Woodford outlines plans for first fund
Star manager Neil Woodford has announced that the first fund in his new venture, Woodford Investment Management, will open to investment on 2 June.
The CF Woodford Equity Income fund, which will be under the corporate directorship of Capita Financial Managers, will be offered to investors between 2 and 19 June prior to official launch; it will be housed in the IMA UK Equity Income sector.
Woodford Investment Management has confirmed that the fund will have an identical annual management charge (AMC) and ongoing fee - ranging from 0.65 per cent to 1.5 per cent over a range of four share classes - with no initial investment cost.
Commenting on the fund's pricing structure, Craig Newman, chief executive of Woodford Investment Management, says that the AMC "takes into account all necessary charges levied to manage and administer the fund".
Keeping fees low
He adds: "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."
Woodford, who officially departed Invesco Perpetual earlier this week, reassures investors that he will manage his new fund according to his established style, focusing on valuation and identifying companies that can deliver sustainable dividend growth.
"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," he says.
Hard not to be positive
The launch has piqued interest across the industry with many brokers and analysts already tentatively adding it to their buy lists. These include Gavin Haines, managing director of Whitechurch Securities, who says that despite the hype surrounding Woodford's new venture, it was 'hard not to be positive' given his track record.
"Woodford's ability to defend clients' money in more difficult times as well as generating positive returns in better climates is really what has set him apart from other managers in the long term, and is why there is so much excitement surrounding his new firm," he says.
He adds that "depending on a couple of criteria" including the fund's yield, it was "likely" he would commit money to CF Woodford Equity Income, which he believes will be an advantageous "clean slate" for the star manager.
Commenting on the charging structure of the fund, he says: "It is pleasing to see that Woodford is pricing the fund in line with the peer group, rather than looking to take advantage of his high profile to charge investors a higher fee."
This article was written for our sister website Money Observer
The general term for the rate of income from an investment expressed as an annual percentage and based on its current market value. For example, if a corporate bond or gilt originally sold at £100 par value with a coupon of 10% is bought for £100 then the coupon and the yield are the same at 10%, or £10. But if an investor buys the bond for £125, its coupon is still 10% (or £10) and the investor receives £10 but as the investor bought the bond for £125 (not £100) the yield on the investment is 8%.
A catch-all phrase that can range from assessing the price of a property or vehicle before offering it for sale or the net worth of assets in an investment portfolio to the prices of shares on a stock exchange.
If you own shares in a company, you’re entitled to a slice of the profits and these are paid as dividends on top of any capital growth in the shares’ value. The amount of the dividend is down to the board of directors (who can decide not to pay a dividend and reinvest any profits in the company) and they will be paid twice yearly (announced at the AGM and six months later as an interim). Dividends are always declared as a sum of money rather than a percentage of the share’s price. Although dividends automatically receive a 10% tax credit from HM Revenue & Customs (HMRC), which takes the company having already paid corporation tax on its profits into account. Dividends are classed as income and, as such, are liable for personal taxation and so shareholders have to declare them to HMRC.
Annual management charge
If you put money in an investment or pension fund, you’ll not only pay a fee when you initially invest (see Allocation Rate) but also a fee every year based on a percentage of the money the fund manages on your behalf. Known as the AMC, the actual percentage varies according to the particular fund, but the industry average for active managed funds is 1.5%.
Describes the relationship between a client and a stockbroker or independent financial adviser whereby the broker or adviser acts solely on the client’s instructions and doesn’t offer any advice on which shares to invest in or financial products to buy and simply “executes” the wishes of the client, regardless if they are judged to be sound or wrong. Other types of broking service offered are advisory (whereby the client/investor makes the final decisions, but the broker offers advice) and discretionary (whereby the broker manages the portfolio entirely and makes all the decisions on behalf of the client).