Charles Stanley Direct has become the latest company to shun Neil Woodford’s flagship Equity Income fund from its list of preferred holdings.
Charles Stanley’s Foundation Fundlist is a 54-strong set of the firm’s “highest conviction investment ideas” across active, passive and investment trusts covering major sectors.
The LF Woodford Equity Income Fund had been on the list since January 2015, but has now been removed over concerns that the “overall performance from this equity income fund may become increasingly impacted by a relatively small number of existing high growth and earlier-stage businesses in the portfolio”.
Key businesses to have hit the Woodford portfolio in recent months include sub-prime lender Provident Financial.
Charles Stanley Direct pension and investment analyst Rob Morgan says that while Woodford boasts an “admirable record” and deserves credit for transparency over his funds’ underlying holdings and willingness to admit poor performance, Charles Stanley has decided to remove the fund while it reviews its options.
Morgan says: “We still believe it is a high quality fund and following a tricky period there may be considerable potential in the portfolio as it currently stands. Yet the Foundation Fundlist is reserved for our highest-conviction investment ideas, so we feel it is right to remove the fund from the list at this juncture while we monitor it further and explore various options within the UK equity income sector.”
Some of the most popular funds in the Foundation list, including Fundsmith Equity and JOHCM UK Equity Income, already target UK equities, but Charles Stanley says it is willing to look at LF Woodford Income Focus as part of its review given it does not invest so heavily in smaller and high-growth businesses.