Woodford Equity Income fund suffers performance hit and outflows

Neil Woodford

Woodford Equity Income saw its assets under management drop over £300m in June as it suffered outflows and a performance hit.

The popular fund saw net outflows totalling £140.8m in the month the UK voted to leave the European Union, while its performance over the same period has dented its size by a further £168.6m. Its assets under management now sit at £8.6bn compared to £8.9bn before the referendum.

The figures come as FE data reveals the biggest winners and losers in the month of the Brexit vote.

Remarkably, the fund with the largest outflows – M&G Optimal Income – was able to more than compensate for £509.2m of outflows due to its performance, which saw assets grow £740.5m to £14.8bn.

It wasn’t the only high performer to suffer outflows with  Stewart Investors Asia Pacific Leaders suffering £78.6mm outflows, while its performance returned £844m leading to total AUM of £9bn.

Mika-John Southworth, director at FE says funds with exposure to perceived lower-risk assets have seen the most inflows.

“The L&G Trust has attracted nearly half a billion pounds in the space of a month – which will go a long way to highlight the cautious mood gripping investors last month.”

The L&G Cash Trust only had assets of £81.6m at the start of the month compared to £558.6m following the UK’s vote to leave the EU at the end of the month.

However, Southworth points out the second most popular fund over the last month, Fundsmith Equity, bucks the low-risk trend.

“The fund has managed to significantly and consistently outperform both its sector and its benchmark. On the day after the EU Referendum, when many funds were struggling with news of a Brexit vote – this £7.7bn global portfolio returned more than 6 per cent.”

In an update earlier this month, Woodford Investment Management head of investment communications Mitchell Fraser-Jones says the asset manager does not expect the Brexit vote to change the overall trajectory of the UK’s economy and that recession would be avoided.

The Woodford Equity Income fund increased its allocation to Legal & General and Provident Financial in the aftermath of the Brexit vote to “take advantage of the ill-informed investor behaviour”, while the companies were down more than 30 per cent and 25 per cent respectively.

It also added to Babcock International, Capita and NewRiver Retail.

Highest outflows since Brexit:

  • M&G Optimal Income  (-£509.3m)
  • Artemis Income (-£367.1m)
  • Threadneedle UK Equity Income (-£193m)
  • Aviva Inv Property Trust (-£190.58m)
  • Threadneedle European Select (-£178.2m)

Highest inflows since Brexit:

  • L&G Cash Trust  (£477m)
  • Fundsmith Equity  (£372.4m)
  • Invesco Perpetual Global Targeted Returns  (£325.1m)
  • Royal London FTSE 350 Tracker  (£310.8m)
  • Royal London Cash Plus(£273.4m)