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Woodford Income Focus – how different is the new fund?

Woodford Income Focus, the new higher income fund from Neil Woodford, opened its doors on 20 March. With a launch period running until 12 April, investors can currently invest in the fund for £1 per share. With the Woodford Equity Income fund already home to nearly £10 billion of investors’ money, we’ve looked at the differences between the two funds’ strategies to see how Woodford Income Focus stacks up.

Lee Dooley Lee Dooley
03 April 2017

Aiming for a higher yield

Woodford Income Focus aims to pay investors a higher yield than Woodford Equity Income. The fund is targeting a 5p of income per share in 2018. Although it isn’t explicitly targeting a certain level of yield over the long term, it will then aim to pay around 20% more income than the FTSE All-Share index over a rolling five-year period – although of course this isn’t guaranteed.

Investing around the world

The new fund sits in the IA Specialist sector and has no geographical restrictions. Neil Woodford is able to choose companies across all seven continents, but we expect the fund to have a UK bias – at least initially. The overseas exposure is likely to increase over time. On the other hand, Woodford Equity Income can only invest up to 20% of its assets overseas.

No unlisted companies

Since it launched in 2014, Woodford Equity Income has benefitted from investing in unlisted companies with a lot of growth potential. The fund manager will not have this option with his new fund – it can only invest in stock exchange-listed businesses.

A more focused portfolio

Woodford Income Focus will have a more focused portfolio, concentrating on fewer companies. The new fund is expected to invest in around 55 stocks at launch, whereas Woodford Equity Income currently has more than 120 holdings.

Will there be an overlap?

The overlap between the two strategies is expected to be approximately 60% by value. This means more than half of the money in the new fund will be invested in companies that are also held in Woodford Equity Income.

Invest in Woodford Income Focus for £1 per share

Until 12 April you can invest in the new Woodford Income Focus fund for £1 per share. If you buy the fund before 6 April, you can use your £15,240 ISA allowance and any income the fund pays will be tax-free.

To invest through Bestinvest you will need to log in or open an account then ­use our investment selector to search our available funds. But remember this isn’t a recommendation to invest. If you are in doubt as to the suitability of an investment please contact one of our advisers.