Neil Woodford’s former Income Focus fund has shed 30% of its assets in the year since it was handed to Aberdeen Standard Investments after suffering performance setbacks during the Covid crisis and redemptions.
Assets in the fund stood at £249.3m in January 2020 when the fund was officially rebadged as the ASI Income Focus fund. But by the end of December the fund had shrunk to £169.8m, according to figures from Morningstar.
Around £36.9m of the £80m worth of falling assets was from investors withdrawing money from the strategy, while the remainder was down to performance-related movements.
Net outflows were at their highest in February, the month of the fund’s re-opening under Charlie Luke (pictured) and Tom Moore, with investors yanking £10.2m. In March, the second-worst month for redemptions, an additional £4.7m exited the strategy.
Since the fund’s re-launch it has lost 15.2%, almost twice as much as the average IA UK Equity Income peer (8.9%).
‘We’re very aware clients have experienced underperformance under the previous manager’
In an interview for the upcoming edition of Portfolio Adviser, co-manager Tom Moore admitted the first three months at the helm of Woodford’s old fund had been “pretty bruising” thanks to the unexpected arrival of the coronavirus.
“When we were setting up the portfolio, we were not expecting the worst global pandemic in living memory,” he said.
Top 10 holdings like coach operator National Express, airliner Tui and defence contractor Babcock, which had been selected for a normal economic environment, were hit hard, dragging the fund down 27% in the first three months. The IA UK Equity Income sector was down 23.2% by comparison.
But in the final quarter, as markets grew hopeful off the back of global vaccine rollouts, Moore and Luke’s cyclical bets on financials and miners helped reverse some of those losses, driving the fund up 17.1%, better than the sector average (15.6%).
“We’re very aware that clients have experienced significant underperformance under the previous manager, and the first year under our tenure was affected by Covid-19,” Moore told Portfolio Adviser. “But you can see from the last three months that things are turning.”
