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This new fund from manager Neil Woodford targets a high level of income and capital growth through investment in UK and overseas equities. Woodford will differentiate the fund from his flagship Woodford Equity Income product by targeting a higher level of income – target dividend is 5p over the first year with a longer-term payout of 120% of the UK stockmarket yield. The fund will also be more focused than the Equity Income fund and have a higher level of overseas exposure, though the bulk of the portfolio will be invested in the UK.
|Dividends paid||31 Mar, 30 Jun, 30 Sep, 31 Dec|
|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. Woodford has a very distinct style with a bias to more defensive stocks. This often leads him to suffer when such stocks are out of favour, often in fast rising markets, but to prove resilient in weaker markets. We expect this new fund to have a similar defensive profile, though given the higher yield it is likely to offer lower capital growth and ultimately a lower total return. In view of the similarity in the funds we suggest not holding both in the same portfolio.
|High yield bonds||0|
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. Given the yield requirement of the fund, portfolio companies are also likely to pay high dividends. His criteria typically lead him to have significant weights in more defensive industries such as healthcare 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 high level view on the domestic and global economy and how this is likely to impact portfolio companies.
|Fund data updated on||21/02/18|
|High yield bonds||0|
As at: 29/12/2017
5.8393%Imperial Brands Plc
5.7381%Legal & General Group
4.8005%Lloyds Banking Group Plc
3.5411%Purplebricks Group Plc
3.2805%Newriver Reit Plc
2.8824%Barratt Developments Plc
2.8751%Taylor Wimpey Plc
Around 55 stocks.
No geographical constraints.
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|
|13/14||14/15||15/16||16/17||17/18||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 29.3 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.24%. During the worst period of relative performance (from December 2015 - January 2018) there was a decline of 22% 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||-22% (December 2015 - January 2018)|
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.