Blows continue for Woodford as Jupiter Merlin pulls money

Woodford Investment Management has confirmed that assets under management in its UK Equity Income fund have fallen to £8.9bn after Jupiter Merlin, once its largest investor, pulled most of its money.

The move represents another blow to Woodford, who last month apologised to investors for recent disappointing performance.

Jupiter would not comment on the move, but a Woodford spokeswoman confirmed in a statement that the transaction was concluded in September.

It is understood Jupiter Merlin pulled around £300m.

Tilney Group managing director Jason Hollands says it is unclear if Jupiter’s move is driven by the recent run of tough performance or by their asset-allocation views.

Hollands says Woodford’s “upbeat” take on the UK economy is likely to shape some investors’ decisions on whether to stick with the fund.

If Woodford is right and the gloom turns out to have been overdone, then investors may soon forget this period of turbulent performance,” Hollands says.

Chelsea Financial Services managing director Darius McDermott says they hold Woodford’s Income Focus in their fund of funds, rather than the Equity Income fund, because it pays a higher yield and they aren’t seeking exposure to patient capital.

McDermott says they remain comfortable invested in the newer fund, which launched in April.

“Chelsea’s clients have been invested with Neil for 25-plus years and made very, very good money. Do I think Neil’s become a bad fund manager because he’s had a bad six months? No.”

McDermott adds: “We have had some calls from clients because he such a high profile fund manger that almost anything that happens in their fund – and they are a very transparent business – gets picked up on in the press.”

Hargreaves Lansdown has also confirmed it continues to invest in Woodford Equity Income through its multi-manager funds, and the fund remains on the Wealth 150 Plus list.

Retail investors continue to flow into the Equity Income fund, according to The Share Centre, where it was the top bought fund in September, which it attributed to Neil Woodford being a “tried and tested” manager.

Woodford-backed companies have suffered a number of setbacks over the last few months.

Provident Financial shed two thirds of its stock market value following a profit warning and cancellation of the interim dividend. It followed double digit falls from pharmaceutical company Vernalis, AstraZeneca and AA.

Head of the Jupiter Merlin fund range John Chatfeild-Roberts was a seed funder of Woodford’s when he exited Invesco Perpetual in 2014.

A year after launch the five Jupiter Merlin multi-manager funds had close to £1bn in Woodford’s flagship fund, which was then £6.2bn, making them the largest outside holder.

“Merlin is a big franchise and Woodford will be disappointed to lose those assets, but its not a huge amount in the total sum they run either,” says McDermott.