Neil Woodford, who oversees the U.K.’s largest equity fund, is leaving Invesco Perpetual after more than 25 years to set up his own company.
Mark Barnett was named head of U.K. equities and will run the Invesco Perpetual High Income Fund (INVHIIA) and the Invesco Perpetual Income Fund, which have a combined 24.6 billion pounds ($39 billion) in assets, at the end of a six-month transition, Invesco said in a statement today. He currently manages 1.5 billion pounds in assets for four funds.
Woodford, 53, who oversees about 33 billion pounds in all, became one of the U.K.’s best-known mutual fund managers by picking stocks that fit his view of the larger economy and avoiding bank shares before the crash in 2008. He declined to comment on his new venture in a statement, adding that details will be provided after he departs on April 29.
“I would be amazed if he doesn’t raise a substantial amount of money at the launch of the new funds,” said Darius McDermott, managing director at Chelsea Financial Services, a investment adviser in London. “I would be confident that he will raise in excess of 5 billion pounds very quickly. Neil Woodford Inc. will bring in a lot of money.”
Invesco’s shares (IVZ:US) slumped as much as 7.4 percent to $32.08 in New York trading, the biggest intraday decline since September 2011. The selloff values the investment manager at $14.4 billion.
Woodford has seen his flagship Invesco Perpetual High Income Fund return 12 percent annually over the past five years, exceeding the returns of 57 percent of similar funds, according to data compiled by Bloomberg. It counts GlaxoSmithKline Plc (GSK), BT Group Plc, British American Tobacco Plc (BATS), BAE Systems Plc (BA/) and BT Group Plc (BT/A) among its biggest holdings.
Morningstar Inc. (MORN:US) said today it put four of Invesco’s funds under review including the 14 billion-pound High Income Fund. Chelsea Financial said it downgraded any fund associated with Woodford to hold until after it has met with Barnett.
“My decision to leave is a personal one based on my views about where I see long-term opportunities in the fund-management industry,” Woodford, who joined the British unit of Atlanta-based Invesco Ltd. (IVZ:US) in 1988, said in the statement. “My intention is to establish a new fund-management business serving institutional and retail clients as soon as possible.”
Barnett, 43, who joined Invesco in 1996, currently runs four funds including the Invesco Perpetual U.K. Strategic Income Fund, which he has managed since 2006. It has 297 million pounds in assets under management. The fund returned 14.7 percent annually over five years, beating 79 percent of similar funds, according to data compiled by Bloomberg.
Mark Dampier, head of research at Hargreaves Lansdown Plc (HL/), the U.K.’s largest publicly traded broker, said investors should maintain their holdings in Woodford’s fund.
“I myself will be remaining invested,” he said. “For new investors we would suggest waiting until the new manager has taken over the fund.”
Woodford’s departure follows a decision by Sanjeev Shah to step down from Fidelity Worldwide Investment’s flagship U.K. Special Situations Fund last month, five years after taking over from Anthony Bolton. Shah stepped back from running money on a day-to-day basis after 17 years in the industry.
Invesco has also named Ciaran Mallon, 42, to immediately take over the U.K. equity components of the Invesco Perpetual Monthly Income Plus Fund and the Invesco Perpetual Distribution Fund. Mallon will work with fixed-income managers Paul Causer and Paul Read.
“We have planned for succession for many years and have built a world-class investment culture,” Mark Armour, chief executive officer of Invesco Perpetual, said in the statement. “Barnett is an exceptional fund manager who has the same active, value-driven investment approach and long-term focus as Neil.”
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