Neil Woodford has said he has the support, team and the capacity to run a third fund.
Yesterday (23 February) Woodford Investment Management gave more details about the CF Woodford Income Focus fund, which will launch on 20 March 2017 with a fixed offer period subject to regulatory approval.
While advisers welcomed an extra fund, some raised concerns about whether this was a fund too far.
Patrick Connolly, a certified financial planner at Chase de Vere, said despite having a disappointing year, there was no denying Mr Woodford’s excellent long-term performance record.
He said: “This new fund launch will be popular and will probably be heavily promoted by the execution-only brokers such as Hargreaves Lansdown and Bestinvest.
“Our only concern would be the risk that Woodford is stretching himself too widely by running different investment mandates, although he has shown in the past that he is capable of managing very large amounts of money.”
To address concerns about him taking on an extra fund, Mr Woodford, head of investment at Woodford, said it was always the plan to have three retail funds for him to manage.
He said: "The CF Woodford Income Focus fund is the last one I intend to run. I have been asked the question about managing large sums of money throughout my career; when my former High Income fund reached £500m many years ago, and when I was managing £30bn in 2013.
"It is my long held belief that fund size is not a hindrance to long-term returns. I have the support, team and the capacity to run a third fund. It wouldn't be in anyone's interest to launch another fund if we didn't.”
In response to increasing investor demand for high-quality income streams, the CF Woodford Income Focus fund will have an investment objective for high income generation together with capital growth.
The fund will aim to deliver an income of 5p per share a year and will invest in a concentrated portfolio of market-listed securities.
While it will not be constrained by geographical region, the fund will predominantly be UK focused at the outset.
Since launch the CF Woodford Equity Income fund is the number one ranked fund in the Investment Association’s UK Equity Income sector, having returned 30.6 per cent, compared with the FTSE All Share Index, which has returned 19.9 per cent between 20 June 2014 and 17 February 2017
Mr Woodford said: “The level of income you can generate from an income-focused equity portfolio today is extremely attractive in the context of what is available from other asset classes.
“The fund will draw on my long-held investment philosophy and reflect my investment convictions. It will have a more concentrated portfolio, with a focus on dividend-paying stock market-listed securities and no geographic constraints -allowing me the flexibility to capture income from international equities when, and if, appropriate.
“This fund responds to investor demand for a Woodford fund which consistently generates a higher level of regular income, with no compromise on quality. I’m excited to lead a fund with a different focus, and deliver this level of equity yield against the current difficult economic backdrop.”
emma.hughes@ft.com
