Fund of the week: Stick with it

Nov 20, 2009

Share with
friends:

Comments (0) Print this article

It's been a pretty dire year for Neil Woodford, one of Britain's most respected fund managers. Over 12 months, his Invesco Perpetual High Income Fund has returned 6.96%, against a 26.46% rise in the FTSE All-Share.

This isn't the first time Woodford has underperformed the market. Back in 1999, he avoided the tech bubble "because share prices were not justified by fundamentals". That turned out to be a pretty smart move. And despite a grim 2009, the fund has returned 108% since the market peaked on 10 March 2000, against a 4.91% drop in the FTSE All-Share.

Avoiding the banking and mining stocks that have outperformed this year, Woodford focuses on firms that can grow their dividends – he thinks that's what drives share-price performance over longer time periods.

He invests in businesses where dividend growth potential isn't reflected in their valuations. As such, "I have a high degree of conviction in the prospects for businesses such as pharmaceuticals, telecoms, tobacco and utilities, despite the challenging economic headwinds." Yet he also invests in specialist property plays, including two listed funds in London that invest in Macau.

So investors should stick with him. "We've supported Neil Woodford for the better half of the last decade and we're not going to change that stance", says Meera Patel at Hargreaves Lansdown. "Back in 2000, he almost lost his job but he came roaring back. There is an awful lot more doom and gloom to come in 2010 and we expect him to outperform."

Contact: 020-7065 4000.

Invesco Perpetual High Income Fund top ten holdings

Name of holding% of assets
GlaxoSmithKline 8.3
AstraZeneca Plc 8.3
Vodafone Group 5.9
BG Group 5.7
British American Tobacco 5.5
Reynolds American Inc 5.2
Tesco 4.7
National Grid 4.3
BT Group 3.9
Imperial Tobacco Group 3.8

Comments (0)

Share with
friends:

Related articles

Leave a comment

This will be the name displayed with your comment.

This helps us verify comments are genuine. It will not be displayed anywhere on the site and is stored confidentially.

Please keep your comment within 1,000 characters and relevant to the main topic. We encourage healthy debate, but we don't allow insults or bad language. Anything off topic or unpleasant, we'll remove. Enjoy the conversation! Thank you.

captcha To prevent spam-related comments please enter the characters shown in the 'Captcha' box to the left.

By leaving a comment you accept our terms and conditions.


FREE - MoneyWeek's daily investment emailJohn Stepek

Our free daily email, Money Morning, is an informative and enjoyable analysis of what's going on in the markets. Written by our Editor, John Stepek, and guest contributors.
Sign up FREE to Money Morning here.

>