Woodford Income Focus - moving to the UK Equity Income sector
Richard Wood | Tue 05 March 2019
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The Woodford Income Focus Fund is moving from the IA Specialist sector to the IA UK Equity Income sector.
The fund was originally set up so Neil Woodford could invest in what he thinks are the best income opportunities from across the globe. It's always been largely invested in UK shares though because this is where he's found some of the most attractive yields. He expects this to be the case in the future as well although it should be remembered all yields are variable and not guaranteed.
Putting the fund in the UK Equity Income sector gives investors a clear idea of what the fund is about - aiming to generate a high and sustainable income, largely from UK companies.
Woodford will still be able to invest up to 20% of the fund outside the UK, which he thinks provides enough flexibility. The fund will also need to have a higher yield than the FTSE All Share Index over a rolling three year period to remain in this sector.
Our view
We think the UK Equity Income sector is the most appropriate for the fund. It’s already mostly invested in UK shares and currently has a yield comfortably ahead of the FTSE All Share’s, though this is variable and can fall. The fund’s charges are taken from capital, increasing yield but reducing growth potential.
The fund's main objective, to provide a high level of income, remains the same. We still think it has good long-term potential.