Well-known fund manager Neil Woodford spent more than 26 years with Invesco Perpetual where he turned £1,000 of investors’ money into around £23,000, which earned him a reputation as one of Britain’s top stock pickers. But since launching his own Woodford Investment Management company in 2014, things haven’t been going so well.
Poor performance
His Equity Income Fund is up around 22% on a total return basis since it started in June 2014. That means the performance has been measured with all income from dividends reinvested along the way. So, it’s in positive territory but the problem is that the fund has underperformed the total return of the FTSE All Share Index, which delivered around 33% over the same period.
In other words, you’d have been better off investing in a cheap passive index-tracker fund than paying the higher fees to invest in Neil Woodford’s fund – saving on the fees as well as gaining on the performance of your money. And it’s a similar story with Woodford’s other funds. The total return of the Income Focus Fund since it started in April 2017 is a decline of around 4.29%, which compares to a gain of around 8.75% from the FTSE All Share index. Meanwhile, the Patient Capital Trust has disappointed investors with a rise of just 1% or so since it launched in April 2015.
Yet not all income-led investment funds have been underperforming and there’s a good example in the Slater Income fund run by fund manager Mark Slater. You probably don’t immediately think of Mark Slater as an income-focused investor because his father was the growth company investor Jim Slater, who became well known for penning his investment book The Zulu Principle. However, Mark has demonstrated over several years that he is a formidable stock picker and the performance of his funds have been hitting the top lists.
Great performance
Over at Slater Investments, the Income Fund has delivered a total return of around 48% over five years and about 13% over three years, so it compares favourably against Neil Woodford’s income funds. But there have been great performances from the other Slater funds too. The Growth Fund has delivered 98% over five years and 38% over three years and the Recovery Fund has scored a return of around 103% over five years and almost 50% over three years. It seems clear which fund manager of these two served his investors best over recent years and it’s Mark Slater – is he the new Neil Woodford?
Of course, there’s no guarantee that an outperforming fund manager will go on outperforming. Just look at Neil Woodford’s recent record for proof of that. Equally, there’s no guarantee that an underperforming fund manager will go on underperforming. But I do think that Mark Slater is building an enviable reputation as a consistently outperforming stock picker and he’s been picking up awards for it along the way. Maybe one day soon we’ll all be using Mark Slater’s name as the benchmark for British investing prowess. He might even get a CBE, just like Neil!
