Woodford’s gated equity fund is the worst performing equity fund since the Brexit vote, with a rate of return of nearly minus 20%.
According to research by investment service provider Willis Owen, the LF Woodford Equity Income fund has lost more than three times the amount of its nearest competitor since the 2016 referendum to leave the EU, called by former UK prime minister David Cameron.
“Perhaps unsurprisingly given recent events, LF Woodford Equity Income is the worst fund of all equity mandates in the UK since the vote to leave,” said Adrian Lowcock, head of personal investing at Willis Owen.
“Investors have not only lagged the gains made by the broad UK market, but have had to suffer the ignominy of actually losing a fifth of their investment.”
Second on the list of worst performing equity funds was Legal & General’s UK Alpha Trust, with a percentage return of -5.81%.
According to Willis Owen, UK investors have lost out by “backing Britain”.
“UK investors who have stuck rigidly to the UK since Britain voted to Brexit could have doubled their money by investing overseas, with equity funds focused on the UK,” the firm stated.
Willis Owen claims that had UK investors “invested in the US market rather than the UK, they would have made 70% in sterling terms thanks to the impact of the weakening pound”.
Investing in the MSCI World index – with exposure to the US and some Asian markets – would also have been a better option for UK investors. They would have made nearly 60%, according to the fund manager.
“The key message for investors is just how important diversification is,” Lowcock said.
“Not only are investors potentially limiting their returns by remaining wedded to the domestic market, but they can also end up excluding themselves from key trends driving markets.”
The research looked at all equity funds across the Investment Association’s universe. The top ten worst performing funds since the referendum are:
| Fund | Percentage return |
| LF Woodford Equity Income | -19.63 |
| L&G UK Alpha Trust | -5.81 |
| Invesco UK Strategic Income (UK) | -5.44 |
| Thesis TM Sanditon UK | -1.21 |
| Jupiter UK Growth | -0.78 |
| Invesco High Income (UK) | 0.08 |
| Invesco Income (UK) | 1.06 |
| Neptune UK Mid Cap | 3.37 |
| Legg Mason IF QS UK Equity | 3.66 |
| Castlefield B.E.S.T Sustainable Income | 5.24 |
Source: FE Analytics, Performance 23rd June 2016 to 19th June 2019. Total Return in pounds sterling
Earlier this month, trading on Woodford’s equity fund was suspended due to ongoing underperformance. Investors had been pulling out an average of £10 million (€11.3 million) per day for the last four weeks prior to its suspension, the Financial Times reported.
This prompted Hargreaves Lansdown, one of the UK’s largest financial advisers, to remove the fund from its top 50 list of favourite funds.
©2019 funds europe
