October 15, 2013 / 3:03 PM / in 6 years

UPDATE 1-Star fund manager Neil Woodford to leave Invesco

* Woodford to leave April 29 after 25-year career

* To be replaced by Mark Barnett

* Woodford manages 30 bln stg of assets for Invesco

By Chris Vellacott and Sinead Cruise

LONDON, Oct 15 (Reuters) - Neil Woodford, one of the investment industry’s most closely watched fund managers, will leave Invesco Perpetual to start his own business after a 25-year career that has given him an almost cult following among British investors.

Invesco Perpetual said on Tuesday the high-profile money manager is to leave on April 29. He will be replaced by Mark Barnett as the firm’s head of UK equities, and take over management of Woodford’s two funds.

But Barnett will face a tough challenge persuading investors to stick with Invesco, given Woodford’s consistent performance, market participants said.

“You are buying the manager not the fund in some instances,” said Adrian Lowcock, Senior Investment Manager at investment supermarket Hargreaves Lansdown.

Invesco Chief Executive Mark Armour stressed the firm had planned for Woodford’s departure “for many years” and industry insiders said Barnett was a well-regarded and able successor.

But the sudden announcement, and the reported impact on some of Woodford’s favoured stocks including Capita, Serco , Drax and Rentokil, which all dropped shortly after the news, illustrated the pitfalls of building a business around an individual high-flyer.

Rival fund manager Schroders bled assets earlier this year when its star equity fund manager, Richard Buxton, tendered his resignation to join Old Mutual Global Investors.

“People back fund managers and there are a few star managers out there and when they move there is a tendency for people to want to follow them,” Lowcock said.

Fidelity Worldwide also paid a price for cultivating star fund managers when veteran investor Anthony Bolton stepped down. His fund held more than 11 billion pounds at its peak, but when it was split and handed to two new managers, money leaked away.

In the six years to end-September, more than 2.5 billion pounds was withdrawn by investors, according to Lipper estimates. The combined value of the split funds is now put at just over 4 billion pounds.

Woodford directly manages around 30 billion pounds of assets for Invesco Perpetual, according to Lipper. Invesco Perpetual manages more than 70 billion pounds across a wide range of asset classes for clients in the UK and across the globe.

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