By Lena Masri
LONDON (Reuters) – Under-fire Neil Woodford leads a list of underperforming money managers two months after his flagship fund was frozen, triggering anger among investors and lawmakers.
Woodford’s fund is one of 11 in the 172-strong UK All Companies sector to be named in online investment service Bestinvest’s biannual report, which highlights the worst-performing investment funds aimed at retail investors.
The report highlights those funds which have underperformed their benchmark over the previous three years by at least 5%, with Woodford’s 3.7 billion pound LF Woodford Equity Income fund underperforming by 38%.
The 11 All Companies sector laggards collectively manage 16.7 billion pounds in assets, out of a sector asset total of 100 billion pounds, the report showed.
Many were hit by their exposure to small and medium-sized companies, which have struggled as the UK market was hit by uncertainty regarding Britain’s exit from the European Union, even as global stock markets have performed more strongly.
As well as lagging its benchmark, the Woodford fund has actually lost money for investors, with 100 pounds invested three years ago now worth 80 pounds, Jason Hollands, managing director at Bestinvest, said in the report.
“Neil will continue to focus the fund’s portfolio towards the few areas of the market which continue to offer valuation appeal and to the economic regions that appear to have enough internal momentum to withstand the growing global headwinds,” a Woodford spokesman said.
“Admittedly, this strategy has not delivered the returns we had anticipated over the past couple of years but identifying situations where price and value diverge has been at the centre of Neil’s disciplined investment approach for more than thirty years.”
Woodford, a favourite among retail investors after performing well during the collapse of the tech bubble at the turn of the century and during the financial crisis, saw his reputation hit after a liquidity crisis forced him to stop clients leaving his fund in June.
The fund has been criticised by Britain’s markets watchdog for “sailing close to the wind” with its heavy investment in illiquid stocks.
Woodford is trying to adjust his portfolio by selling illiquid assets to raise cash to reopen the fund, which its administrator said last month is likely to remain suspended until early December.
(Reporting by Lena Masri; Editing by Simon Jessop and Jan Harvey)