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This new trust from Neil Woodford differs from his existing funds in focusing on smaller, often unquoted companies. Around 50% of the portfolio will be invested in early stage companies, both quoted and unquoted, with 25% in early growth companies (typically quoted) and the other 25% in FTSE 350 stocks. Unusually the trust has no AMC but it does have a performance fee, payable on returns above 10% pa.
|Sector||UK All Companies|
|Dividends paid||Unlikely to pay a dividend|
|Standard initial charge||–|
|Initial charge via Bestinvest||0.00%|
|Additional bid/offer spread||0.00%|
|Annual management charge||0.00%|
|Ongoing charges figure||0.35%|
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 highest profile fund managers in the UK, with a successful track record running UK income funds dating back to 1988. This trust takes a different approach to his existing fund, with much less in blue chip stocks and a high weighting to small cap listed stocks and unquoted companies. It is also unlikely to pay a significant dividend. Charges are low, with the performance fee only applicable when it has returned more than 10%, and in looking at early stage companies this offers investors something different. However, despite Woodford’s record he is unproven in this part of the market, so we are reluctant to give the trust a buy rating initially.
|High yield bonds||0|
The portfolio is split into three buckets: - 50% Early Stage companies. Smaller, generally pre-revenue and pre-profit companies. They typically have strong intellectual property (IP) or know-how that can create barriers to entry down the line, but generally have significant obstacles to overcome to become profitable. They can be quoted or unquoted. - 25% Early Growth companies. Later stage businesses whose IP is often patent-protected and that are generating revenues, though not yet profits. These will typically be quoted but can be unquoted. - 25% FTSE 350 stocks. Quoted companies will largely replicate the Woodford Equity Income fund. Unquoted ideas will be sourced by the manager and his analysts, sometimes feeding off technology transfer companies – businesses such as Imperial Innovations that work with universities to commercialise their inventions. Woodford can also use the expertise of the board, though he has final say on investments. He expects a high failure rate on unquoted investments, so he will typically invest a small amount at a time as they reach milestones. He will then “run the winners”, adding to successful companies as he believes their high potential returns will outweigh the failures.
|Fund data updated on||23/04/18|
|High yield bonds||0|
As at: 28/02/2018
8.56% Prothena Corp Plc
7.78% Purplebricks Group Plc
7.57% Benevolent Ai
7.28% Immunocore A
4.78% Proton Partners International
4.5% Atom Bank
4.18% Mereo Biopharma Group Ltd
3.82% Oxford Sciences Innovation
50-100 holdings. The trust will hold cash pending acquisition of the unquoted holdings, which could take 1-2 years.
Max 60% in unquoted holdings. Max 30% in overseas holdings.
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 29.5 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.23%. During the worst period of relative performance (from December 2015 - March 2018) there was a decline of 23% 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||-23% (December 2015 - March 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.