8th June 2015
Almost a year on since the launch of the hugely popular Woodford Equity Income fund its star manager is sitting on top of the performance league tables after achieving a return of almost 20%.
The £5.7bn portfolio has returned 19.6% since launch on 19 June last year – turning a £10,000 investment into £11,960 – versus a peer group average of 9.3%, making Neil Woodford’s vehicle the best performing UK Equity Income fund over this period.*
Laith Khalaf, senior analyst, Hargreaves Lansdown said: “You couldn’t have scripted it better; one year on from launching his new fund and Neil Woodford is the best performing manager in his sector. This is a cracking start for the fund, although Woodford’s pedigree as a fund manager rests on his achievements in the last three decades, not just the last 12 months.
“Investors who bought the fund at launch will be rightly pleased with how well the fund has performed. Any truly active fund manager will endure periods of underperformance and Neil Woodford is no exception, but it’s good to see investors’ faith in his new venture rewarded by a really bright start.’
The performance of the new fund continues the trend of Woodford’s career spanning more than 25 years. Since taking over the Invesco Perpetual High Income fund in 1988, he turned a £1,000 investment into £28,070, compared to £10,540 from the FTSE All Share.
In terms of what has driven the returns over the past year, research from Hargreaves Lansdown suggests Woodford’s out-performance of the FTSE All-Share, which achieved 6.5% over the term, has been achieved through a mixture of stock selection and sector positioning.
Khalaf said: “Woodford’s stock selection has been particularly strong in smaller growth companies and large high yield companies. Small caps contributed particularly positively to performance, accounting for around 40% of performance, despite making up only 15% of the fund. This is particularly impressive against a backdrop in which small cap growth stocks as a whole have actually lost money.”
He added that at a sector level, a miniscule exposure to the oil and gas sector has helped relative to peers. Khalaf added: “The fund has benefited from exposure to healthcare, financials and consumer goods stocks. Woodford’s stock selection has been particularly good in financials, where he holds no banks but has taken positions in Allied Minds and Provident Financial, among others, which have performed well. The former stock also illustrates a slight kicker Woodford has got from using his international allocation to invest in US stocks, which have benefited from a strengthening dollar.”
*(Data to 4 June)