Woodford mulls new high income fund launch

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Woodford Investment Management has sent a survey to private investors and intermediaries to gauge the industry’s appetite for a high income fund.

The proposed new fund would offer a higher yield than the Woodford Equity Income fund starting at approximately 4.2pc-4.5pc. Woodford’s existing £9bn Woodford Equity Income fund yields about 3.5pc.

If the IFA and intermediary feedback is favourable, the firm could look to launch it at an as-yet undetermined date later this year.

The survey document said: “The proposed new fund would offer a consistently higher yield than the Woodford Equity Income fund. We anticipate a starting yield of approximately 4.2pc-4.5pc and we envisage paying distributions quarterly.

‘No geographic constraints’

“Although the higher yield would be achieved by investing primarily in UK-listed companies, we envisage that the fund would have no geographic constraints, giving Neil Woodford and his team the flexibility to invest anywhere in the world where they identify a suitable investment opportunity.”

Patrick Connolly, an IFA at UK-based Chase de Vere, welcomed the potential launch.

He said: “If he does launch a genuinely higher income option then it will, no doubt, be very popular, although in reality with big sales pushes from the large execution-only brokers, anything with Woodford’s name on is likely to prove popular.”

Quoted companies only

The potential new fund would invest in quoted companies only, whereas Woodford’s existing fund has typically had around 7.5pc of its money in unlisted firms and can take the proportion to as high as 10pc.

At Woodford’s former employer, Invesco Perputual, he ran both the Income and High Income funds for many years.

Connolly added: “He successfully ran an Income and a High Income fund at Invesco Perpetual, although in reality there was little difference between the two in terms of yield or underlying holdings.”

“The lack of geographic constraints could result in an exposure of more than 20pc to overseas assets in the potential new fund, compared with a current figure of 18.3pc for the existing fund.”

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Gary Robinson

Commercial Director, Head of Video at International Investment.