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CF Woodford Equity Income fund dropped from recommended list amid concerns

Written by: Paloma Kubiak
Star manager Neil Woodford’s CF Woodford Equity Income fund has been removed from TD Direct Investing’s recommended list, amid concerns over its size and performance.

Online trading and stockbroker platform TD Direct Investing has removed the CF Woodford Equity Income fund from its list of recommended funds, stating that since its launch in June 2014 the fund has amassed £8.3bn of assets which could hinder its future performance.

In its latest quarterly investment outlook, TD Direct noted while the fund has performed “exceptionally well” since inception, and together with the other funds run by Woodford the firm’s assets are over £12bn, it suggested “Woodford’s performance has reached a pinnacle recently”.

TD Direct, which has a client base of 300,000 and £14bn of money under management, added: “We believe there comes a point when the size of the fund hampers the manager’s ability to react, trade and ultimately continue outperforming.”

Further, it cites that the Investment Association has also indicated it may remove the fund from the IA UK Equity Income sector because the yield is “falling short of the sector’s requirements”.

Just earlier this month, Woodford announced he has stopped charging clients for research and instead, the costs would be met by his company, Woodford Investment Management.

Other removed funds

TD Direct has also removed the Newton Global Income and the Axa Framlington Managed Balanced funds from its recommended list.

It notes the Newton Global Income fund manager James Harries had run the portfolio since 2005, but he left the company in December.

“As a result, Morningstar changed the fund’s Analyst Rating from Silver to Under Review. As Harries’ own investment style was a key characteristic of the fund, we have decided to remove it from our Recommended Funds list.”

And speaking of the Axa fund, TD told investors that manager Richard Peirson has handed over management of the UK equities and fixed income portions of the fund. Overseas equities continue to be managed by Axa Framlington’s regional teams, leaving Peirson with overall responsibility for asset allocation and fund cash flows.

“The fixed income mandate, which will be run by Nick Hayes, has been widened to include investment grade corporate bonds. Jamie Hooper was given responsibility for the UK equities portion in November 2015.”

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