Neil Woodford is launching a new fund that will target a higher income than his current Woodford Equity Income fund. But is it worth buying?
The new Woodford Income Focus fund, due to open for business on March 20, will target a 5pc yield at launch — a higher income than his current fund. After the first year the new fund will aim to deliver 20pc more than the yield of the FTSE All Share index.
The current £9.6bn Woodford Equity Income fund initially targeted 4p for every £1 invested, and currently yields 3.4pc.
The new fund will invest mainly in British stocks but has no limit on the amount that can be invested in overseas companies. It will take stakes only in listed firms.
Experts advised existing Woodford investors not to hold both funds.
Adrian Lowcock of Architas, part of Axa, said: “The funds are designed for slightly different people and there is about a 60pc overlap in the holdings of the two portfolios.
“The current Woodford Equity Income fund is focused on total return, so it looks for income and capital growth, as well as income growth. It is probably more suited for someone who doesn’t need a high yield, whereas the Income Focus fund is more suited for those who need a higher income from their investments.