SJP mandate among four Woodford funds bottoming May tables

Absolute return fund tops performance in May as trade tensions rattle global markets

Woodford

The SJP UK High Income fund has been revealed as the second-worst performer in May, a week after the FTSE 100 wealth manager said it has no plans to drop manager Neil Woodford from the segregated mandate.

It was among a quartet of funds run by the star fund manager that featured among the worst-10 performing funds for the month.

Woodford Equity Income, which now has £3.7bn assets under management, lost investors 9.1%. However, the £1.3bn SJP UK High Income fund was the worst of Woodford’s funds over the month losing investors 9.3%.

In May, SJP reaffirmed its confidence in Woodford following an interview with the Financial Times where its CIO Chris Ralph said it had “the microscope more intently focused” on the UK equities manager. In a follow-up statement several days later, the wealth manager said it had no plans to change his mandate.

Omnis segregated mandate also suffers

A third Woodford fund, Omnis Growth & Income, featured in the worst-five performers losing investors 8.8%.

In a video uploaded by Omnis a week ago, Woodford said his strategy was beginning to work having not done so for the last two years.

Speaking in a filmed presentation, he said: “This is the most attractive portfolio I can remember having in place since 1992. Even now, I’m struggling to think how what I built in ’92, which was a very difficult year for performance for me personally, could have been as attractive as what I’ve built today.

“By attractive I mean the inherent undervaluation of the companies we have the in portfolio today.”

The portfolio is focused on stocks exposed to the UK economy, such as housebuilding, retail and property, alongside healthcare, science and innovation, he said. “I know I’ve been through a really difficult time. It’s been really difficult for you guys to have the patience and trust in me to deliver,” he told the audience.

Asia funds suffer

Despite Woodford standing out for the number of funds in the bottom 10, the £162.4m Standard Life UK Equity Recovery fund was the worst performer over the month. Managed by Andrew Hunt, the fund sits in the Investment Association UK All Companies sector, like Woodford Equity Income.

Its largest holding is Standard Chartered and it also holds a number of oil names in its top 10, like Cairn Energy and Tullow.

May was another difficult month for sterling with the currency falling 3.59% against the dollar and 2.85% against the euro. Theresa May announced her resignation during the month and European elections in the UK revealed voters ditching the Conservatives and Labour for parties with more polarised views on Brexit.

Remaining funds in the worst 10 tended to have a focus on Asia, such as Baillie Gifford China.

Worst performing funds in May 2019

Bottom 10 fundsReturn %
Standard Life UK Equity Recovery-9.75
SJP UK High Income-9.32
Woodford Equity Income-9.14
Baillie Gifford China-8.91
Omnis Income & Growth-8.78
Invesco Global Opportunities-8.38
Woodford Income Focus-8.3
Janus Henderson China Opps-8.26
Quilter China Equity-8.24
Neptune Japan Opps-8.18
Source: FE Analytics, returns 1/5/19 to 1/6/19.

Absolute return fund delivers in falling markets

In welcome news for the Investment Association Targeted Absolute Return sector, Sanditon European Select topped tables for the month of May.

Indian equities and linkers otherwise dominated the best-performing funds over the month.

A ramping up of trade tensions between the US and China saw the MSCI World drop 4.18% during the month. India was one of the few markets to end the month in positive territory, noted Shore Financial Planning director Ben Yearsley, thanks to the re-election of Hindu nationalist Nahendra Modi.

Funds  – May 2019 (top 10)Return %
Sanditon European Select+6.33
First State Indian Subcontinent+6.12
Threadneedle Global Bond+5.93
Neptune India+5.92
Fidelity Inst UK Index Linked Bond+5.9
Janus Henderson Index Linked Bond+5.88
iShares Index Linked Gilt Index+5.83
Axa Sterling Index Linked Bond+5.79
Janus Henderson Inst Overseas Bond+5.74
iShares Overseas Government Bond Index+5.7

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