Neil Woodford (pictured) has blasted critics who accuse him of losing the plot and have whipped investors into a frenzy with a “mountain of fake information” causing his flagship equity income fund to continue haemorrhaging cash.
In an explosive interview with the Financial Times at his Oxford headquarters, the typically media-shy Woodford blamed critics for spreading “misinformation and lazy commentary” which has spooked investors out of the fund and pushed them into “appallingly bad decisions”.
“There is a mountain of fake information and fake analysis out in the marketplace which, in the end, does impact investors’ decisions detrimentally. So, that’s what pisses me off,” he told the publication.
“When you passionately believe in what you’re doing, as I do, when clients are saying, ‘nah, we want our money back now because we’d much rather be investing in these things that have gone up’, that, for me, is a frustration. I think they’re making a poor investment decision.”
Redemptions snowball
Woodford told the Financial Times that he has around “two and a half years” left to turn performance around and curb outflows otherwise he will go “out of business”. A spokesperson for Woodford Investment Management later clarified that this was a flippant remark.
Redemptions from the Woodford Equity Income fund have snowballed in recent years. In 2018 net outflows shot up 80% to £2.38bn from £1.32bn the year before, data from Morningstar shows. By contrast the fund recorded positive net flows exceeding £4bn for the whole of 2014, despite launching in the middle of the year.
Assets in Woodford Equity Income have plunged since peaking at £10.2bn in May 2017 to £4.5bn as at 13 March 2019.
The fund is fourth quartile over six months, one year and three years. On a three-year view it is second from the bottom in the IA UK All Companies sector with returns of -6.3% versus the sector’s returns of 24.6%.
The Woodford Income Focus fund, which was launched two years ago, also saw net outflows in 2018 of £62.6m after bringing in positive net flows of £723.8m the year before. It is also fourth quartile over six months and one year.
Spectacular rebound coming
But the Financial Times said he remained defiant that his “valuation-focused” stock selection approach that saw him through two previous performance slumps, one of which nearly ended his long career at Invesco, would win out in the end and result in him making a “spectacular” rebound.
“To do anything different from what we do now would be a fundamental betrayal, would be, frankly, a lie and we would not deserve to be in business if we did such a thing,” he said.
Though many believe this current bout of underperformance to be the worst he has endured, Woodford noted that the number of stock “blow-ups,” companies that have seen at least 30% wiped off their share price in a single year, is lower now than it was in other rough patches.
At times he told the paper he felt like a “lone voice” sticking to his convictions that the investment opportunities are “absolutely not” in large cap stocks.
“You are pretty much a lone voice, and people write all sorts of stuff about you that tell you that you’ve lost the plot, you’re a lunatic, you’re arrogant. You’re a disastrous fund manager. You’ve had loads of blow-ups, blah, blah, blah. It’s very difficult.”
