Woodford outlines plans for first fund

8 May 2014

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".

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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

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