Neil Woodford to launch first UK equity income fund on June 2. Hargreaves Lansdown backing “finest manager of his generation”

8th May 2014

img

Woodford Investment Management will launch the CF Woodford Equity Income Fund on 2 June 2014.

Neil Woodford, head of investments, will manage the fund, adopting the same investment approach that has served his clients so well throughout his fund management career. Mr Woodford says he will focus on valuation and identifying companies that can deliver sustainable dividend growth, and those that he believes will be dividend payers of the future, investing in a company only when he is convinced of the compelling long-term opportunity.

The firm says it will absorb fund-related expenses into its annual management charge (AMC). This means that the fund’s AMC and ongoing charge will be the same. The CF Woodford Equity Income Fund will have four share classes.

Craig Newman, chief executive, Woodford Investment Management, says: “The fund will have a simplified pricing structure. The only fee investors will pay is the AMC – it takes into account the necessary charges levied to manage and administer the fund.

“We are able to keep our fees low, through the use of modern technology and encouraging investors to use fund platforms, execution-only brokers and financial advice channels, rather than buying directly from us. Many investors are still needlessly paying higher fees as a result of buying directly from fund management companies in the past.”

Neil Woodford says: “I will run this new fund in the same way that I have always run money, adopting the same philosophy and the same long-term approach. My passion and energy have never been stronger. Woodford Investment Management has a culture and an environment that gives me the opportunity to focus on investing – and to build a business committed to its clients’ long-term interests.”

CF Woodford Equity Income Fund Fees

Share classes and fees

A
Inc & Acc

C
Inc & Acc

Z
Inc & Acc

X
Inc & Acc

Initial

None

None

None

None

Annual

1.00%

0.75%

0.65%

1.50%

Ongoing charge

1.00%

0.75%

0.65%

1.50%

Exit

None

None

None

None

In a note published this week, Hargreaves Lansdown is full of praise for the fund manager and has published his performance versus the stock market. Mark Dampier, head of research says: “I have known and invested with Neil for over 20 years. He has remained consistent and true to his long term investment philosophy, refusing to follow the herd and investing in unwanted, unfashionable and unloved sectors and companies. I believe him to be the finest fund manager of his generation and look forward to introducing his new fund to our clients.”

The note continues: “Neil Woodford’s willingness to follow his convictions rather than herd instinct has seen him make some big calls which have benefited his investors. Most notably he refused to invest in technology companies in the run up to the tech crash, and sold out of banks well in advance of the financial crisis. More recently Neil took a big position in pharmaceutical stocks, the fruits of which are currently being reaped. He remains very positive on the sector and feels there are still a lot of opportunities. Some people have lost faith in him along the way, but we’ve always considered this to be short-sighted; his contrarian investment style means investors do have to endure some periods of underperformance. However, the long term results speak for themselves.

Below are the performance statistics of his tenure as manager of the Invesco Perpetual High Income fund, based on £10,000 invested in 1988 (values as of March 2014).

 £10,000 invested

 

Invesco Perpetual

High Income

 

 

FTSE All Share

Value (dividends reinvested)

£253,490

£109,200

Value (dividends withdrawn)

£88,150

£42,010

Total income generated

£39,060

£22,310

2013 income

£2,770

£1,330

Annualised return

13.2%

9.6%

Source: Lipper Hindsight

Leave a Reply

Your email address will not be published. Required fields are marked *