View more on these topics

Morningstar downgrades Woodford’s equity income fund

Neil Woodford 480In a new blow for Neil Woodford, Morningstar has downgraded his signature £6bn equity income fund from silver to bronze following concerns about its positioning.

Morningstar senior research analyst Peter Brunt says that “extreme positioning” in less-liquid parts of the market have made the fund “less nimble” than others.

He says: “While Neil Woodford is broadly targeting the same kind of opportunities as those of his Invesco Perpetual days, there is a greater exposure to stocks found at the lower end of the market-cap scale and to unquoted companies.

“The bias to the former has become far more pronounced over the past couple of years, in part as a result of Woodford’s more positive view on the UK economy since first-quarter 2017.

“While the group has shown its ability to meet sizable redemptions over the past year, with the fund still standing at over £6bn, such extreme positioning in less-liquid parts of the market make it less nimble than competitors.”

Brunt points out that a number of high-conviction holdings have also experienced stock-specific problems over the past couple of years.

He says: “While contrarian investing comes with a degree of risk and issues could be expected from time to time, the nature of some of the problems and respective position sizes in the portfolio give us cause for concern.

“As a result, while we believe that the fund still has long-term investment merit, our conviction has waned, seeing the Morningstar analyst rating lowered to bronze.”

The news comes after last week’s decision by Charles Stanley Direct to ditch the equity income fund from its list of preferred holdings over concerns about investments in early-stage businesses.

In March, the fund was also moved out of the Investment Association’s Equity Income sector after failing to beat the FTSE All Share index over the past three years.



Has the FCA forgotten about the advice gap?

Robos came under fire this week, with an FCA review finding serious failings in terms of suitability and disclosure. Adviser comments soon followed, praising the regulator for finally getting tough on automated advice. Here are a few extracts from the FCA: Some firms did not make clear whether their service was advised, non-advised, discretionary or […]


How much are advisers charging for pension transfers?

Defined benefit pension transfer charges are being put under the microscope again as the regulator turns over more potential conflicts of interest. With the British Steel Pension Scheme the latest to dominate headlines and the FCA ready to interrogate further as it extends its review to include all firms authorised to give pension transfer advice, […]


Lifetime allowance 2018/19 increase confirmed but pensions absent

The Government has confirmed that the lifetime allowance 2018/19 will rise in line with inflation, but savers have been offered little else in the Autumn Budget. The lifetime allowance will increase from £1m to £1,030,000 to match CPI from 2018/19.  Though the maximum amount the can be saved each year into a Junior Isa or […]


News and expert analysis straight to your inbox

Sign up


There is one comment at the moment, we would love to hear your opinion too.

  1. Memories of the good old Bolton days when he could do no wrong until he did…

Leave a comment