invesco Perpetual, Mark Barnett, has put in a strong performance, said Khalaf. “Over the last year he has done an impressive job, with the income fund returning 13.3% and the high-income fund returning 12.9%, well ahead of the sector average of 9.3%,” he said.
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AyG
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Post by AyG on Jun 16, 2015 13:32:04 GMT 7
I don't think the Barnett/Woodford comparison over the short term is entirely fair.
The massive withdrawals from the Invesco Perpetual funds following Woodford's defection meant that a lot of positions had to be sold down. Given the lack of liquidity in some parts of the market it's inevitable that some sales will have been forced. On the other hand Woodford was starting with a clean sheet and could invest as he wished. Not surprising that Woodford has done relatively better than Barnett under the circumstances.
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Post by Fletchsmile on Jun 16, 2015 14:31:12 GMT 7
Yes fair point that Barnett would have had to deal with the outflows, making it tougher in some ways. From another angle though, one could say Barnett probably inherited a well positioned portfolio, so part of his performance over the last year would have been due to Woodford's selections previously - after all he didn't change the whole portfolio completely. This is also borne out when you see that many of Woodford's holdings in his new funds were similar to the ones he had at Invesco Perpetual. That's why the second article was interesting. Woodford came top of the whole sector, so to beat him the new guy would have had to top the sector anyway. Would Barnett have done it? Who knows? - probably not. Key takeaway for me is that it still seems to pay to follow Neil Woodford, as it has done for the last couple of decades, rather than stick your money in a "low cost ETF" that beats "most equity funds" or "the average equity fund", It's pretty clear Woodford remains better than average and better than most  Worth keeping Barnett on the radar screen too. |
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Post by Fletchsmile on Jun 16, 2015 19:18:01 GMT 7
I was having a looking at the new Woodford Patient Capital Trust (WPCT) - it's an investment trust in nature, and launched 25 April. It's small and nimble with assets just over GBP 800 mio
The Company's investment objective is to achieve long-term capital growth through investing in a portfolio consisting predominantly of UK Companies, both quoted and unquoted. The Company will aim to deliver a return in excess of 10% p.a.over the longer term.
It's one I'll keep an eye on, but at the moment, I can't really justify investing in it. It trades at a premium of almost 10% to net asset value (NAV), and that's way too high for me - obviously it was a popular launch, and with only 800mio worth of shares at issue - and being a closed-end fund demand obviously outstripped supply. In contrast his unit trust fund - which is open-ended - is GBP 5.7 bio - so about 7 times the size of the investment trust. The unit trust pricing will also be based on NAV without premium/ discount
So will keep an eye on WPCT, but not interested at 10% premium above NAV for a relatively new launch - even for such a renown manager
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AyG
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Post by AyG on Jun 16, 2015 20:10:28 GMT 7
I was having a looking at the new Woodford Patient Capital Trust (WPCT) - it's an investment trust in nature, and launched 25 April. It's small and nimble with assets just over GBP 800 mio From memory, the initial capitalisation was supposed to be GBP 300 million. However, it was vastly oversubscribed, hence the increase in capitalisation. Some commentators have suggested that at 300 million it was able to be nimble and invest in small companies, but at the larger size a lot of that advantage disappears. |
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Post by Fletchsmile on Jun 16, 2015 20:33:03 GMT 7
Yes, I remember it being GBP 250 mio or something like that. Guess it was really popular. Another reason though to wait and see for a while first.
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The Arrow
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Post by The Arrow on Jun 19, 2015 16:10:45 GMT 7
Neil Woodford: The man who can't stop making moneyThis weekend, hundreds of thousands of small investors - many of them pensioners - will be saluting Britain's very own Warren Buffett.Since he launched his own fund exactly a year ago, Neil Woodford has delighted investors with an 18% return on their cash. By contrast, the average share on the London stock exchange - up to the end of last week - had risen by just 2%. www.bbc.co.uk/news/business-33113081
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Post by Fletchsmile on Jun 19, 2015 18:58:33 GMT 7
Good article - maybe even the BBC are looking to Big Mango for inspiration Tried to check when I first bought his funds, but my records these days are all PC based, so I couldn't find when I first bought, only an old Excel spreadsheet showing an existing holding already in place in October 1996, so pre-dates that. Has been a great guy to follow. Nice guy too. |
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Post by Fletchsmile on Jun 24, 2015 9:40:22 GMT 7
Another article for anyone wanting to understand more about the fund. Highlights: "...performance has been driven by a combination of strong selection and sector positioning."
" At a sector level, a lack of exposure to the oil & gas sector has proven beneficial against a backdrop of a falling oil price. Elsewhere, a bias towards healthcare firms, one of the sectors he is most positive on and where around a third of the fund is currently invested, has also provided a tailwind.
Stock selection within the financials sector has also been strong, where Neil Woodford holds no banks, but has taken positions in Allied Minds and Provident Financial, among others, which have performed well."============================================================= CF Woodford Equity Income: One year anniversaryKate Marshall | 23 June 2015 | A A A One year on since launch of the CF Woodford Equity Income Fund, and what a year it has been. Neil Woodford launched his new equity income fund in June 2014 and it has since been the subject of many investors’ attention, given the reputation he has built over the years as one of the UK’s finest fund managers. I’m sure Neil Woodford would say one year is not really long enough to draw any conclusions and he should be judged over decades, not a single year. With that caveat, it has still been an exceptional start and, since launch, the fund has been the best-performing in the UK equity income sector. Over this time the fund has grown by 17.9%, with dividends reinvested, outperforming the IA UK Equity Income sector by 9.7% and the FTSE All Share Index by 13.5%, although it should be remembered this short-term performance is not guaranteed to continue. contd. www.hl.co.uk/news/articles/cf-woodford-equity-income-one-year-anniversary |
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Post by Fletchsmile on Jun 25, 2015 20:15:04 GMT 7
Always like listening to what this guy has to say ==================================================================================== Neil Woodford: investing in an abnormal worldA year on from the launch of his Woodford Equity Income Fund, Neil Woodford discusses his strategy in what he feels is an unusual investing environment. With equity markets revisiting historic peaks in recent months, investors could easily be lulled into a false sense of security about the state of the global economy. At face value, equity markets appear to be suggesting that all is well in the world and the problems that caused the financial crisis are now well behind us. I have a few words of caution against drawing such a conclusion, however. I believe it would be wrong and, from an investment perspective, risky to believe that we live in a normal world. In case anyone ever needs a reminder of how abnormal current conditions are, I would recommend the chart below. In the first 300 years of the Bank of England’s history, interest rates averaged nearly 5% and never fell below 2%. In the financial crisis of 2008/09, however, they retreated below 2% for the first time in history and have remained at 0.5% since March 2009. In my view, they look set to remain at these very low levels for some time to come.Not only do we have ultra-low interest rates, though, we have also had quantitative easing (QE) in the UK and US and this form of extraordinary monetary policy continues in Europe and Japan. QE is a controversial policy for a number of reasons but, in my view, one of its biggest drawbacks is that it can be held primarily responsible for creating a dangerous mirage of normality, because it has driven a wedge between financial asset prices and the anaemic economy underneath them. From the outset, the objective of QE was to inflate financial asset prices in the hope and expectation that the rise in value of those financial assets would ultimately precipitate a trickle-down effect in the real economy. That was the theory – in reality, we’ve had the first piece in the form of higher asset prices but we haven’t seen the follow-through. Some economists have argued that without QE, deflationary forces would have been more intense and growth outcomes may have been even worse. It’s difficult to argue against this suggestion but, in my opinion, QE has not delivered what the architects of the policy hoped it would deliver, namely, a real economic transformation. It has inflated asset prices, though, and therein lies my concern. Without an improvement in underlying economic fundamentals, if you keep driving asset prices up, in the end you create a financial asset price bubble. We know from relatively recent history that asset bubbles burst in an unpredictable and unpleasant way with real economic effects that can be very damaging and long-lasting. This is why I worry about QE – the ultimate consequences of the policy could be the complete opposite of what it was originally designed to deliver. Such an outcome could still be years away, however, and in the meantime, QE is likely to continue as a policy. Investors, therefore, need to remain vigilant and acutely conscious of inflated valuations. Equity markets remain one of the few areas where undervalued assets can still be found. There are large areas of over-valuation as well, so it’s very important to be selective but there are enough attractive opportunities out there to build a diversified portfolio. Amongst smaller companies, we continue to find early-stage businesses which have tremendous long-term capital appreciation potential. And, within the large cap investment universe, some dependable sources of dividend yield and dividend growth are also undervalued, sometimes profoundly so. This undervaluation is most evident when high quality, dependable growth equities are compared to yields on fixed interest securities. Within the CF Woodford Equity Income Fund portfolio, we have notable positions in BAE Systems, Imperial Tobacco and Legal & General (to name but a few), all of which have forecast yields at the time of writing in excess of 4.5%. To find an equivalent yield among 10yr sovereign bonds, you would have to look towards the likes of Brazil, Turkey and Russia – I know which I consider to be the safer sources of income. Furthermore, the yield on these equities tends to be higher than the yield on the same company’s corporate bonds. When you consider that equities are real assets, capable of delivering long-term income growth and that bonds are nominal assets offering no growth, this situation looks anomalous. In my view, it is indicative of both the over-valuation of bond markets currently and the under-valuation of select high-quality, dependable growth stocks.This is why, in spite of my concerns about QE and future bubbles, I am confident that I can find attractive investment ideas. As those ideas play out I am, in turn, confident that I can continue to deliver attractive returns to investors over the long term. www.hl.co.uk/news/articles/neil-woodford-investing-in-an-abnormal-world |
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Post by Fletchsmile on Aug 13, 2015 23:29:36 GMT 7
Neil Woodford and/or Investment Trust fans may be interested to take a look at what he's holding in his new IT. I like what I see, I just can't bring myself to pay a premium of over 11% on NAV. Particularly with all the market uncertainty at the moment. Well names as Patient Capital Trust in more ways than one. www.hl.co.uk/news/articles/woodford-patient-capital-full-portfolio-released |
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Post by Fletchsmile on Jul 6, 2016 10:44:40 GMT 7
Neil Woodford and/or Investment Trust fans may be interested to take a look at what he's holding in his new IT. I like what I see, I just can't bring myself to pay a premium of over 11% on NAV. Particularly with all the market uncertainty at the moment. Well names as Patient Capital Trust in more ways than one. www.hl.co.uk/news/articles/woodford-patient-capital-full-portfolio-releasedFinally got a chance to add to WPCT thanks to Brexit, and have now done so. It now stands ar a discount of around 5% to net assets compared to the 11% premium a year ago. At this stage just dipping my toes in. The last year has caused me to have a couple of reservations with the direction the fund has taken, and some of his investments in illiquid small caps. But I still have a lot of respect for the fund manager, and it's the fund manager I'm really buying long term for. www.hl.co.uk/shares/shares-search-results/w/woodford-patient-capital-trust-ord-gbp0.01Another factor being that buying thru Singapore the range of unit trusts is much smaller and less attractive than buying thru the UK, so being able to access his skills in an investment trust at a potentially cheaper cost and held outside the UK for me is nice. I still prefer his tried and tested unit trust though if buying from the UK, but WPCT is a nice way of branching out a bit if buying from outside the UK. |
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AyG
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Post by AyG on Jul 6, 2016 11:21:47 GMT 7
Finally got a chance to add to WPCT thanks to Brexit, and have now done so. It now stands ar a discount of around 5% to net assets compared to the 11% premium a year ago. Personally I don't see his Patient Capital as an alternative to his income fund. The investments are very different. And for me, that raises the question of whether his skills in one sector are really transferable to a quite different one. That's warning sign #1. Warning sign #2 is that a few of his investments (e.g. Circassia) have proved pretty disastrous. And sign #3 is the repeat raising of more capital, meaning the trust is now too large to stick to its original remit. Still, at least the modest discount is much more sensible than the ludicrous premium it was at thanks to all the hype around a man (no, he isn't a god walking among us, despite what financial journalists may write). Maybe things will all turn out well, we'll just have to wait a decade or so to see. |
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Post by Fletchsmile on Jul 6, 2016 11:44:52 GMT 7
Yes good point that the unit trust and investment trust have diverged quite a lot compared to what people might have expected. The holdings in the UT and IT are quite different if one looks these days.
I also have some reservations with the direction he's taken as mentioned, and Circassa is one in mind. I see that as an experimental sort of area on a smaller proportion of the fund. We've seen it before where a quality fund manager has gone into a new area and failed - Anthony Bolton and China springs to mind. The difference here though isn't as big. Woodford still has a large proportion in UK equities and western equities. UK developed market to China EM by Bolton though was a massive shift. I held Anthony Bolton for many years, watched his China fund but never thanfully bought in.
Hence overall also the dipping the toes in to something I've been following, but by no means on the scale of the amount already invested in the UT.
The key is the fund manager. I see the IT as an alternative long term play on him rather than a direct substitute for the UK unit trust. A way to branch out a bit. The other factor people should bear in mind is that while we've had 25 very good years give or take from him in UK equity unit trusts, it's not necessarily reasonable to expect he'll even be around for another 25 years, let alone replicate the performance in a new venture. That risk rarely gets mentioned.
I'm not so worried about the third point and size of the trust. Apart from the discount/NAV issue which is one of the most annoying and unpredictable factors of the whole invest trust industry, another thing that often bugs me in the sector is ITs that are too small.
While small ITs are nice and nimble in good times, and while performing well you can often buy in easily, what I've often found is that for smaller investment trusts I can't always get the amounts I want on buying - the liquidity and supply isn't there. On buying it can just become an annoying waste of time. But on selling that's where the issue is. In a downturn that can turn into a nightmare and a real issue. No-one wants to buy, the market supply and liquidity is small. You're stuck. So while I hear the argument for small and nimble, liquidity is often more a priority for me for investment trusts. If buying a long term hold for equity income for years to come then I'm less worried. But sometimes samll ITs can be a pain in the a**e 555
WPCT is around 700mn - 800mn so not exactly a colossus.
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