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Woodford: ‘ I'm very sorry for the poor performance’

Woodford: ‘ I'm very sorry for the poor performance’

Superstar fund manager Neil Woodford has apologised to investors for the recent poor performance of his flagship funds.

‘I’m very sorry for the poor performance that we have delivered really since 2016,’ he said in a video posted on his blog, admitting that the period had been ‘painful’ for him.

‘There's huge potential in the portfolio, huge undervaluation.'

He reinforced his conviction and outlined his belief that he will recoup recent losses on his £9.8 billion CF Woodford Equity Income fund.

‘And it's a great portfolio, one that I own and want to own more of. The short-term performance is painful and is difficult, but it isn't a permanent loss of capital. And I can and I believe I will rebuild the performance and rebuild that capital that we've lost recently.

Woodford explained that while individual company level events, such as a failed drug trial at AstraZeneca, the largest holding in his portfolios that caused a fall in share price, were only partly to blame for the recent bad performance.

He was also hit by the 66% one day collapse in the share price of Provident Financial, which was his fourth largest holding, after the news broke of a Financial Conduct Authority probe and the departure of its CEO.

‘What's happening in the portfolio, the underperformance is a product much more of the rather odd characteristics of this bull run in the stock market,’ he said.

‘It is a very narrowly led market. The stock market seems to want to bid up the prices of stocks that I've talked about before, which provide exposure essentially to Chinese credit growth.’

‘In very simple terms, the stock market has decided that Asia, China is good, the UK is bad. It's a very sort of-- it sounds very simple. And maybe it is an oversimplification. But I see-- I see that driving-- I see that preference playing out in the stock market daily.’  

Woodford insisted that despite the recent lacklustre performance that it is important to remain disciplined, and promissed that he would stay the course with his current portfolio.

‘All the temptation is to move away from that and to soften that and to go and do what everybody else is doing but more miners, sell the UK cyclicals, and just hide in the group where everybody else is investing,’ he said.

‘Maynard Keynes said "it is often better to fail conventionally than to succeed unconventionally". And I think it's at times like this I remember those words, because it is-- the pressure is relentless to do what everybody else is doing.’

‘My job is to focus on what's really happening in the real world, not to get distracted by themes that play out in the stock market.

He added: ‘They can often be like mist on an October morning. You know, it'll just evaporate very quickly.

‘What I got to do is focus on things that are consistent with my investment approach, things that drive long-term fundamental value. That's what I focus hard on.’

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