Neil Woodford, headline hitter – Woodford Equity Income
Despite the news stories focusing on the downward revision of UK economic growth, the UK does look set to be one of the best-performing developed countries and it is the first place many of us look when thinking about our investments. And, when thinking about UK fund managers, Neil Woodford is a headline hitter and perhaps the closest thing the industry has to a celebrity.
During Neil Woodford’s 25-plus years at Invesco Perpetual he built up a loyal following and a reputation for delivering impressive returns for investors. So, while past performance is never a guide to the future, it didn’t come as any surprise that investors made a beeline for his new Woodford Equity Income Fund when it launched in June last year following his departure from Invesco Perpetual to set up shop on his own.
According to Tom White, our specialist in UK equity funds: “It’s got off to a flying start and is one of the top performers in the UK Equity Income sector since its launch.” He explains that Woodford has a high-conviction approach to investing and this has paid off. As an example, he currently owns a large number of pharmaceutical companies (AstraZeneca, GlaxoSmithKline and Roche are top-10 holdings) and, towards the end of last year, the pharmaceutical industry performed very strongly.
“Investment success can also sometimes be about what you don’t own and Woodford has almost nothing invested in the energy and mining sectors, which have both performed disastrously in recent months on the back of plummeting commodity prices,” Tom points out.
Looking more closely at the companies Woodford chooses, Tom highlights that he is continuing his habit of investing in smaller, often unquoted companies. An interesting example is Atom Bank, which he recently took a position in. This is a digital, online-only bank that aims to launch in 2015 with the clear objective of shaking up traditional high-street banking.
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The value of investments, and the income derived, can go down as well as up, and you can get back less than you originally invested. Funds may carry different levels of risk depending on the industry sector(s) in which they invest. You should ensure that you understand the nature of any fund before you invest in it. Prevailing tax rates and reliefs are dependent on your individual circumstances and are subject to change. This article does not constitute personal advice.