Investors Sell Former Favourite Funds

Funds that were private investors' top picks are now being sold off. Departing manager Neil Woodford's funds see outflows - as do beleaguered China funds

Emma Wall 11 December, 2013 | 4:50PM
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Former favourites Invesco Perpetual Income and Invesco Perpetual High Income have  seen outflows of £1.4 billion in the last month, following star manager Neil Woodford's decision to Invesco and set up shop on his own

Despite Woodford not leaving the asset manager where he has spent the last 25 years until April, investors are voting with their feet and fleeing in their droves. Investors were warned not to panic sell Woodford's equity income funds, but it seems they did not heed the advice and instead are opting for Woodford's rivals.

While institutional investors are holding their nerve, private investors are selling off their Invesco holdings. The sales of the two Invesco funds made up 90% of all non-institutional outflows over the past month.

The sheer volume of trades against Woodford's funds meant the UK Equity Income sector was the least popular last month - at a time when most investors are backing domestic stocks. The sector saw outflows of £625 million, worse even than Corporate Bond funds. Funds in the Asia Pacific excluding Japan sector had outflows of £212 million.

Silver-rated bond fund M&G Optimal Income fund saw inflows of £326 million over the past month, soaking up some of the ex-Woodford cash - and UK equity trackers also ranked in the top five most popular as investors chose to go passive.

Former industry darling M&G Strategic Corporate Bond fund had outflows, over the past month - adding to the £1.2 billion that has poured out over the past year as fixed income fell from favour. Top-pick of the past First State Asia Pacific Leaders has also seen outflows of £335 million since January thanks to uncertain surrounding the Chinese stock market.

Source for all data: Morningstar Direct.

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
Invesco UK Eq High Inc UK Inc337.91 GBP0.66Rating
Invesco UK Equity Inc UK Inc1,343.86 GBP0.80Rating
M&G Optimal Income GBP A Acc237.09 GBP0.35Rating

About Author

Emma Wall  is former Senior International Editor for Morningstar

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