Woodford flagship flounders: Fund shrinks by a fifth as assets fall by £1.6bn in 2018
Star fund manager Neil Woodford’s torrid 2018 continued as his flagship fund shrunk to a near-three-year low.
Woodford’s equity income fund assets slumped to £6.6bn at the end of March, according to figures released today.
In February City A.M. revealed the former Invesco money manager had shipped £1bn in the first five-and-a-half weeks alone – assets shrivelled to £7.2bn. Today’s figures mean assets have fallen by a fifth – some £1.6bn – in the first three months of 2018.
After going launching in June 2014, Woodford’s main fund last registered assets under management of less than £7bn in June 2015. They peaked in May 2017 at a mammoth £10.2bn.
Woodford has been on the wrong end of a number of poor trades in recent months, with big sell-offs in the likes of Provident Financial, Capita and the AA demolishing performance.
Read more: Woodford throws his weight behind Provident… and he had to
Institutional investors are split on whether Woodford can maintain his crown. Jupiter’s Merlin range is among a number to have withdrawn hundreds of millions of pounds in recent months. Others, such as FTSE 100 wealth management behemoth St James’ Place, are currently keeping the faith.
Exploit
In a monthly note to investors released today, Woodford said global firms were being switched on to opportunities presented by British firms.
“In recent weeks, we’ve seen bids for Fenner, Fidessa, Hammerson and Laird, from overseas companies apparently keen to snap up the bargains on offer. None of these companies are held in the Woodford funds but this flurry of deal activity is representative of the widespread undervaluation that results from the unpopularity of UK equities among global institutional investors. In turn, it may also represent something of a precursor to a re-appraisal of the UK economy’s prospects and the stocks that are exposed to it.
We have continued to increase the Woodford funds’ exposure to domestically-exposed stocks, in order to exploit one of very few outstanding valuation opportunities left in these late-stage bull market conditions.
City insiders have also highlighted concerns that Woodford is flirting with a 10 per cent cap on unquoted investments. They represented 9.66 per cent of the portfolio; sources pointed out the upcoming floats of broker AJ Bell and pharmaceuticals firm Autulus – both of which are backed by Woodford – could help the fund ease away from the unquoted hard limit.
A Woodford spokesperson said:
Neil’s long-held investment approach aims to position the portfolio towards stocks where the gap between current share price and his judgement of the long-term fundamental valuation opportunity is the widest. Recently, this has opened opportunities with UK-exposed stocks and Neil has chosen to source liquidity from stocks where valuations are not as attractive as elsewhere in the portfolio.
Read more: Neil Woodford’s sharing a £300m windfall after Provident’s meteoric rise