Woodford sub-advised mandate falls by a fifth

The Old Mutual Woodford Equity Income fund has fallen 18.5% over the past year, compared to 12% falls in the flagship Woodford Equity Income fund.

While many investors have been concerned about Woodford’s exposure to early-stage companies, the Old Mutual Woodford Equity Income fund only invests in listed equities, but has still significantly underperformed.

“The OM fund does not hold unquoted investments and the divergence between the two funds in terms of holdings means at times the fund both outperforms and underperforms the retail fund,” an Old Mutual Wealth spokesperson said.

The spokesperson said while there is no minimum amount that must be allocated to Old Mutual’s bespoke sub-advised mandates it must be cost effective to run on a standalone basis.

The fund currently holds £159m, but Old Mutual Wealth refused to comment on how its allocation to the sub-advised mandate has changed.

Over the last year many discretionary fund managers and platforms have dropped the star manager from portfolios and buy lists, with Charles Stanley Direct the latest to do so.

Charles Stanley Direct’s Rob Morgan told clients they were increasingly worried about a “relatively small number of existing high growth and earlier-stage businesses in the portfolio”.

The sub-advised fund is used within the Wealthselect range and has an ongoing charges figure totaling 0.65%, whereas Woodford Equity Income charges 0.75%. The managed portfolio service (MPS) only holds in-house funds or sub-advised mandates.

In May, Old Mutual Wealth reported Wealthselect had surpassed £5bn assets under management, four years after its launch in Q1 2014.

Woodford Investment Management refused to comment on the fund’s performance.

Old Mutual Woodford Equity Income performance

Source: FE Analytics