Neil Woodford, Terry Smith or Nick Train: which fund manager should I back in 2019?

Neil Woodford, Terry Smith, and Nick Train are three of the UK’s most popular fund managers but which one is Edward Sheldon’s top pick?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Neil Woodford, Terry Smith, and Nick Train are probably Britain’s most well-known portfolio managers right now. However, while all three have strong long-term performance track records, their results have been varied over the last three years.

For example, Train’s Global Equity fund has returned around 90% over the last three years while his UK Equity fund has returned 40%, which are excellent figures. At the same time, Smith’s Fundsmith Equity fund has returned around 80%, which is also an excellent performance. On the other hand, Woodford’s Equity Income fund has lost around 10% over the last three years, which is clearly not such a good result for investors. So, who is the best fund manager to back in 2019?

Investment style

To answer that question, I think it’s worth looking at the investment styles of the different managers.

Should you invest £1,000 in Tesco right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Tesco made the list?

See the 6 stocks

Smith and Train could be classified as ‘quality’ investors. Both fund managers tend to focus on high-quality companies that generate consistent growth, reinvest their earnings at a high rate, and pay regular dividends. This is quite a good strategy, in my view. Note that Smith’s fund invests on a global basis, while Train manages both a global fund and a UK fund.

In contrast, Woodford could be classified as a ‘value’ investor. He’s also very much a ‘contrarian’ investor meaning that he tends to go for companies that are out of favour. Moreover, his approach in recent years has been to pick out under-the-radar stocks in sectors such as healthcare and technology that are not on mainstream radars. His Equity Income fund is predominantly UK-focused.

Below is a look at the top 10 holdings of the four different funds, according to data from Hargreaves Lansdown. 

Woodford Equity Income  Fundsmith Equity Lindsell Train UK Equity Lindsell Train Global Equity
Imperial Brands  PayPal  RELX  Unilever 
Barratt Developments Amadeus IT Diageo  Diageo 
Burford Capital  Microsoft Unilever  Heineken 
Provident Financial Facebook  Mondelez  Walt Disney
Theravance Biopharma Stryker Corp Hargreaves Lansdown  Mondelez 
Benevolent AI Link WEIF A IDEXX Laboratories  London Stock Exchange PayPal
NewRiver REIT Waters Corp Burberry RELX
IP Group Novo Nordisk Schroders Nintendo
Stobart Group Becton, Dickinson & Co Heineken Intuit
Autolus Therapeutics Intercontinental Hotels  Sage  Kao

My pick for 2019 

Considering the different investment styles of the three portfolio managers, if I was to choose one manager to go with next year, it would probably be Train.

I like his approach to quality investing, and I’d be happy to own either his UK fund or his global fund, given that they both contain names such as Unilever, Diageo, and Heineken.

That said, I do like Smith’s quality investing strategy as well, although some of his key holdings such as Microsoft and Facebook trade at rather high valuations, which adds a little more risk.

On the other hand, I don’t see a huge amount of appeal in Woodford’s fund right now. I do think value investing could come more into focus in 2019, as the growth trade that we’ve seen in recent years appears to have broken down. However personally, I’m not convinced that Woodford’s fund is the best way to play the value theme. It’s a little too unorthodox for my liking, given that it contains a number of non-dividend paying growth stocks.

So perhaps I’d go with Train for UK equity exposure, and Smith for global equity exposure, in order to diversify a little. As with individual stocks, it can be a sensible idea to diversify with funds, as you don’t want to be overexposed to one particular manager in case they underperform.

Investing in AI: 3 Stocks with Huge Potential!

🤖 Are you fascinated by the potential of AI? 🤖

Imagine investing in cutting-edge technology just once, then watching as it evolves and grows, transforming industries and potentially even yielding substantial returns.

If the idea of being part of the AI revolution excites you, along with the prospect of significant potential gains on your initial investment…

Then you won't want to miss this special report inside Motley Fool Share Advisor – 'AI Front Runners: 3 Surprising Stocks Riding The AI Wave’!

And today, we're giving you exclusive access to ONE of these top AI stock picks, absolutely free!

Get your free AI stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon owns shares in Unilever, Diageo, Imperial Brands, Hargreaves Lansdown, and Schroders, and also has positions in the Fundsmith Equity Fund and the Lindsell Train Global Equity fund. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Facebook, PayPal Holdings, and Unilever. The Motley Fool UK owns shares of Microsoft and has the following options: short January 2019 $82 calls on PayPal Holdings. The Motley Fool UK has recommended Burberry, Diageo, Hargreaves Lansdown, Imperial Brands, InterContinental Hotels Group, RELX, and Sage Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Could the S&P 500 be heading for an almighty crash?

Christopher Ruane shares his take on why he thinks the S&P 500 could be heading for a big fall at…

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

Down 64%, this FTSE 250 stock offers a 13% dividend yield for investors

This struggling investment banker has suffered significant losses in the past five years, but it has the second-highest yield on…

Read more »

Investing Articles

1 stock market ETF I’ve been buying during the sell-off

The stock market's been all over the place in April, creating a fertile breeding ground for long-term buying opportunities.

Read more »

Investing Articles

As the Sainsbury share price bucks the price-war trend on FY results, I examine the dividend prospects

The J Sainsbury share price has been regaining ground, despite growing fears of intense competition in the supermarket sector.

Read more »

The words "what's your plan for retirement" written on chalkboard on pavement somewhere in London
Investing Articles

Should I invest in a Stocks and Shares ISA or a SIPP to retire early?

Early retirement is the ultimate goal for many investors, but choosing between a Stocks and Shares ISA and a pension…

Read more »

Investing Articles

Is now a great time to consider buying Greggs shares?

Greggs shares have been hammered in 2025. But have they now fallen too far? Paul Summers takes another look at…

Read more »

Investing Articles

Is it still a great time to buy cheap shares as stock market crash fears recede?

Fear of a stock market crash can trigger panic selling... but that surely can't be the best thing to do…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

The Vodafone share price is 24% undervalued, according to analysts

Our writer’s been looking at the latest targets for the Vodafone share price. Although there’s a wide variation, the average…

Read more »