Woodford Income Focus - removed from the Wealth 50
Mark Dampier | Tue 04 June 2019
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- We’ve removed Woodford Income Focus from the Wealth 50
- The fund is available to buy and sell as usual
- However, the overlap of holdings with the Woodford Equity Income fund will affect its value in our view
We have removed Woodford Income Focus from the Wealth 50 list of our favourite funds. Yesterday, dealing in the Woodford Equity Income Fund was suspended for up to 28 days, effective immediately. Investors in that fund won’t be able to buy or sell units until the suspension has been lifted. As a result, we removed Woodford Equity Income from the Wealth 50.
While dealing remains open for the Woodford Income Focus Fund, we have taken the decision to also remove it from the Wealth 50.
Unlike the Equity Income Fund, Income Focus is invested entirely in listed stocks, meaning it doesn’t face the same liquidity concerns – if investors wish to sell, they should be able to.
We believe the fund is invested in sound companies, with potential to pay high income and prospects for growth. We are not saying that the underlying holdings are bad investments, but there are other factors to consider.
There is an overlap between the portfolio of the Equity Income Fund and Income Focus Fund and the suspension in trading of the Equity Income Fund has caused volatility in the price of its underlying holdings.
We would prefer to see a resolution to the dealing suspension in the Equity Income Fund before we review our position again.
We’ve been long-term supporters of Woodford, and his multi-decade track record is impressive in our view. But we acknowledge how disappointing performance has been over the past couple of years, and our own conviction has been tested.
| Annual percentage growth | |||||
|---|---|---|---|---|---|
| May 14 - May 15 |
May 15 - May 16 |
May 16 - May 17 |
May 17 - May 18 |
May 18 - May 19 | |
| LF Woodford Equity Income | N/A | -0.3% | 14.1% | -11.3% | -17.8% |
| LF Woodford Income Focus | N/A | N/A | N/A | -2.3% | -17.8% |
| FTSE All-Share | 7.5% | -6.3% | 24.5% | 6.5% | -3.2% |
Past performance is not a guide to the future. Source: Lipper IM to 31/05/2019. N/A - Where no data is shown, figures are not available.
We review the funds on the Wealth 50 constantly, and feel that in this case, investors should consider whether the high income paid by Income Focus is their top priority. In our view, investors who don’t need this yield should consider their position.
Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. Yields vary and aren’t a reliable indicator of future income.
This article is provided to help you make your own investment decisions - it isn’t advice. If you’re not sure whether an investment is suitable for your circumstances please seek advice.