Neil Woodford’s crown as Britain’s best-loved money manager is under scrutiny after his flagship fund shrivelled by over £1bn in the first five weeks of this year.
Assets held by Woodford’s Equity Income fund, one of Britain’s biggest retail offerings, fell from £8.2bn at the start of the year to under £7.2bn on Tuesday.
A torrid start to the year follows a disastrous 2017, during which the same fund shrunk by almost £2bn between May and December.
“Neil’s funds have at times underperformed the broader market because of a contrarian view,” a spokesperson for the fund manager said.
“This is not the first time his funds have suffered redemptions.”
Stakes in outsourcer Capita and online estate agency Purplebricks have been the driving force behind this year’s poor performance.
Woodford last week threw his support behind Capita after shares halved amid a profit warning and plans for a £700m rights issue. He did, however, admit his 11 per cent holding in the contracting giant had been a “poor investment”. And last week’s wicked Wednesday also saw Purplebricks shares slide after Jefferies analysts claimed the firm hid the true number of homes it was selling. Over 20 per cent of the firm’s stock market value was wiped away last week. Woodford owns over a quarter of Purplebricks’ shares.
Woodford has also resolutely defended troubled doorstep lender Provident Financial. Last August the Bradford-based firm was subject to one of the biggest ever one-day sell-offs in FTSE 100 history. Shares fell by almost 70 per cent, losing Woodford investors hundreds of millions of pounds.
“I believe Provident shares started the day undervalued, and have become even more so as a result of the market’s reaction to today’s news,” he said on the day of the share slide.
Of the 12.8 per cent fall in the Equity Income fund’s assets, 9.5 per cent is due to the performance of Woodford’s stock picks; the balance is a result of investors withdrawing their cash. The fund manager’s listed investment trust – Woodford Patient Capital – has fared only slightly better, with assets sliding over 7.5 per cent during 2018.
Meanwhile, Woodford’s woes may not have escaped the attention of one of Britain’s biggest wealth managers. St James’ Place’s High Income trust – managed by Woodford – has fallen almost eight per cent year-to-date.
“The difference between the valuations of value and growth stocks today is greater than at any stage in stock market history,” the Woodford spokesperson added.