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Woodford admits fund could fail unless performance improves

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Woodford admits fund could fail unless performance improves

Under-fire fund manager Neil Woodford has admitted his flagship Equity Income fund risks going 'out of business in about two-and-a-half years' if he fails to stem heavy withdrawals and improve performance.

In an interview with the Financial Times, the manager said investors were being pushed into 'appallingly bad decisions' in pulling their money from his funds due to 'misinformation and lazy commentary'.

'There is a mountain of fake information and fake analysis out in the marketplace which, in the end, does impact investors’ decisions detrimentally. So, that’s what pisses me off,' he told the paper.

'When you passionately believe in what you’re doing, as I do, when clients are saying, "nah, we want our money back now because we’d much rather be investing in these things that have gone up", that, for me, is a frustration. I think they’re making a poor investment decision.'

The manager struck a defiant tone, telling the Financial Times he anticipated a 'spectacular' rebound by his funds in the next two years.

Investors have pulled billions of pounds from Woodford's flagship fund over the last two years as performance has deteriorated.

From a peak of £10.2 billion of assets in May 2017, the fund stood at £4.8 billion at the end of January.

Over the last three years, the fund has lost 7%, with Woodford the worst performing manager in the Investment Association's UK All Companies sector.

But crucially, as investors have fled and performance has deteriorated, online stockbroker Hargreaves Lansdown has stood by the fund manager, keeping his funds in their Wealth 50 buy list.

As Funds Insider revealed last week, the broker has driven more than a third of the inflows into Woodford's funds and, even after Hargreaves clients pulled around £1 billion from the Equity Income fund in 2017, they still owned £2.2 billion, or 28% of the fund.

The manager is now hoping to retain the broker's support, after his controversial deal to swap unquoted assets from his income fund for shares in his Woodford Patient Capital (WPCT) investment trust sparked concerns over potential double-charging.

Accounts for Woodford Investment Management are yet to show any sign of strains on the business as a result of investor withdrawals.

The company delivered a record £41.7 million profit over the 12 months to the end of March last year.

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