Architas has cut its holding in the Woodford Equity Income fund, warning it is too concentrated in two sectors.
Nathan Sweeney, senior investment manager at Architas, says in the £275m Architas MA Active Intermediate Income fund he has cut the position in the Woodford Equity Income fund from 10 per cent at the start of the year to 6 per cent now.
“Woodford Equity Income is concentrated in two sectors: healthcare and tobacco, which account for 50 per cent of the fund. If anything detrimental happens to those sectors it will impact the fund’s performance,” he says.
Instead, Sweeney has increased his position in Michael Clark’s Fidelity MoneyBuilder Dividend fund, to 6 per cent.
“We favoured Woodford Equity Income coming into the year but reduced it from 10 per cent to 6 per cent and bought Fidelity MoneyBuilder to diversify. It was a good decision given the Fidelity fund has performed quite well this year, up 9 per cent,” he says.
Woodford Investment Management breaks down the top contributors to performance in its fund, with the top eight contributors in the Equity Income fund to end of June being healthcare or tobacco holdings.
Woodford’s flagship Equity Income fund saw its assets under management drop more than £300m in June as it suffered outflows and a performance hit. The fund saw £140.8m in net outflows, while performance led to a £168.6m hit to the fund.
In May Woodford said the fund had underperformed markets when they rallied in April because the fund avoided commodities, which were the main drivers of the market uptick. At the time the fund had no allocation to oil and gas, compared to 11.15 per cent for the benchmark, and a 0.1 per cent allocation to basic materials, compared to the benchmark’s 5.5 per cent.