'Darkest before the dawn?' Advisers shrug off Woodford woes

Advisers holding Neil Woodford’s funds in their portfolios are sticking with the fund manager, despite a torrid run of late.

Woodford’s short term woes were compounded most recently by the latest profit shock dealt by Capita, though he has vowed to stay with the outsourcing giant, which has been a major factor in the underperformance of late.

Woodford returned just 0.5% on his flagship LF Woodford Equity Income fund in 2017 versus a peer group average of 10.4%, and he has been hit by a string of sharp share price falls, most notably Provident Financial.

However, advisers are standing by the long term track record of the man who avoided the burst of the tech bubble and shunned the banks ahead of the crisis.

Charles Chami, director, Glamis IFA

‘Even after this latest hit with Capita, I will be sticking with Woodford. You have to look at his long term strong performance, and he has an exceptional record even though over individual years it may not be great.

'When you are dealing with time horizons of five to 10 years plus, which is overwhelmingly what our clients have, the case for Woodford is still strong.’

Rod Milne, joint managing director, HFS Milbourne

'We have quarterly investment committee meetings and will be watching it closely, but we like Neil and have been supporting him, also while he was at Invesco, for many many years, so we’re not about to just dump him because he has had a bad run over the last few months.

‘I think the events of the last few days with the markets falling indicate that possibly he may have made some right calls. Some of his comments have been coming through in recent days about the markets being potentially overvalued. We’ll see how that impacts on performance.

'It’s a bit of a shame he’s been caught by Capita along with everything else. We use him as part of our portfolios, but we’re not particularly overweight in his direction.’

Julie Flynn, director, Bree Wealth

‘I’ve got just the one client holding Woodford, though he was already holding it when he engaged with me. We’ve restructured his portfolio, but he wanted to keep hold of Woodford, and I haven’t objected to it.

‘It’s a small part of his holdings, so not a big loss if it continues its recent form. I also remember the press coverage Woodford got in the run up to the credit crunch, so maybe the day is darkest before dawn?’

Charlie Hill, financial adviser at Plymouth-based Sound Financial Management

‘We are very much in sticking in the sense that we know why we are in it, and obviously we are not happy with the performance, but we have met with them and they have explained their rationale. For now, we are comfortable with what is going on, but it is very much a case of keeping an eye on this.

‘There is no new money going into it, and it does seem to come up at every client meeting, with clients asking what we are going to do about Woodford. Sometimes clients do want to move out of it, and that’s maybe a decision they drive, or sometimes we will agree to take half of the holding out of Woodford to take the opportunity cost of investing elsewhere while it’s not doing so well.

‘The balanced argument is you don’t want to crystalise any losses the client has taken on with Woodford, so it’s very much an ad hoc decision with the client’s book, but most of the time it’s a case of just keeping an eye on it and holding on for now.’