Neil Woodford’s ability to bounce back from previous bouts of underperformance has secured the support of wealth manager Rowan Dartington, which has no plans to remove its clients investments from his fund.
Mr Woodford’s flagship Woodford Equity Income fund has endured a torrid year, losing 9 per cent over the past year, compared with a gain of 3 per cent for the average fund in the sector in that time period.
As others debate whether the fund manager's reputation for savvy decision-making has failed him of late, Donald Maxwell-Scott, technical investment manager at Rowan Dartington, said Mr Woodford "hasn’t had a lot of luck lately".
He noted that Capita - which last Wednesday (31 January) suffered a 40 per cent collapse in its share price - was one of the holdings in the Woodford Equity Income Fund, and a holding Mr Woodford had recently topped up.
"A planned rights issue of £700m and a profits warning was enough to send the shares tumbling. Woodford holds around 66 million shares in Capita across his funds, so a fall of 47p per share resulted in a one day loss of around £31m on his holding in Capita," Mr Maxwell-Scott said.
He acknowledged this recent setback is only one of several for the fund manger, with significant holdings including Provident Financial, AA and the Card Factory also suffering of late
“Given his lacklustre performance it is easy to see why criticism has been levelled at him over the past year," Mr Maxwell-Scott said.
But he pointed out the last time people were critical of Mr Woodford was throughout the frenzied dot com bubble, when he famously shunned the fevered speculation over tech stocks and invested in tobacco.
"This ultimately paid dividends and he was duly vindicated. And it’s possible the markets may be moving into a phase that is more suited to his style," Mr Maxwell-Scott said.
He confirmed Rowan Dartington continue to be invested in the funds, but expressed a note of caution about investing more capital into them.
He said: “His historical stock picking ability is not in question, we know what he is capable of doing for investors and hope that those who have stuck with him will see a positive return over the long term.
"We have invested in the Woodford’s funds in the past, and we continue to hold them, but for the time being we believe there are better investment opportunities.
"We have some concerns surrounding the risk within his various funds; such as his reasonably large holdings within the fund, often in AIM and unquoted companies.
"This could inhibit his ability to exit his positions when he gets it wrong.
"Nevertheless, we still expect the fund to perform well at some stage; very few active managers are able to outperform throughout the different business and economic cycles, something which Neil Woodford has proved he is able to do throughout his impressive career.”