Woodford income focus fund

[SeagoonN]

Just received an email from one of my brokers giving details of this new fund. It's open for purchase from 20th March to 12th April 2017. Unit price is fixed at £1 and the "planned" annual income is 5p. Units can be either Income or Accumulation (ie dividends re-invested). No entry or exit changes, annual fee is 1%. Full details at:

https://woodfordfunds.com/funds/wiff/

It seems to be a possible candidate for an HYP portfolio but I posted here as this seems to be the home for funds etc.

Any thoughts?

Neddy

[Lootman]

A "planned" income of 5% annually is ambitious, especially since the managers are going to pay themselves 1% a year on top. Some questions to ask:

1) Does that 1% annual charge come from income or capital?
2) Does the 5% annual distribution include drawing from capital if necessary?
3) Will the fund sell options to boost the yield, potentially sacrificing growth for income?
4) How will a fund disgorging itself at a rate of 6% a year perform if we have a sustained period of low, no or negative growth?

The fund cannot yield 6% a year without taking a fair amount of risk in terms of capital growth and the sustainability and growth of dividends, in my opinion.

[SeagoonN]

Thank you both for your thoughts - some good points which are very helpful.

The 5% per annum is an "intention" and is not guaranteed......

Their 1% fee will be taken out of the capital - and you can be sure that they will pay themselves first!

I think that I will pass on this one and look elsewhere for my next HYP-ish purchase.

Thanks again.

Neddy

[OhNoNotimAgain]

Thank you both for your thoughts - some good points which are very helpful.

The 5% per annum is an "intention" and is not guaranteed......


Neddy

And how does that compare to the current highest yielding fund in the that sector or indeed the UK All Co sector?


Rob

[mc2fool]

Thank you both for your thoughts - some good points which are very helpful.

The 5% per annum is an "intention" and is not guaranteed......


Neddy

And how does that compare to the current highest yielding fund in the that sector or indeed the UK All Co sector?

By "that sector" I take it you mean the one that the Woodford Income Focus Fund is in ... well, the current highest yielding fund in the IA Specialist sector is Invesco Perpetual Global Financial Capital with a yield of 5.33%, and the current highest yielding fund in the UK All Companies sector is Close OLIM UK Equity Income yielding 3.96%, and while I don't know of their "intentions" I'm pretty sure neither of their yields is guaranteed either.

[Arborbridge]

I'm not joining the cynics on this one: I'd rather take a small holding and see how it pans out. It's not as though I've had rubbish results from the previous funds he has managed so I would give him the benefit of any doubt. Personally, I would not expect 5% yield for long, so if it isn't, I won't be disappointed. A yield of the order of 4% or over could not be called a failure and should be acceptable , if the TR is OK too, when comparing with other funds in the UK equity income group.

We shouldn't get too wound up about charges in this sector: let's see what the results are. My equity income OIEC basket is showing a respectable XIRR of 15.31% since Nov 2008, bettering the IT basket of 12.1% since May 2009. That OIEC basket started off including Woodford's IP income fund amongst others, such as Troy Trojan.

So, don't write-off a new fund just because you don't like the hype, and don't write off OEICS as a means of producing a return because there's an idea that all managers are scamming us on fees and not doing any more than we can ourselves. It takes a good amateur to outrun a professional, in my view.

I've taken a small position in the new fund. If it goes well, I will top up: if not I won't. But I need skin in the game to make sure I take an interest.

Oh, and to point to Woodford's lack lustre results over the short from one fund to condemn him generally, is biassed, especially when the clue "patient" is in the title of the fund. He never was a short termist, and short termists shouldn't apply.

[Arborbridge]

the Woodford Income fund also had a promised target income at launch, I seem to recall. It doesn't deliver on that income target either

I think you are correct, though I do not remember the original estimate. I received 3.35% last year and the latest payout was slightly down on the same one last year. Actually the one year rolling four quarters paid only 0.3% more than last year.
The XIRR from launch is 11% which is on median for my OEIC basket. i.e. not great, not bad. Troy Trojan someone mentioned, has given 11.26% since Feb 2011.

As a matter of interest, I'm trimmed this holding and one other to take a small holding in the income focus fund.

As an aside, one can always find funds with go faster stripes at any particular moment. The real question is how they will fair over a long period, and by the time you've found that out, two things will have happened: a) the market may have morphed making the informatio irrelevant b) you will be too old to benefit!

Fred: if you want a different fund within the OIEC pool, can I suggest you looks at Newton Asia Income, or the Jupiter equivalent? That would give you some diversity.

[Arborbridge]

I get the icing on the cake from Terry Smith at the present time.

Yes, the performance of his fund has been rather remarkable: I'm just waiting for the backlash as nothing carried on for ever! My return from that one is roughly twice that of any other fund over two years - it won't last.

[nmdhqbc]

This thread seems to state the fees as 1% so I thought I'd register to question it. The info below is from Woodfords website. I'm not sure what the "A" share is but for his previous fund the main ones retail investors buy are C and Z. C is 0.75% and Z I think is for HL only so when adding in their 0.45% charge it actually totals to 1.05%. So I think the sensible investor would buy in a execution charging broker at the 0.75% (C). So I think that's the number that should be discussed which is competitive compared to rivals. Whereas 1% is inline with competitors and would not give him credit for undercutting them a little.

Share class Initial Annual Exit
A Acc & Inc None 1.00% None
C Acc & Inc None 0.75% None
X Acc & Inc None 1.50% None
Z Acc & Inc None 0.65% None

[Aprilfool62]

Hello....i am not keen on investing in something until I know its content. It says on Hargreaves lansdown that some of the portfolio will consist of companies he has invested in for years. So I take it that this could mean the likes of Astra Zeneca, imperial brands, legal and general etc. I already have these in my own portfolio, so I would rather wait until I know more. Unless I've missed something and there is a list somewhere of companies be included in this fund?

[OhNoNotimAgain]

Thank you both for your thoughts - some good points which are very helpful.

The 5% per annum is an "intention" and is not guaranteed......


Neddy

And how does that compare to the current highest yielding fund in the that sector or indeed the UK All Co sector?

By "that sector" I take it you mean the one that the Woodford Income Focus Fund is in ... well, the current highest yielding fund in the IA Specialist sector is Invesco Perpetual Global Financial Capital with a yield of 5.33%, and the current highest yielding fund in the UK All Companies sector is Close OLIM UK Equity Income yielding 3.96%, and while I don't know of their "intentions" I'm pretty sure neither of their yields is guaranteed either.

Strange, I got a different answer, but with a yield 0.4% higher when you filter on Income units.

Rob

[mc2fool]

Strange, I got a different answer, but with a yield 0.4% higher when you filter on Income units.

I don't see your "answer" in the IA Specialist sector, or are you making comparisons between different sectors/asset classes, something you've complained about people doing many many times in the past?

[OhNoNotimAgain]

Strange, I got a different answer, but with a yield 0.4% higher when you filter on Income units.

I don't see your "answer" in the IA Specialist sector, or are you making comparisons between different sectors/asset classes, something you've complained about people doing many many times in the past?

No, the UK All Companies Sector.

Rob

[mc2fool]

Strange, I got a different answer, but with a yield 0.4% higher when you filter on Income units.

I don't see your "answer" in the IA Specialist sector, or are you making comparisons between different sectors/asset classes, something you've complained about people doing many many times in the past?

No, the UK All Companies Sector.

Right. So you are making comparisons between different sectors/asset classes, which is something you've complained about other people doing many many times in the past.

In any case, even with the additional 0.4%, the answer to "how does that compare" to the Woodford fund is, the latter is higher.

[OhNoNotimAgain]

I don't see your "answer" in the IA Specialist sector, or are you making comparisons between different sectors/asset classes, something you've complained about people doing many many times in the past?

No, the UK All Companies Sector.

Right. So you are making comparisons between different sectors/asset classes, which is something you've complained about other people doing many many times in the past.

In any case, even with the additional 0.4%, the answer to "how does that compare" to the Woodford fund is, the latter is higher.

I am assuming Woodford's fund will go into the UK All Co. There is of course a difference between what is actually available and what someone aspires to.
And if someone is promising a yield that is 16% hight than anything else available from UK equities it ought to prompt some questions. Especially when you look at his recent performance.
Rob

[Arborbridge]

Sectors can be misleading. Some of the best (IMO) income funds were ejected from the income sector and are now in the all UK sector. Evenlode Income being a prime example of a top tier fund that is no longer classed officially as an income fund. HTH.

It's yield is a little low at 3.3%, but I don't see why it doesn't qualify since there are lower yields still in the UK equity income sector. In fact, nine funds show lower yields, or more oddly "n/a" yields.

No doubt someone here (like Rob? or mc2fool?) has the answer via a definition, but a quick look through the Trustnet site does not easily give forth any ground rules.


Arb.

[nmdhqbc]

From his website (again). No geographic restrictions. I guess that excludes it from any UK sectors. Weird that it's still benchmarked to the FTSE All given that. I suppose it'll still be mainly uk stock but does not want to limit himself.

Fund name	CF Woodford Income Focus Fund
Fund sector	IA Specialist
Benchmark	FTSE All Share Index
Geographic exposure	No restrictions

[mc2fool]

I am assuming Woodford's fund will go into the UK All Co. There is of course a difference between what is actually available and what someone aspires to.
And if someone is promising a yield that is 16% hight than anything else available from UK equities it ought to prompt some questions. Especially when you look at his recent performance.

Then why did you ask previously how it compared with the highest yielders in "that sector or indeed the UK All Co sector"? Seems obvious that you knew then that it wasn't in UK All Companies, and you certainly knew when I responded saying it's in the IA Specialist sector.

You'd know that for sure if you'd followed the OP link to the fund's site -- and you'd also see that it's not a UK equities fund but one with no geographical constraints.

[saechunu]

Especially when you look at his recent performance.

I like this Humpty Dumpty approach to past performance. Think of it as a Viz style "Top Tip":

"Reference past performance when it suits a narrative that past performance matters and therefore is indicative of future performance, but dismiss past performance when it suits a different narrative that past performance does not matter and therefore is not indicative of future performance. Remember also to focus on particular periods of past performance, the shorter the better, that support the desired narrative while ignoring other periods that do not support the narrative."

Not particularly snappy, admittedly, and I can't see it finding its way into the FCA's Handbook.

[OhNoNotimAgain]

I am assuming Woodford's fund will go into the UK All Co. There is of course a difference between what is actually available and what someone aspires to.
And if someone is promising a yield that is 16% hight than anything else available from UK equities it ought to prompt some questions. Especially when you look at his recent performance.

Then why did you ask previously how it compared with the highest yielders in "that sector or indeed the UK All Co sector"? Seems obvious that you knew then that it wasn't in UK All Companies, and you certainly knew when I responded saying it's in the IA Specialist sector.

You'd know that for sure if you'd followed the OP link to the fund's site -- and you'd also see that it's not a UK equities fund but one with no geographical constraints.

No geographical constraints but benchmarked to the FTA tell is everything we need to know about how it is torturing the data.

If it truly is a global fund its benchmark should be a global index, not a national one.

Rob