We do not focus on short-term performance issues; we focus on the valuation of fundamentals. Our disciplined approach guides us, we believe, to the best opportunities in the stock market and we are very patient investors. We expect our performance to improve when the market begins again to focus, as it inevitably will, on valuation.
– Neil Woodford, 2011
A brilliant performance
The investor reviewed in this issue is a well-known fund manager who spent 25 years at the helm of the main Invesco income funds before founding his own investment shop. Like most of the investors reviewed in previous editions of this column, Neil Woodford is a value investor with a focus on the longer term. He believes the short term focuses too much on sentiment, and can therefore be a period where prices and value often diverge.
Neil Russell Woodford, 56, graduated in Economics and Agricultural Economics from the University of Exeter in 1981 and later pursued postgraduate studies in Finance at the London Business School. His finance career started with the Dominion Insurance Company and, in 1987, he became a fund manager with Eagle Star. One year later he moved to Invesco Perpetual where he would stay for the following 25 years and establish himself as one of the most respected portfolio managers in the UK.
Woodford ran the Invesco Perpetual Income and Perpetual High Income funds, with £10.4 billion and £13.6 billion in assets respectively, achieving an average performance of around 13% per year. An investor pledging £10,000 to these portfolios in 1988 would have around £230,000 in 2013, which compares with £97,500 if invested in the FTSE All-Share….