Markets and Woodford Patient Capital Trust

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“The FTSE 100 only manages to nudge up 0.2% on Friday to 7,572 with no major corporate news to drive trading volumes. Next week sees FTSE 100 companies Bunzl and Whitbread update on their trading and on the economic front there is data on UK GDP and mortgage approvals,” says Russ Mould, Investment Director at AJ Bell.

Markets

“Investors in tracker funds which match the performance of the UK’s biggest stock market index would now have lost money if they bought at the start of 2018. Year-to-date, the FTSE 100 is down 1.4%, which ranks alongside a similar performance from Japan’s Nikkei 225 index and the Dow Jones Industrial Average in the US.

“Anyone investing in the UK’s index of mid-cap stocks, the FTSE 250, would only have made 0.2% gain so far this year. Stronger gains would have been made by tracking the AIM 100 index, which is up 6.2% year-to-date.

“The best performers among the world’s major indices are the NASDAQ 100, up 12.8% so far in 2018, and the S&P 500 which is up 2.9%. The worst performer this year has been China’s SSE Composite Index, down 13%.”

Woodford Patient Capital Trust

“After an intense period of criticism over lacklustre performance, fund manager Neil Woodford is likely to be in a better mood following news that one of his investments has dramatically increased in value.

Woodford Patient Capital Trust, part of Neil Woodford’s stable of funds and investment trusts, is getting a valuation boost from the US stock market flotation of Autolus Therapeutics, which is currently its eighth largest holding.

“The value of its stake in Autolus has suddenly jumped by 51% as a result of the IPO (initial public offering) being priced at a higher level than the current book value of its investment. In turn, that provides 3.8% uplift to the net asset value of Woodford Patient Capital.

“This outcome vindicates Woodford’s approach of finding businesses with ‘outstanding intellectual property’, helping them grow with financial support, and then reaping the rewards with ‘exceptional long-term returns’.

“The investment trust currently has 89 holdings, so Neil Woodford is clearly spreading his net quite wide in the hope of catching other potential Autolus-type situations. Unfortunately the timing of such valuation uplifts is unpredictable, much to the annoyance of many investors who have perhaps expected the investment trust to keep churning out good news and therefore share price gains.

“Just remember there is a good reason why the product name has ‘patient’ in the title as that is exactly what investors will need to be.”

These articles are for information purposes only and are not a personal recommendation or advice.