Neil Woodford’s frozen flagship Equity Income Fund (EIF) substantially underperformed its industry benchmark in September and will remain under lock and key as expected, the firm managing the suspension said.
The fund has dropped 12.83 per cent since its suspension on 3 June, while the benchmark FTSE All Share total return rose 4.29 per cent, Link Fund Solutions – which is managing the suspension – said in a letter to investors today.
Link has to review the fund’s suspension every 28 days, but has said previously it expects EIF to remain gated until early December.
The company is working to reposition the fund’s portfolio to be more centred around liquid and listed assets. EIF was first gated after becoming overwhelmed by investor withdrawal requests.
“During the latest 28-day period… the fund has underperformed in relative and absolute terms” said Woodford in a statement.
Woodford said a “primary” reason for EIF’s poor performance was the substantially lowered valuation of one of its holdings, Benevolent AI.
The London-based tech startup’s valuation halved to $1bn (£804m) earlier this month as it secured a cash injection from Singapore’s sovereign wealth fund, Temasek.
“Identifying situations where price and value diverge has been at the centre of Neil’s investment approach over his entire career – and is underpinning the strategy that he believes is appropriate for the economic and market environment that confronts us,” said Woodford.