Woodford Beats Woodford: The Great Man Has Outdone Himself

Star fund manager Neil Woodford is used to beating the competition, but over the past year he has taken things to a different level.

The former Invesco-Perpetual dividend maestro, long admired here at the Fool, has quite literally surpassed himself.

His new fund, CF Woodford Equity Income, has overtaken his former vehicle Invesco Perpetual Income in size barely one year after launch.

At the end of July, CF Woodford Equity Income was worth a mind-boggling £6.74 billion, despite only launching in June 2014.

That puts it ahead of his flagship Invesco Perpetual Income, launched 35 years earlier in 1979, which holds “just” £6.45 billion.

Woodford v Woodford

What’s in a name? When that name is Neil Woodford, an awful lot. Investors have flocked to his new fund, hoping he would repeat the kind of performance he delivered at Invesco. In the 20 years he was at the helm of Invesco-Perpetual Income, he turned an original £10,000 investment into more than £114,000.

He also won fame for making big contrarian calls, and getting them spot-on. He coolly snubbed the tech sector during ill-fated dot-com boom in the late 1990s, and incredibly, repeated the trick by dumping the banks in the run-up to the 2007 financial crisis. Both times, history proved him right.

Plenty of people now claim they saw the banking blow-up coming, but few put their money where their mouth was, like he did.

Woodford even went head-to-head with the great man himself, Warren Buffett. He offloaded Tesco stock while Buffett was busily buying: a decision Buffett subsequently called one of his worse ever.

Big Winner

There is more to Neil Woodford than his name. The great man certainly isn’t living off past glories. Since launch, CF Woodford Equity Income has become the best performing fund in the Investment Association’s UK equity income sector. It returned 21.9% in that time, compared to 7.3% for the sector and 3.3% for the FTSE All Share, according to figures from AXA Self Investor.

Invesco-Perpetual Income, now managed by Mark Barnett, has returned a respectable 17% over the past year.  

Whenever you write articles singling out Neil Woodford for praise, someone always pops up claiming to know a far better manager. The thing is, it is always a different manager: but there is only one Neil Woodford.

Value Man

When Woodford quit Invesco-Perpetual, he was managing £30 billion across a range of funds, including his popular High Income fund. Woodford has a long way to go to beat that mighty behemoth, it is currently worth £12.38 billion (largely thanks to his efforts). At this rate, it may take him, ooh, another year.

Of course, Neil Woodford won’t always thrash the market. His value philosophy will underperform in certain conditions. Active investors might want to balance his fund with a mix of individual stocks and shares plucked from the FTSE 100 and other indices.

So where do you find these stocks? Why not let Woodford be your guide?

One sector Woodford really rates is pharmaceuticals, and at Motley Fool, so do we.

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Harvey Jones owns units in CF Woodford Equity Income and Invesco-Perpetual Income.