Quilter Investors drops Woodford segregated mandate

Multi-asset house will retain exposure via pooled funds

Woodford

Quilter Investors has abandoned Neil Woodford as manager of one of its UK equities segregated mandates, Portfolio Adviser can reveal.

Letters sent to clients on Friday detailed the changes, which will take effect from 15 April. The fund will merge into an existing segregated mandate managed by Artemis UK equities manager Adrian Frost.

Quilter Investors will retain a decent exposure to Woodford (pictured) via his pooled funds – a point that the boutique equities house emphasised when contacted by Portfolio Adviser.

Quilter Investors UK Equity Income II, the mandate managed by Woodford, held assets totalling £91.8m compared to £236.6m in the Artemis-managed fund, Quilter Investors UK Equity Large-Cap Income, according to their respective February fact sheets. When Portfolio Adviser highlighted poor performance in the Woodford segregated mandate in July 2018, the fund had assets totalling £159m.

Quilter Investors has had the segregated mandate since 2014.

Woodford performance in segregated mandate versus pooled fund

6m1yr3yr
Quilter Investors UK Equity Income II-19.48-18.73-25.69
LF Woodford Equity Income-10.31-5.84-7.52
FTSE All Share-1.196.9332.65
IA UK All Companies-3.473.5126.45
Source: FE Analytics

A Woodford Investment Management spokesperson said the firm will retain 90% of assets as the £8.3bn Cirilium active range, managed by Paul Craig, will switch its holdings into the LF Woodford Equity Income fund.

Quilter’s £6bn Wealthselect Managed Portfolio Service, headed by Stuart Clark, divested from the segregated mandate in 2017.

The Woodford segregated mandate is also held via a small number of direct investors who were able to access the fund via Quilter’s investment platform. Investors have until 10 April to switch out of the fund if they do not wish to be in the merged strategy under Frost’s management. The platform offers the Woodford Equity Income fund at a fixed ongoing charge of 0.80%, 5 basis points more than the segregated mandate.

Shore Financial Planning director Ben Yearsley said it was interesting Quilter had picked Woodford Equity Income over Income Focus, given the former’s exposure to unquoted companies. Like St James’s Place segregated mandate with the star fund manager, Quilter did not allow Woodford to hold unquoted stocks.

Quilter UK Equity Income was the third-worst performing fund in March, according to FE Analytics data compiled by Shore Financial Planning, losing investors 7.2%. Woodford Income Focus was also among the bottom-10 performers for the month falling 4.1%.

Confirming the merger to Portfolio Adviser, Quilter said in a written statement: “While the fund groups and strategies for our sub-advised mandates are chosen with a long-term view, the process has the flexibility to add, replace, or remove fund managers where necessary.

“The Quilter Investors fund research team has recommended that the current investment adviser, Woodford Investment Management Limited, is replaced with Artemis Investment Management LLP.”

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