Woodford promises 'much more liquid portfolio' when Equity Income fund re-opens

Apologising for the suspension of the fund once again, the veteran investor has admitted he has been disappointed with the performance of the fund "for some time".

"This underperformance has, in part, been the product of some company-specific issues within the portfolio, but I have also been battling against a momentum-driven market, where a narrow band of stocks in which I have chosen not to invest have driven market returns in a largely valuation-insensitive manner," Woodford wrote in the letter.

"These market conditions have persisted for far longer than I had expected and, as a result, the fund has not captured the benefits of a steadily rising market."

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The manager has reiterated his commitment to the unerlying strategy of the fund, which will continue to demonstrate "a strong and selective bias towards undervalued companies that are exposed to the UK economy", but has promised the portfolio will be "much more liquid" when the fund re-opens.

"Prior to the suspension being instigated, I had already announced an intention to implement a shift within the fund's portfolio, away from unquoted and less liquid holdings, towards a portfolio consisting of larger, more liquid stocks," he said.

"That shift started in February and further carefully managed activity is anticipated in the weeks and months ahead to execute the rest of this shift."

Despite the turmoil around his fund over the last couple of weeks, Woodford remains confident on the outlook for the UK economy and sees opportunities amid the falling market valuations.

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"The UK is one of the few regional economies that has enough internal momentum to withstand the growing global headwinds," he said.

"At the same time, many companies that generate most of their revenues from the UK economy are as cheap as I can ever remember."

He added: "In my view, every position within the portfolio will continue to be united by one thing: undervaluation. Every asset in the portfolio has a fundamental value that significantly exceeds its share price.

"In some cases, in my judgement, the gap between value and price is as wide as I have ever seen in more than 30 years of public equity market investing."

The manager has also promised once again to keep investors updated on the progress of the fund; a Q&A on the suspension has been published on the Woodford Investment Management website. 

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