Woodford bags another £400m

Neil Woodford, the star investor, has received another boost for his new fund by winning more than £400m to manage for Hargreaves Lansdown's "multi-manager" funds.

Mr Woodford's new fund, Woodford Equity Income, will manage the money that Hargreaves currently holds in the funds he used to run at Invesco Perpetual.

Hargreaves' multi-manager funds, which parcel out investors' money to other funds rather than choosing individual shares, currently hold about £423m in total in the Invesco Perpetual Income and High Income funds, according to FE Trustnet, the data firm.

All this money will be switched to Mr Woodford's fund, Mark Dampier of Hargreaves told The Telegraph.

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Woodford Investment Management, Mr Woodford's new firm, already runs £3.6bn on behalf of St James's Place, the wealth manager, so the Hargreaves Lansdown money will bring his total assets to about £4bn. This would bring the company into the top 40 of British asset managers, according to figures compiled by the Investment Management Association. The fund will start accepting investors' money on June 2.

Hargreaves' Multi-Manager Income & Growth fund currently has about £312m in the Invesco funds formerly run by Mr Woodford, while the Multi-Manager Special Situations fund has £56m and the Multi-Manager Balanced Managed trust has £43m. There is a further £12m in the Multi-Manager Equity & Bond fund, FE said, according to the most recent data.

Mr Dampier said: "We don't see this as a switch, we are sticking with Neil Woodford now that we have the opportunity to invest with him." Mr Woodford has said that he intends to run the new fund exactly as he used to manage the Invesco funds.

Lee Gardhouse, manager of Hargreaves' multi-manager funds, described Mr Woodford as "perhaps the best fund manager of his generation".

He added: "Over the long term I can think of no manager to whom I would rather entrust my money. [Mr Woodford's] fund represents a rare opportunity to invest with a manager with an exemplary track record, in a new environment where he has 'skin in the game' – in other words, he has every incentive to perform. We will be buying the fund in the HL multi-manager fund range and expect it to be a core holding for many years to come."

Invesco Perpetual declined to comment.

Another fund group with popular multi-manager funds, Jupiter, may also allocate some of its clients' money to Mr Woodford's new fund. The £4.7bn Jupiter Merlin Income fund has 14pc of its money, or £660m, in Invesco Perpetual Income, while the £1.9bn Merlin Growth portfolio has 8pc or £150m in the fund.

John Chatfeild-Roberts, who runs the Merlin funds, said: "Considering that we have had money with Neil Woodford since 1997 continuously, it would be odd if we would not look pretty carefully at what he is doing in his new shop. But until our fact sheet comes out, I can’t tell you what we are going to do." His remarks, reported by Citywire, came at a multi-manager forum held in London last week:

But Mr Chatfeild-Roberts has also backed Mr Woodford’s successor at Invesco Perpetual, Mark Barnett, buying a stake in Mr Barnett’s UK Strategic Income fund the day before Mr Woodford’s resignation.

"We really do think that Mark Barnett is an excellent fund manager," Mr Chatfeild-Roberts said. "We have put money with him and we are going to have money going forward with Mark Barnett."

Hargreaves Lansdown has also announced how much its customers will pay to invest in Woodford Equity Income. The fund shop has negotiated a special annual charge on the fund of 0.6pc, so the total cost, when Hargreaves' own 0.45pc charge is included, comes to 1.05pc. Woodford has abolished the distinction between annual management charges (AMCs) and ongoing charge figures (OCFs), so the 0.6pc figure gives a better approximation of the true cost than an old-style AMC. Even an OCF does not include all costs, however.

Woodford Equity Income will also be added to Hargreaves' "Wealth 150+" range of chosen funds with reduced fees. Mr Dampier said: "Investors have access to a top-flight fund manager at a bargain price. I have no hesitation in adding the fund to our Wealth 150+ list of favoured funds.”

However, investing in Mr Woodford's fund will be cheaper at some other fund shops, even though the fund's annual cost through all of Hargreaves' competitors is expected to be higher at 0.75pc. This is particularly true for investors with large amounts, where a "flat rate" company such as Alliance Trust Savings or Interactive Investor will save you money. For smaller amounts, some fund shops charge fees of as low as 0.2pc.

Our easy-to-read tables will show you the cheapest fund shops for your circumstances.

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