The life company recently announced that the funds were being scrapped from its Skandia Life range in response to investor feedback and said it believed the move would be in the best interests of its clients.Woodford has seen significant inflows since launching his own fund, pushing assets over £2.7bn, while Invesco has had to cope with mass redemptions from the portfolios he left behind.
Skandia’s versions of the Invesco Perpetual two funds were due to close on 9 October with assets of around £640m then being transferred into a mirror of Woodford’s CF Woodford Equity Income fund.
The move proved unpopular with some advisers, who were unhappy that the decision to transfers assets from one mandate to another had effectively been taken out of their hands. Investors would have also faced a 1 per cent switching charge.
Woodford vs Barnett since 1 Jan 2000
Source: FE Analytics
However, the firm has now decided to keep the Skandia Invesco Perpetual Income and High Income funds open after “many” financial advisers said they wish to remain invested in the mirrors.
In addition, the total expense ratios (TERs) on the funds have been reduced to 1.2 per cent, down from their current 1.3 per cent.
The OMW Old Mutual Woodford Income fund will still be added to the range with a TER of 1.1 per cent. Advisers can choose to move their clients over the new fund but no clients will be automatically put into the new vehicle.
Offering reasons for the U-turn, Paul Feeney, chief executive of parent Old Mutual Wealth, says he “listened” to the strong reaction – bordering on furious from some advisers.
“What we heard from advisers and their customers was that they welcomed the addition of the Woodford Income fund to our life range and the price we have negotiated for them, but they wanted the Invesco Perpetual funds to remain open,” he said.
“We have acted to keep those funds open at a reduced cost. With the continued support of Woodford Investment Management, we have been able to add the new Woodford fund to the range at the original price. This gives advisers and their customers’ choice of where their money should be invested.”
Craig Newman, chief executive of Woodford Investment Management, added: “We empathise with the predicament faced by financial advisers and, of course, support their desire for choice and control. We have an excellent relationship with Skandia and look forward to working with them in the years ahead.”
The Skandia Invesco Perpetual Income fund launched in May 1986 with the High Income mirror following in February 1988.
Performance of funds vs sector over manager tenure
Source: FE Analytics
In keeping with the underlying funds, the mandates have served investors over the long term.
Over 10 years, of which the bulk was under the helm of Woodford, the High Income mirror has returned 163.69 per cent while the Income fund is up 161.63 per cent. The average fund in the ABI UK All Companies sector, in comparison, has delivered 104.02.
Mark Barnett (pictured) took over the funds in March this year, when Woodford left Invesco Perpetual to start up new venture Woodford Investment Management.Over that time, the funds have fared much better than the average member of the sector – which has fallen 0.64 per cent. The High Income mirror has gained 3.86 per cent while Income advanced 3.51 per cent.
The CF Woodford Equity Income fund only launched in June but has already attracted assets of more than £2.6bn.
While the fund’s track record is short, the portfolio is managed using the same investment process Woodford built his name around over his time of more than 25 years running Invesco Perpetual income funds.
Since launch, CF Woodford Equity Income is up 4.32 per cent against a 1.12 per cent rise in its FTSE All Share benchmark and a 0.54 per cent gain by the average fund in the IMA UK Equity Income sector.
Performance of fund vs sector and benchmark since launch
Source: FE Analytics
The fund has clean ongoing charges of 0.75 per cent.
