Woodford (pictured), by far the highest profile fund manager in the UK, will relinquish control of a number of top-rated portfolios at Invesco Perpetual, including the Invesco Perpetual High Income and Income funds – which have combined assets under management (AUM) of more than £20bn – the Edinburgh Investment Trust and the Invesco Perpetual Distribution fund. He will remain responsible for all funds for which he is the named manager through a transition period during the six months prior to his departure.
At the end of the transition, Barnett – who currently runs the Invesco Perpetual UK Strategic Income fund – will be named manager of the two income funds. Barnett will then succeed Woodford as head of UK equities.
Former FE Alpha Manager Ciaran Mallon will join Paul Causer and Paul Read on the Invesco Perpetual Monthly Income Plus and Invesco Perpetual Distribution funds.
In an unexpected turn of events, Woodford – who some industry professionals had tipped for retirement in recent months – is to set up a rival fund management firm for both retail and institutional investors as early as next year.
"I leave the company on good terms and remain fully committed to my fund management responsibilities at Invesco Perpetual until my departure," he said.
"The Invesco Perpetual High Income fund, Invesco Perpetual Income fund and other client mandates will be transitioned into the hands of my long-standing, experienced colleagues. I wish my colleagues all the best for the future."
"My decision to leave is a personal one based on my views about where I see long-term opportunities in the fund management industry."
"My intention is to establish a new fund management business serving institutional and retail clients as soon as possible after 29 April 2014. There will be no further comment at this stage. Further announcements about the new business will be made after I have left."
Commenting on the star manager's departure, Mark Armour, chief investment officer of Invesco Perpetual, said: "Neil has served clients of Invesco Perpetual with commitment for over 25 years."
"It has been a privilege for us all to work alongside him, and I understand that, after 25 years, he is ready for new challenges."
"We have planned for succession for many years and have built a world-class investment culture that develops and supports gifted and experienced managers."
"Mark Barnett is an exceptional fund manager who has the same active, value-driven investment approach and long-term focus as Neil. A key member of the UK equities team for 17 years, Mark has a first-quartile track record over one, three and five years."
"We are confident that Mark, Ciaran and the UK equities team will continue to do an excellent job for clients."
Armour concluded: "Our overriding priority is to look after our clients’ interests through a well-ordered transition process."
"Invesco Perpetual has highly experienced, talented investment teams, market-leading capabilities and the resources of a global company. We will continue to focus on delivering good outcomes for our clients."
Woodford’s track record needs no introduction: as many of you will be aware, he has been one of the best-performing UK managers of the last two decades, leading his numerous funds to the top decile of their relevant sectors over five, 10, 15 and 20 years.
Performance of Woodford vs peers since Jan 2000
Source: FE Analytics
Our data shows the manager has in total returned 249.31 per cent since 2000, compared with 106.29 per cent from his peer group composite.
Tim Cockerill, investment director at Rowan Dartington, says that Woodford’s departure is of huge significance on a number of different levels.
“Is it big news? I think you are underplaying it slightly,” he said.
“He has been the backbone of Invesco Perpetual and is commonly viewed as the best fund manager in the UK. He is a long term investors who has a certain view on the world and sticks to it, and now he is setting up his own business. It’s huge.”
“There isn’t much more to say really, this is a huge blow for Invesco,” he added.
Cockerill rates Woodford’s replacement highly, but anticipates redemptions to occur regardless.
“Mark Barnett is a very, very good fund manager and is absolutely the ideal person to take over,” he said.
“But, when you have a team of analysts and managers where everyone has their own input, it is difficulty to locate and pin-point who contributes what. It’s a bit like a rock band, they will sound great but as soon as you remove one of them they aren’t half as good.”
“We will only know in time just how significant Neil Woodford has been. We all assume how significant he has been,” he added.
Cockerill says he’s very surprised that the manager has plans to set up a rival fund management firm, and will be interested to see what products are made available in the coming months.
Darius McDermott, managing director of Chelsea Financial Services was equally shocked, stating: “I don’t see how he can get greater freedom than he has at Invesco – he was the daddy there. Maybe he thought it was time to do something for himself?”
“This is probably the biggest news we've ever had in asset management and comes as a bit of a shock. It has huge implications for Invesco Perpetual as Neil currently runs just under half of the £71.8bn assets managed from Henley."
“Mark Barnett was the heir apparent, but he has a huge job ahead of him. There will no doubt be substantial outflows for him to deal with in the next six months as the fund transitions to him from Neil. Ciaran Mallon has slightly less of a daunting task ahead. We will look to meet with both managers as soon as possible."
Chelsea has downgraded both of Woodford's income funds from "buy" to "hold" as a result of the news.
Mark Dampier, head of research at Hargreaves Lansdown, says that he didn't see this decision coming.
“I am surprised he wanted to do all that at his age," he said. "I thought he would retire on the fund. I saw him about 8 months ago and I had no idea he was thinking of moving on.”
FE Trustnet will be writing a series of articles in the coming days for investors and advisers worried about Woodford's imminent departure, including one looking at possible alternatives to Invesco Perpetual High Income.
