Woodford's Former Funds Downgraded

Following the departure of Neil Woodford from Invesco Perpetual last year, Morningstar analysts have reviewed the income manager's former funds and downgraded ratings

Emma Wall 30 June, 2014 | 12:48PM
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Analysts have downgraded Neil Woodford’s former open end funds and investment trust following his departure from Invesco Perpetual last October.

Mark Barnett took over the management of Invesco Perpetual Income, Invesco Perpetual High Income and the Edinburgh Trust (EDIN). Under Woodford, all three products were awarded a Morningstar Analyst Rating of Gold, thanks to his impressive track record and consistent style.

However since Woodford’s departure the open end funds and the trust have been Under Review. Today Morningstar analysts revealed that they had downgraded all three products, with the open end funds being awarded a Neutral Rating and the trust being awarded a Bronze Rating.

Due to the open-end structure of Invesco Perpetual Income and High Income, it is expected that Barnett will have to manage the continued outflows of cash, as investors move money to Woodford Equity Income over the next year.

Edinburgh Investment Trust

Following the Morningstar OBSR Analyst Ratings Meeting on 12th June 2014, we have moved the Edinburgh Investment Trust to a Morningstar Analyst Rating of Bronze, said Morningstar analyst Jackie Beard. The fund’s Gold rating was previously Under Review following the announcement that former manager, Neil Woodford, was leaving Invesco Perpetual. Mark Barnett was appointed by the board as the new manager in January 2014. Barnett is a talented fund manager with a strong track record on similar mandates; however, in taking on the management of this fund, and the Invesco Perpetual Income and High Income funds, his assets under management have increased by over £20 billion. Along with the departure of Woodford, the UK equity team at Invesco Perpetual has also recently lost another fund manager and two analysts, departures that Barnett has moved swiftly to replace. We are mindful of the considerable increase in assets under Barnett’s management that may affect his investment process and portfolio construction, along with the changes to his team. However, the closed-ended nature of this fund gives some comfort that Barnett can stay true to his investment style. We believe a Bronze rating is warranted at this time.

Invesco Perpetual High Income

Following the Morningstar OBSR Analyst Ratings Meeting on 12th June 2014, we have moved the Invesco Perpetual High Income fund to a Morningstar OBSR Analyst Rating™ of Neutral, said Morningstar analyst Richard Whitehall. The fund’s Gold rating had previously been placed Under Review following the announcement that former manager, Neil Woodford, was leaving Invesco Perpetual and that Mark Barnett was to become manager. Barnett subsequently became manager in March 2014.

He is a talented fund manager with a strong track record on similar mandates; however, in managing this fund and the Invesco Perpetual Income fund his assets under management have increased by over £20bn. Along with the departure of Woodford, the UK equity team at Invesco Perpetual has also recently lost another fund manager and two analysts, departures that Barnett has moved swiftly to replace. However, given the considerable increase in assets under Barnett’s management that may affect his investment approach, and the changes to his team, we believe a Neutral rating to be appropriate at this time.

Invesco Perpetual Income

Following the Morningstar OBSR Analyst Ratings Meeting on June 12 2014, we have moved the Invesco Perpetual Income fund to a Morningstar OBSR Analyst Rating of Neutral, said Morningstar analyst Richard Whitehall. The fund’s Gold rating had previously been placed Under Review following the announcement that former manager, Neil Woodford, was leaving Invesco Perpetual and that Mark Barnett was to become manager. Barnett subsequently became manager in March 2014. He is a talented fund manager with a strong track record on similar mandates; however, in managing this fund and the Invesco Perpetual High Income fund his assets under management have increased by over £20 billion.

Along with the departure of Woodford, the UK equity team at Invesco Perpetual has also recently lost another fund manager and two analysts, departures that Barnett has moved swiftly to replace. However, given the considerable increase in assets under Barnett’s management that may affect his investment approach, and the changes to his team, we believe a Neutral rating is appropriate at this time.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Edinburgh Investment Ord741.01 GBP0.27Rating
Invesco UK Eq High Inc UK Inc330.71 GBP-0.65Rating
Invesco UK Equity Inc UK Inc1,282.91 GBP-0.66Rating
LF Equity Income A Sterling Acc0.94 GBP0.00

About Author

Emma Wall  is former Senior International Editor for Morningstar

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