As recently as the end of April, the fund held 3.4% in the telecoms giant, though the decision to sell was prompted by “competition for capital” in the portfolio as manager Neil Woodford focuses on those stocks with the greatest return potential.
“The decision was not prompted by a change in anything fundamental at the business. Indeed we believe that the company is performing well and we support its strategy,” said head of investment communications Mitchell Fraser-Jones.
“For a while, we have had some concerns about is pension deficit and the relationship between the business and its regulator but these factors have not prompted the decision.”
On Friday, a funding update showed BT’s pension deficit had widened from £7bn in 2014 to £9.9bn at the end of June last year.
Woodford has topped up smaller positions in Horizon Discovery, Verseon, BCA Marketplace and Circassia, while also introducing a new unquoted position in Nexeon. Spun out of Imperial College London, the latter focuses on developing silicon anode materials to replace carbon in rechargeable lithium ion batteries.
It was a mixed performance for biotech holdings last month – while Prothena and Alkermes in the US were among the portfolio’s best performers, the unquoted element of the fund also saw two downward revaluations in Evofem and Viamet, reflecting disappointing market reception to their planned IPOs.
“Generally speaking the market environment has been hostile to IPOs this year but, in both instances, we continue to see considerable long-term future value in these businesses,” Fraser-Jones said.
Among mega-caps, AstraZeneca was a positive contributor on the back of positive phase 3 results for its metastatic breast cancer treatment, Faslodex, while in financials Legal & General and Provident Financial saw a rebound in fortunes.
Woodford has experienced a tough time in 2016 as year-to-date the fund is down 6.5%, compared to a 4.3% from the UK Equity Income sector.
