Tomorrow will be the 25th anniversary of the fund, and FE Alpha Manager Woodford (pictured) has run it the whole time, making him the longest-serving manager in the IMA UK Equity Income sector. Dampier, head of research at Hargreaves Lansdown, says that Woodford is second to none in his invest approach, and fully deserves the title of the UK’s number-one fund manager.
"Neil Woodford’s long-term track record on this fund is nothing short of superb," he said.
"He takes a strong, disciplined approach to investing, with a focus on what will drive the company’s dividend price and growth in five years’ time, not just now. Sticking by your views and investment decisions can sometimes be lonely."
"Selling banks, which were once one of the biggest income-producing sectors, was one of the most rewarding decisions Woodford made."
He added: "A manager with such high convictions is essential."
Dampier says Woodford is one of the only genuine long-term investors out there, often taking up to a 15-year view on a stock.
"He takes the view that he is investing in a business and becoming a part-owner, not just buying the shares," Dampier said.
"Investments in the Invesco Perpetual High Income fund are held for an average of 15 years, so companies are invested in for their long-term potential."
"Decisions to include a company in the fund are not made lightly and each holding goes through a rigorous process of detailed forensic research."
"Long-term investing is just as much about ignoring the current fads or trends and identifying companies that look good value and will be around in 10 or 15 years."
According to FE data, Invesco Perpetual High Income has delivered 1,940.37 per cent since its launch in February 1988, compared with 841.93 per cent from its All Share benchmark.
The data for the UK Equity Income sector average does not go back that far.
Performance of fund vs sector and index since launch
Source: FE Analytics
It has also significantly beaten both its sector and benchmark over five, 10, 15 and 20 years.
While it has been less dominant in recent years, the fund has still beaten its benchmark over one and three years.
As well as outperforming on a total return basis, Invesco Perpetual High Income has been considerably and consistently less volatile over every time period.
Performance of fund vs sector and index
| Name | 3yr returns (%) |
5yr returns (%) | 10yr returns (%) | 20yr returns (%) |
|---|---|---|---|---|
| Invesco Perp High Income | 38.85 | 32.70 | 239.88 | 844.44 |
| FTSE All Share | 37.62 | 28.09 | 168.30 | 384.77 |
| IMA UK Equity Income | 36.96 | 25.57 | 149.68 | 361.18 |
Source: FE Analytics
It was one of the best-performing UK Equity Income funds during both the dotcom crash and the financial crisis of 2008, reflected by its very low max drawdown; according to FE data, it scores 33.18 per cent over 20 years, compared with 45.28 per cent from the sector average.
It is this ability to protect against the downside that Dampier believes makes Woodford stand out from his rivals.
"If a fund sacrifices capital in exchange for income, eventually it will reach a point where the dividend cannot be sustained, on top of which the fund will not be returning as much as its peers."
"During the technology boom in the late 1990s and turn of the millennium, Woodford avoided speculative technology companies."
"For a while the fund lagged the stock market as money flowed into these sectors; however, the strategy paid off as he shielded investors from the worst of the subsequent crash."
Invesco Perpetual High Income currently has 115 holdings.
The fund – which has a yield of 3.56 per cent – counts popular dividend-paying companies such as GlaxoSmithKline, Imperial Tobacco and British American Tobacco in its top-10.
It is considerably underweight financials, while its largest overweight is in healthcare, which makes up 34.12 per cent of the total portfolio.
Dampier says this high-conviction positioning is typical of the manager.
"Woodford has believed for some time that an opportunity has opened up in pharmaceuticals, and the healthcare sector remains profoundly undervalued within the UK and is an area many others have written off," he said.
"Those investing today might benefit from what he has described as 'one of the best investment opportunities in my career'," Dampier added.
Invesco Perpetual High Income requires a minimum investment of £500 and has a total expense ratio (TER) of 1.69 per cent. It is available on all major platforms.