Woodford Investment Management  

Woodford refuses to 'betray principles' by switching strategy

Woodford refuses to 'betray principles' by switching strategy

Underperforming fund manager Neil Woodford has said changing the strategy on his funds now would be a betrayal of his principles, and compared his struggles to pre-season rugby training.

The fund manager apologised last week for a period of dismal performance from his £10bn Woodford Equity Income fund and his Woodford Income Focus fund.

The Woodford Equity Income Fund has lost 2 per cent over the past year, a period when the average fund in the IA UK Equity Income sector has gained 8 per cent.

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But the fund manager remains defiant, and refuses to change course.

He said the market reaction to shares focused on the UK domestic economy has been “hysterical”, while ignoring the risks of the Chinese credit boom.

Mr Woodford said adopting his contrarian stance against the market is “a bit like when I was playing rugby at a reasonably good level".

He said: "Pre-season training was always really tough. You would push yourself really hard two months after the summer. You know, you’d feel really ill at the end of the session if you pushed yourself really hard.

"You’d lie at side of the pitch wanting to be ill. And eventually, half an hour later you got over it. But you put the hard yards in, because you knew it was the right thing to do.”

He added: “It would have been easy to back off a bit, but of course that would mean that when the season comes, the tough season, the tough games you’re going to have in ahead, you wouldn’t be fit enough. You wouldn’t be as prepared as you should have been.

"The temptation is to take the easy option, to sort of hide, as I’ve said, to hide in the strategy that everybody else is pursuing. And then all the attention, and all the fuss, and all the criticism would go away.

"But as I’ve said, that would be a betrayal of my investment principles. I believe entirely the wrong thing to do in terms of the medium and long-term interests of our investors.”

Over the summer Mr Woodford's funds have been hit by a series of problems with the stocks it holds.

AstraZeneca, the largest holding in the £10bn CF Woodford Equity Income fund, saw its shares tumble in July after it was revealed the trial of a cancer fighting drug called Mystic had not achieved its aim.

Meanwhile Provident Financial, the AA and Next, which are all Woodford holdings, saw their shares take a tumble over the summer.

Phillip Milton, an IFA in north Devon, said the problem faced by fund managers who run portfolios the size of Neil Woodford’s is they must take very large positions in companies and so any share price underperformance from an individual stock is amplified, while the fund manager would struggle to exit the holding.