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Woodford Blames Frozen Fund’s Losses on Momentum-Driven Market

Swetha Gopinath

(Bloomberg) -- Neil Woodford blamed “a momentum-driven market” for underperformance at his flagship fund, in its first report since it was frozen in early June.

The embattled stock picker shocked the financial world by halting withdrawals from his LF Woodford Equity Income Fund after a run of poor results led to mounting redemption requests.

A momentum-driven market “is the antithesis of our fundamentally-anchored investment approach which will, as a result, tend to underperform in such conditions,” Woodford said in an interim report for the fund published online.

Lack of exposure to sectors such as basic materials, oil & gas, consumer goods and large financial groups such as HSBC Holdings Plc was responsible for a “significant” proportion of the fund’s underperformance, he said. The fund fell 11.2% bewteen June 30 and Aug. 21, compared with a 1.5% gain on its benchmark index, the FTSE All Share Total Return.

Link Fund Solutions Ltd., administrator of Woodford’s flagship, said in late August that the suspension will remain in place for at least another month, and that lifting it in December is “achievable.” The fund’s status is reviewed every 28 days.

To contact the reporter on this story: Swetha Gopinath in London at sgopinath12@bloomberg.net

To contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, Amy Teibel, Claudia Maedler

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