You are here: Home - Investing - Experienced Investor - News -

Woodford flagship fund downgraded by Morningstar

Written by:
Neil Woodford’s flagship fund has been downgraded by fund analysts Morningstar, due to “persistent redemptions, underperformance and stock-specific issues”.

Morningstar analyst Peter Brunt said the Woodford’s “relentless willingness to push the portfolio to its liquidity limit” had also contributed to the downgrade for the Woodford Equity Income fund.

A Neutral rating implies that the analyst does not have a strong conviction on a fund and doesn’t expect it to deliver standout returns. This will disappoint those who have remained loyal to Woodford through a difficult period of performance that has seen assets more than halve from a peak of £10.2 billion to £4.3 billion.

Last week Kent County Council, which has 4% of its pension assets invested in the fund, said it was reviewing its holding. Earlier this month, Woodford said he would reduce the proportion of the fund investment in illiquid and less liquid stocks to less than 10% by the end of the year and eventually to zero.

Dzmitry Lipski, investment analyst at interactive investor says: “There’s a well known saying that there’s no sense closing the barn door after the horse has bolted, and contrarian investors might want to bear this in mind. Three years ago was arguably the time to sell, when performance was at the top of its game and profit taking would have been a sensible strategy.

“While Woodford’s reputation may still be swinging on the hinge, the fund today is very different to where it was three years ago. The barn has had a thorough sweep, with unquoted stocks transferred to Patient Capital Trust, with a closed-ended structure much better suited to illiquid assets. This should help reduce risks and provide more clarity to investors.

“While we still think there are better options, existing investors in Woodford Equity Income Fund could blend them with other high-quality funds in the sector to gain broader, more balanced exposure to UK equity income.” Lipski recommended the Super 60 core fund Royal London UK Equity Income and the low cost Vanguard FTSE UK Equity Income Index.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape for summer, and moving your cash savings to a higher paying deal is ...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Royal Mail to roll out parcel postboxes across the UK

Royal Mail is to roll out 1,400 parcel postboxes across the UK from August.