Charles Stanley drops Woodford’s fund from its highly recommended list

Once-star fund manager Neil Woodford received another blow today, as wealth manager Charles Stanley ditched his Woodford Equity Income Fund from its list of "high conviction" investment ideas.

The fund had been on the "Foundation Fundlist", formed to help guide investors on Charles Stanley's online DIY investment platform Charles Stanley Direct, since 2015.

There are currently 54 funds on the list of recommended places for investors to funnel their cash, with recent additions including Fundsmith Equity and Artemis US Extended Alpha.

Read more: Woodford still featured in top 10 most-purchased active funds last month

“Mr Woodford has an admirable record. He is one of the most talented and well-known fund managers in the UK, consistently strong in reading the economic picture and developments within industries," said Charles Stanley's Rob Morgan.

"Despite this, we have begun to harbour some concerns that 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."

Such businesses include Prothena, a biotech company which saw its share price plunge by 70 per cent last month after it revealed it would have to withdraw a new drug.

Read more: Woodford denied another payday as Patient Capital Trust fails to perform

Morgan did concede that now might, in fact, be a good time to buy into Woodford's fund, since the value of its underlying investments has sunk. When an investor buys "units" in the fund, the price of these units depends on the value of the fund's assets – if Woodford bounces back, investors could soon be smiling.

"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," Morgan added.

"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."

The knock to Woodford comes just a month after his fund was shunted out of the Investment Association's equity income sector, as it failed to yield enough in comparison to the all-share index.

Woodford was keen to press that this was nothing to do with a change in strategy, and that the fund was always focused on "pence per pound" returns rather than yield.

Read more: Woodford-backed BenevolentAI raises $115m as founder allays robot fears

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