The Invesco Perpetual High Income fund, managed by star fund manager Neil Woodford, has become the first UK unit trust to reach £10bn of assets under management.
In setting this record, Woodford raises some questions about the amount of assets he manages and whether a manager can become ‘too big’.
Our Investment Committee has had concerns about the size of Neil Woodford’s mandate for some time.
Clients sometimes ask us why we have not been recommending the Invesco Perpetual High Income fund recently. It is a fund that is frequently recommended by other financial advisers and often included in press coverage of the sector.
Size was an important factor when it came to this decision to remove the fund from our recommendations.
In addition to the £10bn High Income fund, Neil Woodford runs the £7.8bn Invesco Perpetual Income fund and a number of institutional mandates.
The trouble with managing so much money is that it makes taking even a small position quite challenging. In their press release, Invesco Perpetual make the point that, if the fund was a standalone fund management company, it would be the 20th largest in the UK.
Invesco Perpetual are keen to point out that there are no capacity pressures. We believe that size is an important consideration and would urge investors to think carefully about investing in such as Behemoth of a fund.
Smaller, more nimble funds exist in the same sector that should be carefully considered by investors who are looking at the funds run by Neil Woodford.
Photo courtesy of wwarby.