In this paper, we provide an overview of the issues that plaqued Woodford, a UK-based equity investment manager. Using forensic portfolio analysis, we also show how investors could have detected some of the redflags ahead of the blow-up. By regularly monitoring and analysing key drifts in the economic and risk footprints of the portfolio, investors have the opportunity to be decisive before it is too late or at least ask the right questions to get to the bottom of the key issues.

Introduction to Woodford Equity Funds

Celebrated as a high profile manager, Neil Woodford’s own Woodford Equity Income Fund amassed great popularity as a strong performing investment in the UK market. Within three years, Woodford cemented its reputation as a well-managed fund with a return of 39.3 per cent in comparison to the average 19.4 per cent from the UK Equity Income sector.

According to Morningstar analysis, the early outperformance of the fund was attribute to incisive long-term macro calls and as well as strong stock selection.

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