Link Fund Solutions has reduced the income target on Neil Woodford’s former Income Focus fund that would have effectively seen the new Aberdeen Standard Investments managers chasing a 7.5% yield.
The change was detailed in the latest update for trapped investors in the fund, which revealed the fund will remain suspended until February.
Instead of the fund’s current objective of aiming to deliver 5p per share, from 23 January the manager will aim to achieve a yield higher than the average yield of the FTSE All Share index over a three-year rolling period.
Link said in a note to investors the fund’s aim will continue to be to achieve a high level of income together with capital growth, but it is amending how it defines “high level of income” following a review with Aberdeen Standard.
It said the change was to “reflect what we and the new investment manager feel is an achievable target for the fund in the current investment environment, in accordance with the fund’s investment objective and policy”.
“For example, based on the current share price of the Z Income share class of the fund, a 5p per share target gives a yield of 7.5%, whereas over the past 12 months, the yield of the FTSE All Share index has been 4.5%.”
The fund remains suspended while Aberdeen Standard repositions the investments and it is expected to reopen no later than February 2020.
Investors were notified on 20 December that Aberdeen Standard UK equity income managers Thomas Moore and Charles Luke had been chosen to take on the mandate, supported by a team of 16. From 23 January the fund will be renamed the LF ASI Income Focus fund.
Link, Aberdeen Standard and the fund’s depositary Northern Trust have all waived their fees until 31 May. This is to offset costs of portfolio repositioning prior to reopening the fund which Link anticipates being about 0.27% based on the value of the fund as at 27 December.
Woodford Income Focus suspended on 15 October, immediately following news that Woodford Investment Management was winding down.
