Today it was announced that the management of Edinburgh Investment trust will pass to Barnett with immediate effect.
This leaves Woodford still in charge of managing the high income and income funds, which he has developed since joining Invesco in 1988.
How these funds will be managed is yet to be seen.
“The real questions is how much do Barnett and Woodford depend on each other in the team, and how much of the success is down to Invesco Perpetual,” said Adrian Lowcock, senior investment manager at Hargreaves Lansdown.
Time will tell whether investors should move fund to follow Woodford or not, although most likely the fund size will shrink somewhat. Barnett is a perfectly competent fund manager, he added.
While the board of the Edinburgh Investment trust concluded that Barnet should take over the trust, managing the funds could be more complicated.
One possible way of managing fund transfers could be an in specie transfer. Meaning ‘in actual form’, an in specie transfer happens when the ownership of that asset from one player is passed in its current form to another, without the need to convert the asset to cash.
“It remains to be seen whether or not Invesco Perpetual decides to do such a transfer. It is at no additional cost to investors, and the amount of goodwill generated would be huge. This could set a procedure of the industry, which has seen few in specie transfers,” Lowcock said.
In the past, unit trust managers have transferred stocks such as BT, Shell or GSK directly into income funds without changing the stocks into cash, said Julian Chillingworth, chief investment officer at Rathbone Unit Trust Management.
He added that “an in specie transfer is not something made hugely public”.
Any decision on fund management will be a complex procedure. But an in specie transfer could be an option, particularly when it comes to the chunk of small unlisted companies in Woodford’s fund, where the highly illiquid stock could prove difficult to sell, according to Lowcock.
Invesco Perpetual declined to comment, saying that no further announcement on the fund management transition has been made.
