Woodford confirms higher income fund launch

Woodford Investment Management has confirmed it will launch a higher income fund.

The company confirmed in a statement that it intends to launch the CF Woodford Income Focus fund in March 2017, with a fixed-offer period. Further dates will be confirmed in due course.

Fund Strategy understands the fund, to be managed by Neil Woodford, will target an income of 5 pence per share in its first year after which it will seek to deliver modest sustainable growth in per share income over a five-year rolling period.

It is understood that it will invest primarily in the UK but is not constrained by geographic region.

Woodford first announced its intention to launch a higher income fund last June, when it contacted advisers to test appetite for the new product.

The survey said at least 85 per cent of the assets within the portfolio would be dividend paying and the fund would invest in quoted companies only.

Fund manager Neil Woodford set up the Woodford Equity Income fund and the Woodford Patient Capital Trust following his departure from Invesco Perpetual in April 2014.

However, in December Fund Strategy reported his equity income fund is set to fall out of the sector as strong capital growth rather than income has delivered most returns since the fund launched in June 2014.

In 2016 the equity income fund returned 3.3 per cent for the one-year period ended 31 December compared to 16.8 per cent in the FTSE All Share. The previous year it had delivered a more exceptional 16.3 per cent compared to 1 per cent in the All Share.

As a result, Woodford said 2016 had been a “disappointing year from a performance point of view”.