Wealth management firm Tilney has revealed the reasons they cut Neil Woodford's flagship £6.4bn Woodford Equity Income fund from their buylist.
Jason Hollands, managing director for communications and business development at Tilney, said the change, which happened several weeks ago, occurred because the fund is less “defensive” in nature than they are comfortable with.
Mr Hollands said: "This was not solely driven by recent performance issues but also down to changes in the positioning of the fund. The fund currently has high exposure to smaller companies and earlier-stage growth companies, and the manager has also adopted greater exposure to UK cyclical stocks reflecting his more upbeat view. In our view this makes the fund less defensive in nature."
A spokesman for Woodford Investment Management declined to comment on the reasons given by Tilney for ditching their recommendation to invest in their fund.
As FTAdviser has previously reported, the performance of Mr Woodford’s fund has been very weak over the past 18 months.
It has lost 11 per cent over the past year to 6 June, compared with a gain of 8 per cent for the average fund in the IA UK All Companies sector in the same time period.
Mr Woodford continues to view the UK economy as likely to perform much better than the consensus forecasts expect.
He anticipates the UK economy will grow by 2 per cent in 2018.
Tilney is just the latest in a long list of fund buyers to turn their back on Mr Woodford.
Jupiter and Architas did so last year, and Charles Stanley removed Woodford from their buylist in May.
Charles Stanley cited the exposure to unquoted companies in Mr Woodford’s funds as the reason for their decision to drop the fund.
Ben Yearsley, a director at Shore Financial Planning, said he wouldn’t recommend the Woodford Equity Income fund despite sharing Mr Woodford's view that the UK economy could do better than many experts predict as the nation heads towards exiting the European Union.
He said: "I agree with his view on the UK economy. I don't think it's as bad as many make out. However what stops me from buying Woodford is the unquoted element in the portfolio. I don't think it is appropriate for a mainstream open ended fund.”
david.thorpe@ft.com
