Neil Woodford is a greatly respected manager.
Many people are rushing to buy his new fund launched under his new eponymous investment brand. I'm not. I'm recommending my clients don't either.
The long history of Mr Woodford at Invesco Perpetual (IP) is well documented and his track record is impressive. He has a well defined investment philosophy and he sticks to his guns in good times and bad. All admirable.
I have supported his funds heavily in the past. So why not now?
Performance - Well, the mantra goes "past performance is not necessarily a guide to future performance". Former glories are not certain but even when Mr W had free rein at IP, his last 3 years were lacklustre. So, why support a star manager whose sparkle is questionable? Also, the new fund has no history at all! Implied history is not the same as a proven years results.
Distraction - His name's above the door, this is reassuring. However, remember he's moving away from the large support base and research teams at his disposal when at IP, to much smaller infrastructure. I cant help but worry his eye will be half focused on other things besides investment decisions.
Liquidity - Undoubtedly the fund will attract huge inflows of cash. The hardcore Woodford fans will folllow him everywhere 'Life of Brian' style, pilling in their cash without a second thought. Not to mention the cash that will follow huge advertising campaign undertaken by Hargreaves Lansdown and other direct sales brokers. Neil's investment preferences are well known, his preferred stocks understood; this will count against him when trying to access the market. There could even be hedge fund managers out there trying to make a margin on the back of these purchases. All in all I have concerns that there may be issues for him accessing the market at the right price. It's already been muted he would try and do a deal with IP to buy some shares off them.
I have no doubt that these issues will pass and Mr W will be worth buying in a year or two. Until then there are lots of other funds out there with proven track records and none of these concerns.
