Neil Woodford’s £790m Patient Capital investment trust faces being kicked out of the FTSE 250 in the next reshuffle.
If the trust drops out of the mid-cap index it would be relegated to its lowest position since it was launched in 2015.
Since coming to market in May 2015 the trust has lost 25 per cent, according to data from FE Analytics. That compares with a gain of 34 per cent for the average trust in the AIC UK All Companies sector in the same time period.
On a year to date basis, the trust has lost 12 per cent, compared with a gain of 5 per cent for the average trust in the AIC UK All Companies sector in the same time period.
The comparison with the All Companies sector is one made by FE Analytics, but since the trust invests in more early stage companies than most of the trusts in sector its performance is likely to be very dissimilar to those.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "Investing in early stage companies clearly comes with risks attached and, as the title of the trust suggests, a good deal of patience is required.
"It’s worthy of note that the trust works on a ‘no win, no fee’ basis, so the investment manager shares in the financial fortunes of investors. The trust has to return a cumulative 10 per cent a year before Woodford Investment Management makes a penny, and to date no management fee has therefore been charged."
Mr Khalaf said the shares were now trading around 26p below the £1 launch price, with the trust's successes including Benevolent AI, Oxford Nanopore and Purple Bricks but these have been outweighed by poor performance from stocks like Prothena, Circassia and Northwest Biotherapeutics.
Woodford Investment Management declined to comment but pointed FTAdviser to the annual report of the trust, where Neil Woodford wrote: "We are building some great businesses, and although this progress has not yet flowed through in terms of share price and net asset value performance."
If it drops out of the FTSE 250, funds which track the mid cap index will no longer buy the Patient Capital trust, reducing demand for the shares.
One of the companies likely to replace Patient Capital in the FTSE 250 is Integrafin, which owns the Transact platform and listed on the stock market earlier this year.
The company, which has a market cap of £1.2bn, is likely to be promoted to the FTSE 250 at the first opportunity.
david.thorpe@ft.com
