Gavin Haynes, investment director at Whitechurch Securities, said: "This is undoubtedly a massive blow to Invesco Perpetual. Woodford’s funds have been the groups’ flagship products and make up a significant amount of their funds under management (Income and High Income funds alone have over £24bn invested in them).
"This is news that will affect a significant number of private investors, but there is no need for investors who hold his funds to panic in the short-term. Woodford is committed to running the funds for the next six months and will be keen to ensure that his exceptional track record is not tarnished. However we would not recommend putting new monies into the Income and High Income funds following the news."
These sentiments were echoed by Patrick Connolly, certified financial planner at Chase de Vere, who said: "This is terrible news for Invesco Perpetual and will be a cause for concern for many investors who trust their investments and pensions with Neil Woodford. It would be impossible for Invesco Perpetual to replace Woodford with somebody of similar standing because, particularly in the world of UK equity income funds, there is nobody similar."
However, he is also advising clients to sit tight until April while Woodford is still running the funds, but to avoid directing new money to Woodford’s funds.
Brian Dennehy, Managing Director at FundExpert.co.uk, suggests a more pro-active approach: "The Neil Woodford funds are outstanding, and are not going to become poor funds overnight. Nonetheless, there will be a hullabaloo about this for months to come and investors should consider what action to take in a more rational moment – now! If an investors holds no more than 10% of their portfolio value in Woodford funds, there is no need to panic. If more than 10% is held, alternatives should be considered."
Darius McDermott, managing director, Chelsea Financial Services, said that all Woodford’s have been downgraded to a hold. The group has also downgraded the the Invesco Perpetual Monthly Income Plus and Distribution funds to a hold. Both funds have the majority of assets in fixed income, which are run by Paul Causer and Paul Read, but McDermott says that the equity weighting is still significant enough to warrant caution.
