Neil Woodford: ‘I'm very sorry for the poor performance’

7 September 2017
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Leading fund manager Neil Woodford has issued an apology and explanation for his recent poor performance.

In a video posted on his website Mr Woodford said that the performance of CF Woodford Equity Income (one of Moneywise's First 50 Funds) has been "incredibly painful and [a] difficult thing to have to navigate."

It has been a year to forget for the feted fund manager – with the fund showing a loss of 0.6% over the period – leaving the fund rooted to the bottom of the Investment Association’s UK Equity Income fund sector. In contrast, the average fund has returned 8.9% over the past year.

"It's been a difficult period. And I'm very sorry for the poor performance that we've delivered really now since 2016."

A couple of Mr Woodford’s bets turned sour in recent months, most notably AstraZeneca and Provident Financial.

However, Mr Woodford remains defiant and stands behind his portfolio: "There's huge potential in the portfolio, huge undervaluation. And it's a great portfolio, one that I own and want to own," he later said.

He noted that while AstraZeneca’s (which accounts for over 8% of Mr Woodford’s CF Woodford Equity Income fund) lung cancer drug trial in July was a significant setback for the company, the announcements came alongside ‘very good results and a number of other very good very positive things. Nevertheless, he adds ‘that was a sort of an event that the market focused on.’

It caused AstraZeneca’s share prices to plummet from 5,113p (26 July), down to 4,325p (27 July), a decline of 15.4%. Share prices have yet to recover, currently sitting at 4,573p.

‘It's the biggest position in the portfolios. And of course, that was quite damaging to the funds in terms of the hits,’ Mr Woodford said.

He also noted the poor performance of Provident Financial, of which Woodford Investment Management owned 19.9%. The doorstep lender saw its share price crash after a number of profit warnings, ultimately leading it to being relegated out of the FTSE 100 and into the FTSE 250.

Mr Woodford, however, said that while stock specific problems have not helped, he argues underperformance is more down to "the rather odd characteristics of this bull run in the stock market".

He adds: "It is a very narrowly led market. The stock market seems to want to bid up the prices of stocks that I've talked about before, which provide exposure essentially to Chinese credit growth.

"In very simple terms, the stock market has decided that Asia, China is good, the UK is bad. It's a very sort of-- it sounds very simple. And maybe it is an oversimplification. But I see- I see that driving- I see that preference playing out in the stock market daily."

Echoing previous claims, Mr Woodford said that while ‘the short-term performance is painful and is difficult…it isn't a permanent loss of capital. And I can and I believe I will rebuild the performance and rebuild that capital that we've lost recently.’ 

This article was originally published on our sister website Money Observer.

Comments

In reply to by anonymous_stub (not verified)

Neil Woodford has been an excellent performing manager for many years and I have always invested in him. However like all fund managers they do not always get it right and I am afraid Neil is no exception. Funds managers go in and out of favour based on how they are performing. Look at New Star for example. However let us hope our faith in Neil comes good!!

In reply to by anonymous_stub (not verified)

Fine, the man that hasn't made a mistake hasn't made anything in life, so are we to assume that fund charges will reflect the position ?........why not break the trend altogether ans start charging fund charges as a direct percentage of the profits the units show ?.....we win you win, we lose, you lose.........a short sharp hit in your wallet may help you focus more clearly !

In reply to by anonymous_stub (not verified)

By a mere apology on a piece of paper, things do not improve for ordinary people/workers like myself. So how does Mr Neil Woodford intend to help us. It is our hard earned money through our life time and now it is gone & he still wants more of our funds to be destroyed by promising at least 10%. It is a big risk to take.at our expense!!! Any comments.

In reply to by anonymous_stub (not verified)

Further proof that there's no sure fire way to win on the markets. Some win, others lose. Stick at it long enough and you average out to be the same as anyone else.

In reply to by anonymous_stub (not verified)

I agree with Mr Woodford. Unfortunately ever since Brexit almost every financial analyst on the planet has jumped to slam the UK, without even knowing what the future holds and turning their attention to anywhere but the UK out of pure spite imo. I believe this kind of jittery approach has translated into the market for now. But market forces swing back and forth all the time so the UK will become sexy again once the current crop of screamers and naysayers find something else to fixate on. I recall tales of the EU collapsing not too long ago but it's survived. Greece was going to crash and so was Italy and Portugal. But hey presto it hasn't happened. Neither will the UK collapse. Even if people with agendas act like they want it to. Fwiw I have just invested a chunk into the Woodford fund. It is as good as any in my humble opinion. I'm happy to support UK companies.

In reply to by anonymous_stub (not verified)

Neil really must try harder next term especially when it comes to basic maths ( 40% of 100 is NOT the same as four one-hundredths).

In reply to by anonymous_stub (not verified)

I've been an independent investor since 1972. I feel I am as good as any professional. I get things wrong but I also get a lot right. Even professionals can get it wrong so I am in good company.It's good to see that Neil can admit to his faults and I'm sure he will succeed .Meanwhile I will continue to stick with my own judgement .I started off with£100 in save and prosper itu.My investments are now in excess of £100k so I'm doing alright

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