Woodford Investment Management is launching the Woodford Income Focus Fund on 20 March, subject to regulatory approval, with fund manager Neil Woodford managing a new unconstrained portfolio of around 55 stocks, of which “about 15” will be brand new holdings.
The fund will be initially rolled out with a fixed offer period running until 12 April. In what the company describes as a “response to increasing investor demand for high-quality income streams”, the Woodford Income Focus Fund will have an investment objective for high income generation, together with capital growth.
The fund will aim to deliver an income of 5p per share per annum and will invest in a concentrated portfolio of market-listed securities.
While it will not be constrained by geographical region, the fund will predominantly be UK-focused at the outset, with the option to move outside Woodford’s popular Equity Income Fund and take positions above the 20% mark in international equities, should he chose to do so. As a result the fund will be situated in the Investment Association’s Specialist sector.
Speaking to International Investment, earlier today at a launch event for the new fund, Woodford revealed that a dummy portfolio of the fund was currently being run with around 55 holdings.
’15 new holdings’
Although details of any of the fund’s holdings are strictly under wraps until the official launch, he did reveal that “about 15 new holdings” that are not currently in his other two products, are likely to be part of the new portfolio.
In what the company describes as “a pursuit of transparency”, full disclosure of the Woodford Income Focus Fund’s portfolio and breakdown of fees will be provided on a monthly basis after launch.
Fund related expenses will be absorbed into the fund’s annual management charge (AMC), meaning that the fund’s AMC and ongoing charge will be the same. The Woodford Income Focus Fund will, as outlined in the table below, have four share classes.
Higher level of income
The fund will be managed by Neil Woodford, pictured above, head of investment, Woodford Investment Management, to “complement the existing successful equity income strategy by offering a higher level of income alongside a lower long-term risk profile,” the company said.
Since launch the Woodford Equity Income Fund is the number one ranked fund in the Investment Association’s UK Equity Income sector, having returned 30.6%, according to Morningstar statistics between 20 June 2014 and to 17 February 2017, compared with the FTSE All Share Index, which has returned 19.9% over the period.
“The level of income you can generate from an income-focused equity portfolio today is extremely attractive in the context of what is available from other asset classes, said Woodford.
“The fund will draw on my long-held investment philosophy and reflect my investment convictions. It will have a more concentrated portfolio, with a focus on dividend-paying stock market-listed securities and no geographic constraints – allowing me the flexibility to capture income from international equities when, and if, appropriate.
“This fund responds to investor demand for a Woodford fund which consistently generates a higher level of regular income, with no compromise on quality. I’m excited to lead a fund with a different focus, and deliver this level of equity yield against the current difficult economic backdrop,” Woodford added.
Last year, as reported, the company announced that it was looking at the launch and asked for intermediary and adviser comments relating to whether such a release was needed. Since it was launched in May 2014, Woodford Investment Management has more than £15.6bn assets under management, according to company figures.
CF Woodford Income Focus Fund share classes and fees
|Share class||Initial fee||AMC||OCF||Exit fee|
|A Inc & Acc||None||1.00%||1.00%||None|
|C Inc & Acc||None||0.75%||0.75%||None|
|Z Inc & Acc||None||0.65%||0.65%||None|
|X Inc & Acc||None||1.50%||1.50%||None|