Saturday, 9 February 2013

A Safe Pair of Hands

Noteworthy this week is the 25th anniversary of a fund that I use in many of my client portfolios.  This is of course the High Income Fund, from Invesco Perpetual, managed by veteran Neil Woodford.  I use the fund because of Woodford’s pragmatic and grounded approach to investing and because he has delivered solid returns through some truly dreadful periods. 

This fund has produced a total (growth plus dividend) return of 1906% over that period, compared to a mere 823% shown by the FTSE-100 over the same period and on the same basis.  This is a fair comparison, as Woodford’s fund invests in UK Blue Chip firms and it shows clearly how his approach would have trounced a ‘Tracker’ fund, most of which don’t even return the dividend income they receive to you, the investor.

It is also worth looking, graphically at how the fund has weathered the various storms it has encountered during this extraordinary time if the graph doesn't show in your browser then please click on the empty box) :

I remain in awe of the work that Neil Woodford does with this fund and the effect it has on client returns.
As a result of this expertise, a £10,000 investment into the fund in 1988 would now be worth £107,291, truly an astounding gain against the backdrop of the UK during that time. 
Please be aware that investments in funds such as this one and the returns achieved by them can fall as well as rise. This does not constitute an investment recommendation and any such decision should only be made as a result of a detailed discussion of objectives, attitude to risk and tolerance for loss.  These are the kind of discussions that a decent IFA would have with his clients prior to any recommendation.