Neil Woodford to launch new higher-yielding income fund

Kyle Caldwell
1 February 2017

Woodford Investment Management is launching a second income fund next month for star fund manager Neil Woodford.

The new fund, which will be available from March, will aim to deliver an income of 5p per share for every £1 invested in its first full calendar year in 2018. From then onwards Woodford will aim to deliver modest sustainable growth in per share income.

It is understood that investors should expect the fund to yield at least 20% more than the income delivered by FTSE All Share index over a rolling five-year period. The index is currently yielding around 3.7%.

To generate a higher level of income than the firm's popular CF Woodford Equity Income, which is currently offering a yield of 3.4 per cent, the new fund will only buy quoted companies.


Punchy offering

In addition, the fund, to be called CF Woodford Income Focus, is expected to have no geographic constraints to give Woodford and his team the flexibility to invest anywhere in the world where they identify a suitable investment opportunity.

A spokesperson for Woodford Investment Management confirmed the fund will be available in March, with a more specific date to be announced in due course.

Commenting on the new fund Ryan Hughes, head of fund selection at AJ Bell, says: "With the demand for income an ever increasing trend, it is little surprise that the new Income Focus fund will look to tap into that need.

"By specifically excluding unquoted stocks, the focus on income generation is clear while the flexibility to look overseas will also offer a much wider opportunity set should the UK economy falter in the face of potential headwinds from the forthcoming Brexit."


Mark Dampier, head of investment Research at Hargreaves Lansdown, describes the 5p income target as "punchy". He adds: "For me this fund will be very much for those seeking and prioritising income over growth. This contrasts to the Woodford Equity Income which is more growth orientated."

Since launch, in June 2014, Woodford Equity Income has returned 25.7%, according to FE Trustnet. The average fund in the Investment Association UK equity income sector is up 15% over the same timeframe.

His other fund - Woodford Patient Capital - has struggled to find its feet. The trust has posted a share price loss of 7.8% since making its stock market debut in April 2015.

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