What should investors make of the St James’s Place decision to switch to Neil Woodford’s new operation?

7th April 2014 by John Lappin

If you invest with St James’s Place and many people do, then your next discussion about your portfolio may well focus on the decision to switch substantial mandates away from Invesco Perpetual and hand management to several other fund management firms. The eye-catching name among the ‘new’ operations is Neil Woodford of course.

It also means that Neil Woodford’s successor Mark Barnett loses out on the management of some of the money. This is a big decision by a giant firm of advisers which sets great store by its investment process. Indeed Chris Ralph, the chief investment officer at SJP, is a very seasoned investment professional.

Yet it is difficult to tell whether this is a bold stroke or an obvious one. It is certainly significant involving around £3.65bn moving to Mr Woodford’s new operation.

We have a few further thoughts to offer however. First, if an big advisory firm such as St James’s Place decides to switch, then you are well within your rights to ask your own IFA what his or her view is about any equivalent IP funds in which you are invested. That applies certainly to the High Income fund of which Mark Barnett is manager.

But that brings us to another important point. The way St James’s Place structures its investments is to secure managers to manage mandates, while it retains legal responsibility as overall fund selector. It is a bit like an investment trust board, in that SJP can effectively sack a manager. Given this arrangement, Invesco Perpetual will not have to sell out of any assets in its main funds thus avoiding tricky redemptions – though Invesco will no doubt feel the pain in its bottom line.

Finally, there have been some rather foolish things said about Mark Barnett in a national newspaper recently in a comparison with football managers. Mr Barnett has a rather good track record as a manager – comparisons with sport are rather trite in this case.

Everything suggests he should cope with the new role, though there may well be a performance challenge short term, if he faces a lot of redemptions to the main IP funds.

In addition, as the Telegraph reported earlier in the year, Mr Barnett has not faced a comprehensive vote of ‘no confidence’ from all sections of the investment community. He has been awarded the management of the Edinburgh Investment Trust for example.

It would be better in our view though, if Invesco Perpetual was a little more on the front foot in explaining what its views are about all this activity. The SJP story elicited a ‘no comment’. There is nothing that says fund groups have to talk to journalists, but even a prepared statement wouldn’t have hurt.

2 thoughts on “What should investors make of the St James’s Place decision to switch to Neil Woodford’s new operation?”

  1. GoodEachWayBet says:

    John, no-one seems to have picked up on this but Stamford Associates do the fund picking for St. James Place – an institutional manager research consultancy. Ralph would have just ratified this decision, in my opinion.

  2. Noo 2 Economics says:

    My take is that this helps Mark Bennett as imo Woodford in the past and now he has a couple of gargantuan funds to manage already in addition to the other “smaller” ones. The bigger these funds get the harder it is to make money before the market sees you coming – or going, so now, thanks to SJP taking some funds away, Mark has more wiggle space when he tries to make moves.

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