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This fund targets long-term capital appreciation as well as a yield at least 10% above the UK stockmarket by investing mainly in large and mid-cap UK equities. Some small-cap, private equity and overseas investments are also included. Manager Neil Woodford's style is risk-averse, typically favouring companies in more predictable industries such as healthcare and tobacco, and his portfolios can be heavily skewed to certain stocks and sectors. He focuses on capital growth as much as income, so his funds have often been amongst the lower yielders in the sector.
|Sector||UK Equity Income|
|Dividends paid||28 Feb, 31 May, 31 Aug, 30 Nov|
|Standard initial charge||0.00%|
|Initial charge via Bestinvest||0.00%|
|Additional bid/offer spread||0.00%|
|Annual management charge||0.75%|
|Ongoing charges figure||0.75%|
Before investing make sure you have understood the risks relevant to the fund by reviewing our Risk Warnings section. Further information on the risks are contained in the fund's Key Investor Information Document, which we make available to you before you make a decision to invest, alternatively it is available on request.
Neil Woodford is one of the world’s leading fund managers, with a long and successful track record at Invesco Perpetual – this success has continued since he decamped to his own firm in 2014. Investors should be aware that Woodford has a very distinct style compared to his peers with a bias to more defensive stocks. This has led him to have bad periods on a relative basis when such stocks are out of favour, often in fast rising markets. However, we expect this fund to prove resilient in weaker markets and outperform over the cycle. Woodford’s success means he is already running significant assets at his new firm - this is likely to limit his ability to invest in mid-cap and smaller companies, providing a headwind to performance.
|High yield bonds||0|
The portfolio includes companies of all sizes, but the bulk of it consists of FTSE 100 and FTSE 250 stocks. The manager also takes advantage of IA rules that allow him to invest up to 20% of the fund in overseas equities. Woodford believes that markets are inefficient most of the time with prices diverging from underlying value, and he aims to identify those stocks that are undervalued then hold them for the long term. Ideas are primarily generated internally, but may also come from external brokers and analysts and from conversations with company management teams. His research process looks at companies’ long-term growth prospects, competitive advantages, sustainability of cashflows and earnings, strength of balance sheet, and valuation. He prefers companies on reasonable yields, but there are no rigid yield criteria and his portfolio yield has often been at the lower end of his peer group. These criteria typically lead him to have significant weights in more defensive industries and steer him away from more cyclical businesses such as mining. Woodford does not allocate to sectors from the top-down, but does put significant effort into forming a view on the domestic and global economy and how this will impact portfolio companies.
|Fund data updated on||24/11/17|
|High yield bonds||0|
As at: 31/08/2017
6.4932%Imperial Brands Plc
5.5465%Legal & General Group
3.7425%Prothena Corp Plc
3.1591%Lloyds Banking Group Plc
2.9137%Burford Capital Ltd
2.5342%Purplebricks Group Plc
2.1251%Theravance Biopharma Inc
2.0662%Newriver Reit Plc
50-100 stocks, though with the bulk of the portfolio concentrated in the top 40. Includes around 20 unquoted holdings making up around 5% of the portfolio.
The portfolio usually has very little commonality with the benchmark and so performance can be expected to differ markedly on occasions.
|Average monthly relative returns||Bestinvest MRI|
|12/13||13/14||14/15||15/16||16/17||3 years||5 years||Career||3 years||5 years||Career|
|Performance figures are based on the average of monthly percentage returns relative to the benchmark index.|
Woodford gained an Economics degree from Exeter University and then studied Finance at the London Business School. He began his career in 1981 with Dominion Insurance, moving to TSB’s corporate finance department in 1984. He moved back into investment management in 1986 with Eagle Star before moving to Perpetual in 1988. There he took responsibility for the UK team’s income funds, later becoming Head of Investment. He left Invesco Perpetual in April 2014, forming Woodford Investment Management in May 2014.
Neil Woodford has 29.1 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.25%. During the worst period of relative performance (from January 2009 - January 2011) there was a decline of 21% relative to the index. The worst absolute loss has been 30%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is more than 99%.
|Periods of worst performance|
|Absolute||-30% (May 2007 - March 2009)|
|Relative||-21% (January 2009 - January 2011)|
Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.