Not every private investor worships at the altar of fund management star Neil Woodford. Some point out that he is mere flesh and blood and complain that too many treat him like an investment god. They are right, of course, Woodford is only human, as he knows well enough. That explains why he works out in the gym, in a bid to stay fit and mimic Warren Buffett by investing into his 80s. As someone who personally invests in his funds, I hope he does.
Born To Win
All men are mortal but some are better at investing in others, and Woodford is perhaps the UK’s most celebrated example. He won his reputation in the 1990s, by standing aloof from the dot.com frenzy. He cemented it in the run up to the financial crisis, by snubbing the banks. Now he is at it again, thrashing the market with his eponymous fund CF Woodford Equity Income.
If making your reputation is a battle, enhancing it is even harder. Too many fund manager “stars” burn brightly then fade out just as quickly, but Woodford shone again in 2015. His fund grew 18% last year, when the FTSE 100 fell 2.7% and the All-Share went nowhere. That is quite a performance from an established star, given that so many prefer to play safe and live on their past glories.
Big Money
Many investors will be delighted, having backed his fund with billions since launch in June 2014. CF Woodford Equity Income was the most bought fund by customers at both Bestinvest and The Share Centre in 2015, and is the most researched fund on the Hargreaves Lansdown site as I write this. It has grown from zero to a £8bn behemoth in less than 20 months.
Woodford made his name at Invesco-Perpetual with his Income and High Income funds, where he famously turned £10,000 into £140,000 in 20 years. Those were equity income funds primarily targeting blue-chips, whereas his new fund combines a core nucleus of big dividend stocks such as Imperial Tobacco, AstraZeneca, GlaxoSmithKline, British American Tobacco and BT with smaller, younger businesses with stronger growth prospects.
Metal Guru
Of course, Woodford isn’t infallible. A report in December suggested he lost around £38.5m from a failed investment in a controversial US firm Northwest Biotherapeutics. I had the temerity to question his decision to offload Vodafone in February 2013 when the share price stood at 185p. Today it stands at 221p so I think we can call that a draw. This is just nitpicking when set against his many victories: he wisely dumped Tesco when Warren Buffett was still an avid buyer.
Woodford isn’t immune to market falls such as the one we are suffering now, but his fund is still 12% higher than a year ago, while the FTSE 100 is down 9.5% in that time. As stock markets crash about our ears too many investors are focused on the dangers of losing money rather than the opportunity to make it. Neil Woodford won’t be making that mistake. He will be holding his nerve and buying shares, which is just one factor that makes him a winner.
