Neil Woodford’s only openly traded fund has continued to haemorrhage money, shrinking by a third this month, as once-loyal investors flee his rapidly collapsing business.
The Income Focus fund, which follows a similar strategy to Mr Woodford’s flagship Equity Income fund but with no allocation to unlisted securities, contracted by 32 per cent in June, to £333m, on the back of withdrawals and market moves, according to Financial Times analysis of Morningstar data.
The fund is the worst performer in its Investment Association category over three months, six months and one year. Over the past 12 months it is down 23 per cent compared with a 2.2 per cent loss for its peer group, according to FE Trustnet, the fund data provider.
Mr Woodford’s investment empire had assets of £15bn two years ago — but has withered to less than £5bn as key clients have abandoned the UK’s best-known stockpicker. The majority of his remaining assets are locked in his flagship Equity Income fund, which has dropped from £3.7bn to £3.5bn since being closed to redemptions this month.
The decline of Income Focus is yet another wound for Mr Woodford who also faces the prospect of being sacked as manager of the listed investment trust that bears his name.
“Income Focus is going to continue to shrink quite quickly,” said Adrian Lowcock, head of personal investing at Willis Owen, the fund distributor. “It was never as big as Equity Income or had the same problems with illiquid assets, but the outflows show the concern that investors have with Woodford.
“It’s a case of sell first, ask questions later.”
Hargreaves Lansdown, the FTSE 100 fund distributor that was one of Mr Woodford’s biggest cheerleaders, said this week that it was pulling a £45m investment in Income Focus made through its multi-manager fund of funds.
Income Focus is still heavily reliant on Hargreaves customers who invest directly. At the end of last year these individuals represented 62 per cent of the fund’s assets.
Last week Hargreaves removed Mr Woodford’s two main funds from its highly influential best buy list after the manager suspended trading in Equity Income on June 3.
Since then, £15m on average has been with withdrawn from Income Focus every business day. Mr Lowcock said the exodus was a threat to the viability of the fund.
“If it falls below £100m, that’s where it starts to become more expensive to run and a big problem,” he said.
He suggested Woodford Investment Management could consider merging the fund with Equity Income once the latter’s illiquid holdings were sold off and it was ready to be reopened.
In a statement to the Financial Times, Woodford IM said: “Flows for the Income Focus fund increased on the news of the suspension of the Equity Income fund, but have fallen sharply and consistently since the announcement.
“Income Focus is a fundamentally different fund that does not share the same characteristics. It was set up with the aim to deliver an income of 5p per share per annum, which it has achieved and invests in a concentrated portfolio of liquid stock market-listed stocks.”
Income Focus, which Mr Woodford launched to great fanfare with £500m of investor capital two years ago, reached a high of £742m in October 2017.