The embattled fund manager said investors were making ‘appallingly bad decisions’ by chasing large-cap growth based on a ‘mountain of fake information’, saying that the loss of potential returns ‘pisses me off'.
In the interview, Woodford blamed ‘a mountain of fake information and fake analysis out in the marketplace’ for promoting interest in the largest FTSE 100 mega caps at the expense of the fledgling companies he believes are the best prospect of growth.
‘In the end, [that] does impact investors’ decisions detrimentally. So, that’s what pisses me off. When you passionately believe in what you’re doing, as I do, when clients are saying, "nah, we want our money back now because we’d much rather be investing in these things that have gone up", that, for me, is a frustration. I think they’re making a poor investment decision.’
Assets held within the Woodford Equity Income fund have tumbled from a peak £10.2 billion in 2017 to a recent figure of £4.5 billion. Performance has sputtered on a long tail of underperforming micro caps and a clutch of major stock-specific issues at core holdings such as Provident Financial and Capita.
Over three years, Woodford sits at the very bottom of his 91-strong UK Equity Income peer group, with a total return of -9.2%, versus an average 18.8%.
The rapid exit of client capital has caused the percentage of the portfolio held within illiquid unquoted stocks to balloon to almost 18%, well in excess of the headline 10% limit. In recognition of the danger this posed, earlier this month Woodford swapped some of that exposure with a holding in Patient Capital trust.
This may not have succeeded in satisfying his disappointed backers, however.
Writing for Citywire this week, anonymous columnist the Secret CEO described the decision as the ‘final straw’ that led him to pull his exposure to the fund.
‘I am angry with Neil Woodford as an investor, as an industry peer and as someone active in corporate governance,’ he wrote. ‘The unquoted assets transaction raises a number of questions over the role of the fund’s own governance body and the oversight functions within the investment group.’
Speaking to the Financial Times, Woodford estimated that he had around ‘two and a half years’ in which to turn around performance before he ended up ‘out of business’.
But he predicted that he could still pull off a repeat of his reputation-making defiance of the tech bubble in the early 2000s and offer investors who have stuck with his conviction a ‘spectacular’ rebound.
‘To do anything different from what we do now would be a fundamental betrayal, would be, frankly, a lie and we would not deserve to be in business if we did such a thing.
‘You are pretty much a lone voice, and people write all sorts of stuff about you that tell you that you’ve lost the plot, you’re a lunatic, you’re arrogant. You’re a disastrous fund manager. You’ve had loads of blow-ups, blah, blah, blah. It’s very difficult.’