Woodford and Threadneedle most exposed to AstraZeneca

Pill-Pharma-Pharmaceutical-Drugs-Medicine-700x450.jpg

Woodford Investment Management and Columbia Threadneedle are among the fund groups that have seen the biggest fallout from AstraZeneca’s sudden fall in share price this week with some of the highest exposures to the UK stock.

The Woodford Equity Income fund has a 8.9 per cent allocation, more than any other UK domiciled fund.

The next most exposed funds are also managed by Woodford with the Omnis Income & Growth and Old Mutual Woodford Equity Income funds holding 8.7 per cent and 7.9 per cent respectively, Morningstar data shows.

AstraZeneca shares plunged 16 per cent on news on disappointing results from its immuno-oncology drug trials. The fall was the largest in its history.

But fund manager Neil Woodford says the results do not justify such a reaction, pointing to positive results from another lung cancer trial, plus the announcement of a collaboration with Merck to independently develop and commercialise two further cancer drugs.

Three Threadneedle funds had the next highest exposure, including the £4bn UK Equity Income fund, with 6.8 per cent allocated to AstraZeneca, its largest holding. The Threadneedle UK Growth & Income and UK Overseas Earnings funds both also feature among the top 20 most exposed funds.

Richard Colwell manages UK Equity Income and UK Growth & Income funds, as well as the UK Equity Alpha Income fund, with 7.2 per cent allocated. He co-manages the Monthly Extra Income fund with Alasdair Ross, which has 5.8 per cent in the stock.

The Vanguard FTSE UK Equity Income index fund had 5.1 per cent allocated to the stock, the highest passive fund in the data.

A Columbia Threadneedle spokeswoman says AstraZeneca has a portfolio of recently launched and pipeline drugs such as Tagrisso, Lynparza and Imfinzi.  

She adds: “The current share price is now towards the bottom end of its recent trading range and the business has options to reduce costs through its high cost base if needed.”

Top 20 holders of AstraZeneca

Name Portfolio Weighting %
CF Woodford Equity Income Fund 8.9
Omnis Income & Growth 8.7
Old Mutual Woodford Equity Income 7.9
Threadneedle UK Equity Alpha Income Fund 7.2
Threadneedle UK Equity Income Fund 6.8
Threadneedle Monthly Extra Income Fund 5.8
SVS TPI Monthly Income 1 5.6
CF Purisima UK Total Return 5.5
Threadneedle UK Growth & Income Fund 5.3
Vanguard FTSE U.K. Equity Inc Idx 5.1
Fidelity Enhanced Income 5.1
Threadneedle UK Overseas Earnings Fund 4.9
Insight Equity Income Fund 4.6
Fidelity MoneyBuilder Dividend 4.5
NFU Mutual UK Equity Income Fund 4.5
BlackRock Income and Growth Inv Trust 4.4
Rathbone Blue Chip Income And Growth 4.4
Insight Equity Income Booster Fund 4.3
Murray Income Trust PLC 4.3
Rathbone Income 4.3
Source: Morningstar

Liontrust Macro Equity Income co-manager Stephen Bailey says they had reduced their holding in AstraZeneca 85 per cent over the last year from 5 per cent of the portfolio to 0.8 per cent today. 

“The impact of Mystic on AstraZeneca’s share price was always going to be explicitly binary,” Bailey says, adding that they anticipated a disappointment would bring a big shock.

“Rumours abound on AstraZeneca’s M&A prospects – price wise it looks far more appealing as a target today than it did yesterday, but its prospects have diminished.”

Bailey favours GlaxoSmithKline, the fund’s largest holding, due to its emphasis on long duration vaccine and consumer health assets.

EdenTree Investment Management fund manager Ketan Patel says it is difficult to recall a time when a large-cap pharmaceutical company has suffered such a large setback in share price in one day. 

“The 5 per cent yield may provide a floor in the near term, but investors will need strong stomachs to continue to hold the name.”