This is perhaps not so surprising given the size of the funds, their profile and that of Neil Woodford. In the past six months the funds have moved towards the top of the IMA UK Equity Income sector, a position they have not enjoyed for a little while.
Indeed, back in January this year the funds had slipped some way down the sector (third quartile) when looked at on a three-year basis. This reflected fourth-quartile positioning within the sector during the second half of 2010, when the UK stock market rose strongly.
Yet most investors seem to have kept their faith with the two funds. Why is this when many investors seem to be intolerant of underperformance? Perhaps the funds represent stability and certainty in an uncertain world – even when they are underperforming versus the sector, you know why that is.
Their performance characteristic is driven by a genuine long-term approach to investment that few managers still practise and as such the portfolio evolves rather than changes.
Now, some will argue that there is no choice but for the funds to evolve because they are so large – Invesco Perpetual argues differently, of course, about its ability to re-shape the fund at short notice, saying that fund size is not a real issue.
I guess until the time comes when Neil Woodford decides to turn over 50 per cent of the fund in a week everyone will have to keep arguing the point and that is going to be for a long time.
For me, the key thing about these funds is that you know exactly what you are getting and more so probably than with any other fund. The funds, it seems, have pretty much become an essential component of most equity income portfolios, the starting point around which other funds are assembled.
Over the same three-month period the First State Asia Pacific Leaders fund has been one of the biggest losers of assets and this is harder to understand. The fund's performance has been consistent and is based on another long-term investment process that seeks out quality businesses, strong balance sheets, good management and leading products or services.
Within the sector it is top-quartile over three and five years and second-quartile over 12 months – it hardly strikes me as a reason for it to be one of the biggest losers.
There has, however been a move among investors to reallocate assets to the developed markets and to country-specific funds in the Asia Pacific and emerging market regions, and this may well be the underlying reason, although no other Asian or emerging market fund has lost assets in a similar way.
Sometimes funds which have been strong and consistent performers are the first to lose out when assets are reallocated, although this is contrary to the common idea of 'running the winners'.
Performance of funds over 3-months
Source: FE Analytics
Another fund that has been losing assets is BlackRock UK Absolute Alpha, which is among the top losers over six months. The fund is not equity benchmarked, it simply aims to deliver an absolute return, but for many I suspect its performance is measured against the benchmark of the FTSE All Share.
Given that redemptions take time to think through, organise and execute, it appears that with the UK market rising in the first six months of the year, when the fund lagged the index which is to be expected, redemptions were lined up and executed.
In the six months since the fund lost assets, however, it has outperformed a market that has broadly fallen in value, the very characteristics it is designed to display.
The fund hasn’t generated outstanding performance, and timing both sales and purchases is a notoriously hard thing to do, but it is worth the thought that the statistics on funds shedding and attracting money could be a contrary indicator worth watching.
Tim Cockerill is head of collectives investment at Ashcourt Rowan. The views expressed here are his own.