The Woodford Income Focus fund has re-opened, under the new management of Aberdeen Standard Investments.
The fund was suspended last year after manager Neil Woodford closed his Woodford Investment Management (WIM) business following the collapse of his flagship Woodford Equity Income fund.
The Equity Income fund was once worth more than £10bn but fell to £3bn due to poorly-performing stocks and investor withdrawals. In June 2019, investors were blocked from making further withdrawals as WIM was unable to meet redemptions. Woodford was then fired as manager of the fund, which was wound up, and his remaining two funds Patient Capital and Income Focus were taken over by Schroders and ASI respectively.
The Income Focus fund was now being run by ASI UK equities managers Thomas Moore and Charles Luke.
In a note ahead of its re-opening, ASI said the portfolio would remain a high-conviction mandate which would ‘drive sustainable income and capital growth as well as an attractive dividend yield’ from 30-40 holdings.
The new portfolio would be a ‘more liquid’ portfolio than it had been in the past, Woodford previously faced criticism for the number of unlisted holdings in the fund. Its top sector weighting was now industrials at 20% followed by financials at 18%.
Looking ahead, the managers said they saw opportunities in UK domestic stocks such as utility SSE and financial Close Brothers as well as internationally-exposed stocks such as Coca-Cola and Ashmore.
During January 2020, the fund underperformed its FTSE All-Share index benchmark by 4% as a result of the costs incurred during the portfolio turnover.
“This underperformance was partly the result of the costs incurred via the necessary transition of the portfolio towards a liquid portfolio of strong income-generating UK assets. As anticipated, there were certain inherited stocks that proved relatively costly to dispose of.
“With its repositioning now substantially complete, the portfolio is, we believe, now strongly positioned to provide attractive total returns.”
Performance of the FTSE All Share over one year to 12 February, 2020
