Investments  

ASI cuts income target on former Woodford fund

ASI cuts income target on former Woodford fund

Aberdeen Standard Investments, which has taken over the management of what was the Woodford Income Focus fund, has cut the target level of income investors should expect in future. 

When Mr Woodford launched the fund, which does not have the unquoted or illiquid stocks that blighted the other mandates he ran, the Income Focus fund had a target of 5p per share per year. 

According to Link, the 5p target would equate to a yield of 7.5 per cent in current market conditions, while the FTSE All Share, in which the fund is invested, currently yields 4 per cent.

The new target for the fund is to achieve a yield “higher than the average yield of the FTSE All Share over a rolling three year period,” Link told investors in a letter dated January 7.

As the FTSE All Share currently yields 4 per cent, if this were to be the average over the next three years, then the fund managers' target would be to achieve a yield of just over 4 per cent, as compared with the current target of 7.5 per cent.

Link said this level of income was “more achievable in the current environment.”

Aberdeen Standard Investors was confirmed as manager of the £250m fund on December 20.

The fund will be jointly run by Tom Moore, who has run the £1.2bn Standard Life UK Income Unconstrained Fund for the past decade, and Charlie Luke, who runs the Murray Income investment trust.

It will be renamed the LF ASI Income Focus fund.

Dealing in the fund is currently suspended, with Link stating in the letter to investors it will re-open “no later than February 2020.”

In the just less than three years since the fund launched under Mr Woodford’s management, it has lost 22 per cent, compared with a gain of 17 per cent for the average fund in the IA UK Equity Income sector in the same time period.

david.thorpe@ft.com

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