Woodford considers higher income fund launch

Neil Woodford

Woodford Investment Management has been canvassing private investors and advisers to test appetite for the launch of a second equity income fund later this year.

The new income fund would target yield of up to 4.5 per cent, higher than the 3.7 per cent yield of the firm’s existing £8.7bn Woodford Equity Income fund.

In a statement chief executive Craig Newman confirmed: “We’re currently speaking to private investors, intermediaries and platforms to glean views and appetite for a new equity fund targeting a higher income.”

The new fund would invest solely in listed companies compared to the existing income fund, which holds a mixture of public and closely-held companies.

The survey said the proposed new fund would offer “consistently higher yield” than the existing equity income fund.

It is anticipated that at least 85 per cent of the assets within the portfolio will be dividend paying and as such, the fund will invest in quoted companies only. 

“Although the higher yield would be achieved by investing primarily in UK-listed companies, we envisage that the fund would have no geographic constraints, giving Neil Woodford and his team the flexibility to invest to invest anywhere in the world where they identify a suitable investment opportunity. 

“We anticipate a starting yield of approximately 4.2 to 4.5 per cent and we envisage paying distributions quarterly.”

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

The equity income fund, launched in June 2014, has returned 19.07 per cent compared to the FTSE All Share’s 0.57 per cent.

The trust, launched in April last year, has £759.2m total assets and has a market share price of 99.85p and net asset value including income of 92.56p.