Investors pull money out of flagship Woodford funds
Neil Woodford’s flagship fund has lost almost a fifth of its assets since May as investors dumped the renowned British investment manager following a series of bad bets and disappointing performance.
The Woodford Equity Income fund’s assets under management fell almost £2bn from an all-time high of £10.15bn in May to £8.2bn in December, intensifying pressure on Mr Woodford to turn round performance at the asset manager.
Investors have taken fright after the idiosyncratic fund manager struggled to perform despite an extended bull run that saw UK markets hit new highs throughout 2017. The share price of several of Mr Woodford’s large holdings, including Provident Financial and Allied Minds, fell sharply last year, prompting suggestions the prominent investor had lost his touch.
The problems have continued this year, with Mr Woodford suffering a paper loss of an estimated £40m after the share price of Capita fell by 47 per cent last Wednesday.
A spokesperson for Mr Woodford, who developed a stellar reputation after he turned £1,000 into £25,000 during his 26 years running the Invesco Perpetual High Income fund, said: “Neil’s funds have at times underperformed the broader market because of a contrarian view and [this is] not the first time his funds have suffered redemptions.
“He believes there are inherent risks in inflated asset prices. By sticking to the investment principles that have underpinned his successful 30-year career, he believes he will continue to deliver the level of returns that investors expect on a three-to-five-year view.”
Investors pulled cash from the fund manager for 10 out of 12 months in 2017, according to figures compiled for the FT by Morningstar, the data provider.
Investors that redeemed cash include Aviva and John Chatfeild-Roberts, head of Jupiter Asset Management’s Merlin fund range, who withdrew hundreds of millions of pounds from Mr Woodford’s income fund after two decades of backing the equity manager.
Architas, the multi-manager investment company, and LGT Vestra, the investment manager, also cut or reduced exposure to Mr Woodford’s funds as part of asset allocation changes last year.
Pension funds have also expressed concerns about Mr Woodford’s performance. Last November, Kent County Council pension scheme said the fund’s main issue was “the continued underperformance of Woodford”.
“[Mr Woodford’s] recent problems have had extensive media coverage and there have been some high profile investments which have gone badly wrong,” the chairman and corporate director wrote in a report for the fund committee.
Mr Woodford’s flagship fund lost more than 2 per cent over the past 12 months, while the IA UK equity income benchmark returned 10 per cent.
Investors also pulled cash from Mr Woodford’s income focus fund in recent months. The $737m fund, which launched last March, suffered redemptions in each of the final four months of 2017.
A senior figure at a large UK wealth manager said that while his company had not “taken a view against Neil that has resulted in the business withdrawing money from his funds”, some clients had pulled their cash.
“Fund management is difficult. It is a lonely job, especially for the manager of a high-profile fund, whether you are doing well or bad. Neil has to retain a strength of purpose and determination and he is showing that,” he said.
“The nub of it is there have been lots of situations in Neil’s portfolio’s where the share prices have fallen substantially. He held on. And often it has worked out and he has delivered a big profit.”