Despite Woodford’s recent setbacks, Gary Waite and Andrew Morgan, who run Walker Crips’ Alpha r2 series of managed portfolios, continue to back Woodford as “an important part of the portfolio” and “one of our preferred funds”.
Earlier this week, Portfolio Adviser revealed how Jupiter’s multi-manager range, run by John Chatfeild-Roberts, had pulled about £300m from Neil Woodford’s UK Equity Income Fund.
The Merlin team was one of the big early backers of Woodford’s mega equity income vehicle, joining the initial rush to invest in the fund before it launched in June 2014.
This came after Woodford reportedly lost in the region of £300m after shares in Provident Financial plummeted more than 70% on 22 August. At the time, Woodford owned 19.9% of the fund.
According to data from FE, the Woodford UK Equity Income Fund has returned -2.8% and -1.4% over six months and one-year respectively, versus 3.8% and 10.1% for the IA UK Equity Income sector.
But the Walker Crips duo still approve of his management style and value the fund’s role as a diversifier across the range.
Waite said: “It acts as a diversifier within the portfolio because what Woodford holds, and is overweight in, is typically not what is in the portfolio elsewhere. Even though he has had a bad run, you look at his history and his process, if you believe his process is consistent and conviction-led, he has had a number of stock specific disasters but it is one of those things; you can go on these runs.”
Waite said the reason for holding the fund is not necessarily for its performance but because of the “dynamics” it gives the aggregate portfolio.
“We are not taking 10% or 20% positions per model in his fund; the holding is around 2%.”
He added: “Our portfolios are very broad based and diversified so if any one thing happens to any one fund manager or sector it is only going to have a limited impact on our performance.”
That said, Morgan added the pair are not looking to increase their weighting to Woodford, but that is largely because they are generally not adding more to the UK.
“He [Woodford] is an extraordinarily good manager over the long term so you can’t taint your view of this over two minutes,” he added.
Earlier this week, Walker Crips announced it has partnered with ethical data provider IdealRatings to deliver an ethical screen to UK equity holdings in the Alpha r2 range.
