LONDON Jan 12 UK fund manager Neil Woodford has
blamed runaway share prices in oil and resources stocks for the
underperformance of his flagship fund last year.
Woodford, the founder of Woodford Investment Management who
manages around 15 billion pounds ($18.40 billion) of assets, had
low exposure to commodity-related stocks which were the biggest
beneficiaries of the so-called reflation trade that has
dominated markets since the last quarter of 2016.
The Woodford Equity Income fund returned 3.4 percent in 2016
against the 16.8 percent rise for the FTSE All Share Index
The manager's top holdings, including healthcare companies
GlaxoSmithKline and AstraZeneca, have lagged
against sharp rallies in the oil and gas and resources sectors.
UK-listed mining companies doubled in value
last year while oil and gas companies rose 50
"It has been a disappointing year from a performance point
of view," Woodford said in an update to investors.
"As share prices have detached from fundamentals it has made
me more confident, but has tested my resolve and our clients'
Performance was hit by problems at Next and Capita
, both top holdings for the fund.
"There have been some disappointments reflected in big share
price falls and some profit warnings," Woodford added.
Gains in the portfolio came from a position in litigation
funding firm Burford Capital, whose share price
more-than trebled in 2016, as well as strong performance from
British American Tobacco.
Woodford, one the UK's best-performing fund managers during
a 30-year career predominantly spent at Invesco Perpetual, said
recent underperformance mad it more likely his fund would
recover ground in 2017.
"Share prices will always catch up with reality at some
stage - they always do," he said.
"In the end the only thing that matters is fundamentals."
($1 = 0.8153 pounds)
(Reporting by Alasdair Pal, Editing by Vikram Subhedar)