Neil Woodford, of Invesco Perpetual, has today been appointed to manage the £750 million Edinburgh Investment Trust. He takes over the helm from Fidelity International, which was unable to reach agreement with the Edinburgh board over the trust’s future strategy.

Mr Woodford runs more money for private investors than any other fund manager in the UK. His two main funds - Invesco Perpetual Income and Invesco Perpetual High Income - are the two biggest in the unit trust industry, at £6 billion and £8.4 billion respectively. They are consistently among the top performing funds in the equity income sector.

This is Mr Woodford’s first venture into investment trusts for nearly 10 years and is likely to delight shareholders in the Edinburgh Investment Trust. Scott Dobbie, the trust’s chairman said: “Neil Woodford has an outstanding track record in managing equities and we look forward to working with him and the Invesco Pertpetual team.”

At the same time both Edinburgh and Fidelity made clear that their parting of ways was not triggered by any suggestion of poor performance by the trust during the five years that Fidelity was running it. Over the past three years Edinburgh has been the best performing fund out of the 18 in its sector, while over five years it was third out of 16.

Edinburgh Investment Trust was founded 115 years ago and is the largest trust in the growth & income sector. It focuses mainly on large UK companies and aims to achieve better capital growth than the FTSE all share index and dividend growth above the rate of UK inflation.

One potential problem for Mr Woodford could be that his very popularity leads to a surge of money into the trust, pushing up the share price beyond the underlying value of the shares in the trust’s portfolio. This situation, where the share price trades at a premium to the net asset value (NAV) of the underlying shares, could make the trust look expensive. If the trust does prove really popular following Mr Woodford’s arrival as manager one option would be for Edinburgh to issue more shares, thus meeting the extra demand and reducing any premium to NAV.

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