In a note to clients, Charles Stanley Direct’s Rob Morgan said while Neil Woodford is one of the UK’s “most talented and well-known” fund managers, the platform has concerns about performance being impacted by the composition of the portfolio.
Morgan told clients they were increasingly worried about a “relatively small number of existing high growth and earlier-stage businesses in the portfolio”.
He said: “We still believe it is a high quality fund and following a tricky period there may be considerable potential in the portfolio as it currently stands.
“Yet the Foundation Fundlist is reserved for our highest-conviction investment ideas, so we feel it is right to remove the fund from the list at this juncture while we monitor it further and explore various options within the UK equity income sector.”
There are currently 54 funds in the Foundation Fundlist. New additions in the past year have included Fundsmith Equity and Artemis US Extended Alpha.
Woodford Equity Income had been on the preferred funds list since January 2015, only seven months after its launch in June 2014.
Woodford’s fund has had a difficult time over the last 12-months as some of his largest listed holdings, like Provident Financial and Capita, have seen their share prices tank and he has lost the backing of significant investors from Jupiter Merlin to Aviva, Architas and LGT Vestra.
It has returned 4.3% over three years compared to 25.2% in the Investment Association UK All Companies sector, according to FE data.
Morgan said the platform was currently considering the merits of Woodford’s most recently launched fund, Income Focus, to see if it was worthy of the Foundation Fundlist.
Woodford Equity Income performance
|Woodford Equity Income||-2.74||-9.05||4.29|
|IA UK All Companies sector||7.00||9.60||25.16|
|FTSE All Share||7.56||9.02||26.24|