It would be foolish to ignore the best investors on each side of the Atlantic, and there’s a lot to learn from Warren Buffett in the US and our own Neil Woodford. But who’s the best?
New fund, new year
Neil Woodford has been running his new CF Woodford Equity Income Fund since June 2014, with units launched at a price of 100p. Today the price has risen to 116p, and there should be an estimated 4% income yield to add to that per year. We’ve only had nine months so far, so 3% for income should be about right, and we’ll knock off 0.6% for charges — that takes the return so far to approximately 18%.
Over the same period, shares in Warren Buffett’s investment vehicle Berkshire Hathaway (NYSE: BRK-A.US) (NYSE: BRK-B.US) have risen by 15%. Berkshire Hathaway famously doesn’t pay dividends, as the company’s philosophy is one of reinvestment for maximum long-term gain.
With the FTSE 100 up less than 3% over the same period including dividends, both of those returns are very impressive — with Mr Woodford just ahead.
Score = Woodford 1, Buffett 0
Past five years?
But what about further back? We’ll have to go to Mr Woodford’s two Invesco funds for that, the Perpetual Income Fund and Perpetual High Income Fund. Both have been managed by Mark Barnett since last June, but the performances of both funds over the past 12 months have been in line with Mr Woodford’s new fund, so the comparison seems fair.
Over the past five years, we have a return from the Invesco Perpetual Income Fund of 88.5%, with the Invesco Perpetual High Income Fund bringing home 89.4% — very similar performances, and both easily beating the FTSE. What about Berkshire Hathaway? Well, over the past five years the Sage of Omaha has provided a 104% return, and has pulled the scores back level.
Score = Woodford 1, Buffett 1
What about a decade?
Back 10 years now, and we have returns of 176% and 181% from the Invesco Perpetual Income Fund and Perpetual High Income Fund respectively — again very close returns, so if you were reinvesting for the long term it wouldn’t have made much difference which one you chose. From the US, Berkshire Hathaway managed 148% — still very nice, but it’s slipped back below Mr Woodford’s performance.
Final score = Woodford 2, Buffett 1
The winner is you!
Neil Woodford has come out on top over the longest period, but the result is close enough that it could have gone either way with different start and end dates —Â the 5 and 10-year figures here were taken to the end of January 2015. You’d do well learning from either of these top class investors, whose strategies are very similar — buy good top-quality companies when they’re cheap.