‘Woodford effect’ draws money to star investor’s funds despite lull

Britain’s highest-profile fund manager quit Invesco Perpetual to go it alone and investors have followed

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The Independent Online

The fund manager Neil Woodford continued to attract retail investors to his funds last month despite sales falling to an 18-month low across the UK industry, it emerged yesterday.

Figures from the Investment Management Association revealed that net retail sales were down to £702m last month, compared to £2.31bn in September 2013, due to uncertainty over the global economy and the Scottish referendum.

UK All Companies funds were hit particularly hard in the period, with the sector seeing its largest ever outflows of £852m.

Experts also put this down to the launch of Woodford Investment Management this summer after Britain’s highest-profile fund manager quit Invesco Perpetual to go it alone.

Laith Khalaf, a senior analyst at Hargreaves Lansdown, said: “If you join the dots you can see this huge outflow is largely a continuation of the Woodford effect, as investors switch across from his old Invesco Perpetual funds.

“Were it not for the fact that the Invesco Perpetual funds now sit in the UK All Companies sector, this shift of assets would be nowhere near as visible.

“As it is, investors continue to vote with their feet and their cash, some of them no doubt waiting for the latest dividend before switching across.”

In contrast, the UK Equity Income sector – in which Mr Woodford’s flagship fund sits – registered the strongest sales, with £605.8m invested over the month.

According to the IMA data, Global equity funds performed well, with net retail sales of £255m. Asia was the second bestseller, with net retail sales of £163m, considerably above the £6m average of the previous 12 months.

Daniel Godfrey, chair of the IMA, said: “There was wide variation in the experiences of different types of equity funds, with UK and European funds seeing net outflows, whilst global and Asian equity funds were doing better.”

He added: “UK Equity Income funds had another good month, whilst UK All Companies funds saw their biggest retail outflow ever.”

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