Fund manager Neil Woodford saw his star status slightly tarnished on Wednesday following news his listed vehicle Woodford Patient Capital Trust PLC (LON:WPCT) will be relegated from the FTSE 250 after yesterday’s quarterly index reshuffle.
The fund, which listed in April 2015 after an offering of 800mln shares at 100p each which raised £800mln - the largest ever launch for a UK investment company.- has dropped below that level over the past year reflecting disappointing performances from some of its portfolio.
Woodford Patient Capital Trust shares were changing hands at 74p each in late afternoon trading, rallying 0.8% higher from the previous session’s close, and a 12% discount to the estimated net asset share price of 83p.
Lee Wild, Head of Equity Strategy at interactive investor said: “The demotion of Woodford Patient Capital trust from the FTSE 250 is no shock after a truly awful run of results from the manager's portfolio picks.
“The trust is down over 38% from peak to trough, and buying even at these low levels requires a leap of faith.”
The trust was launched by the renowned former Invesco Perpetual fund manager who left the company to create his own fund house in 2014.
An interesting time to invest
However, Charles Stanley Direct’s Rob Morgan suggests the relegation may mark an interesting time to invest.
He said: “The venture capital approach of this Trust is an interesting way to access innovative earlier-stage businesses.
“The closed-ended nature of an investment trust offers liquidity, making it easier to buy and sell your investment – something it is difficult to do if you invest direct in early stage companies. However, these types of investments mean a very high level of risk and results will often take time.”
Morgan explained: “ When the Trust was launched there was a great deal of investor excitement but it has been a rocky road since then.”
He added: “There are some FTSE tracker funds that own the Trust that will be forced to sell when it is no longer a constituent of the index, though many such index funds tend to exclude investment trusts, and it is likely that all of this could add to depressed investor sentiment.
“However, the relegation could prove a good entry point for those that believe Mr Woodford’s assertion that the Trust has stakes in several companies that could be worth billions of dollars each in the future.”
The indexes reshuffle was calculated using closing prices on 29 May, and will come into effect on 18 June.