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Woodford Equity Income appears in 10 worst funds list

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The Woodford Equity Income fund, run by renowned manager Neil Woodford, has made it onto fund broker Chelsea Financial Services’ ‘DropZone’ following an extended period of disappointing performance.

The table comprises of the 10 funds which have lagged their sector averages the most over the three years to 1 January 2019.

Woodford’s fund appears in tenth position, having lagged the performance of other funds in its sector by 25.3% over three years.

Sam Slator, head of communications at Chelsea, noted that Woodford Equity Income has become a point of contention in the broker’s office.

“Some – like myself – have lost patience and are no longer invested in the fund. In my view, there are a number of excellent alternatives available. Others here have more faith in manager Neil Woodford being able to turn his performance around. He does, after all, have a very good, long-term track record,” she explained.

Woodford Equity Income wasn’t the only well-known fund to make an appearance in Chelsea’s DropZone list. It appeared alongside Jupiter UK Growth and FP Argonaut European Alpha, which both lagged their sector averages by 26.5% respectively.

Close FTSE techMark achieved the largest relative underperformance over three years, lagging its sector average by 48%. Chelsea suggests this fund has disappointed because it invests only in UK rather than global technology.

Meanwhile, Candriam SRI Equity Emerging Markets claimed second place in the DropZone, followed by MFS Meridian Global Energy.

RedZone revealed

Chelsea also analysed the three-year performance of funds across IA sectors, naming and shaming the worst-performing funds over the period. A total of 188 funds appeared in Chelsea’s RedZone, up from 187 the previous year.

A number of well-known funds appeared in this list, including Neil Woodford’s successor Mark Barnett’s funds: Invesco UK Strategic Income, Invesco Income and Invesco High Income. Over the three-year period, these three funds posted respective losses of 7.9%, 3.2% and 2.6% versus a positive return of 12.2% for the average fund in the IA UK All Companies sector.

Chelsea noted that 28 funds in the UK All Companies sector appeared in the RedZone: 20 more funds than this time last year, with assets in excess of £22.2bn.

In the Europe excluding UK sector, Liontrust European Enhanced Income fared badly with a 4.5% loss versus a 20% rise by the sector average.

Meanwhile, in the sterling strategic bond sector the L&G Dynamic Bond fund posted a loss of 2.8% over three years versus a positive return of 10.2% by the sector average.

On a company level, Chelsea said Aberdeen Standard Investments had the most funds in the RedZone, with 20 making an appearance. This was two more than last year, with assets accounting for £10.7bn.