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Neil Woodford’s investment empire dismantled as final fund handed to Aberdeen

Disgraced stockpicker Neil Woodford (pictured) saw his £268m Income Focus Fund handed over to Aberdeen Standard Investments (ASI), marking the end of his investment empire.

Aberdeen Standard was appointed to run the fund by administrator Link Fund Solutions, who have overseen the investments of the UK’s most famous stockpicker since they were first suspended in June.

The portfolio will be renamed the ASI Income Fund and will be run by Charles Luke and Thomas Moore, who said the fund is due to reopen “no later than February”.

Woodford opened the fund in 2017 as a more income-driven strategy versus his flagship Equity Income fund. But poor returns saw it dwindle in size with the manager inevitably resigning after the fallout over its sister fund.

 

Repositioning the Fund

 

Aberdeen Standard said the ASI Income Fund will be “a high conviction portfolio” of around 30 liquid British equity holdings, drawing on research from the firm’s 16-strong equities team. It added the team maintains full coverage of the FTSE 350 and conducts over 750 company meetings a year.

Aberdeen Standard head of UK equities Andrew Millington said: “We recognise the issues that may have weighed on the minds of investors in the Fund over the past months and we are resolute in our determination to turn things around for them. We will reposition the Fund into a focused portfolio of our favoured, liquid UK equity income names aiming to generate sustainable long-term income growth for its investors.”

Ryan Hughes, head of active portfolios at broker AJ Bell said the question for investors in this portfolio “is should they stay with the new manager or move onto a different fund”.

Hughes added: “Thomas Moore and Charles Luke are both experienced equity income managers, but both have underperformed the FTSE All Share Index with their open-ended funds over the past five years which may be cause for concern to some investors, despite Moore’s longer-term track record being impressive.”

 

Problems with illiquid assets

 

Hughes said the “portfolio will be concentrated to around 30 high conviction positions, however, this is significantly more concentrated than the existing funds that they manage which contain around 60 stocks. Investors may be heartened to see that there is minimal crossover between Woodford Income Focus and the portfolios managed by Moore and Luke, however, this does indicate that a significant amount of portfolio adjustment will be needed that will result in costs being incurred by investors.”

This fund was the last part of Woodford’s empire to fall after his Patient Capital fund was taken over by Schroders in October.

Woodford’s flagship Equity Income Fund blocked withdrawals in early June, after rising numbers of investors asked for their money to be returned as the value of the fund tumbled.

The fund was valued at £10bn at its peak in May 2017, but it is currently valued at around £3bn. It was launched in 2014, attracting cash from large institutions such as Jupiter Asset Management as well as ordinary investors.

The fund was hit by the poor performance of larger firms in its portfolio such as biotech business Circassia, technology company Allied Minds, and Provident Financial. It was then left with a sizeable number of small unquoted firms on its books, which were difficult to sell in the market.

 

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Roger Baird

Roger Baird is News Editor at Finixio. He has worked as a financial journalist for 20 years reporting on companies, capital markets and the UK economy.