Investment guru Neil Woodford has apologised for the poor performance of his equity income fund over the past year.
Online fund supermarkets like Hargreaves Lansdown have pushed his funds with articles talking up his skills as a fund manager with thousands of investors ploughing cash into his investment funds.
The equity fund has nearly £10 billion invested but has failed to impress as returns slumped below those of the FTSE All Share index this year.
After showing growth of 15.59% in the year to September 2015, the return was 8.93% the following year and -0.35% in the year to September 2017.
Three-quarters of the fund is UK-based, with 57% going to three sectors – pharmaceuticals and biotechnology (22.25%); financial services (13.86%) and support services (11.32%).
I’m right to be criticised
“I’m very disappointed with the short-term performance and indeed, have been criticised for it,” said Woodford in a video posted online.
“I think I’m right to be criticised. It’s been a very difficult period. And I’m very sorry for the poor performance that we’ve delivered now since 2016.”
He also argued that sometimes the markets are wrong and felt some of his share choices were not the low value the market placed on them.
The problem holdings for Woodford included doorstep credit company Provident Financial, the AA and drugs giant Astra Zeneca.
But he is urging investors to hold their nerve and not jump ship.
£300m wiped off fund in just one day
“It actually may be a surprise to our investors. But it is the fact of life that the regulatory environment that sits around public markets ensures that I can’t know all the things that I would want to know,” he said.
He explained Provident Financial was as an example.
The fund’s 18% £468 million holding lost £300 million in a day as Provident issued a second profit warning, saw the chief executive leave and plans to pay a dividend axed.
“I think the stock market, yet again, has become hysterical,” he said.
Woodford offers three funds – the CF Woodford Income Focus Fund; the CF Woodford Equity Income Fund and the Woodford Patient Capital Trust.