As outlined on Monday, this is by far the largest investment company launch in the UK. But, what makes it perhaps more impressive is that it was achieved in an environment where investors seem more enamoured with Europe than they do with the UK, especially in the short term – faced, as they are, with the prospect of a rather messy election and the accompanying currency volatility.
Even WIM’s eponymous CIO Neil Woodford is bearish on the growth prospects for the UK in the near term, telling the BBC recently that he sees uncertainty about the country’s continued membership of the EU as a drag on British business, which makes the appetite for a fund that plans over the long term to invest significantly in small and microcap British companies even more impressive.
It also serves to underline the need for patience that Woodford has been careful to reiterate time and again in relation to the trust.
John Newlands, head of investment companies research at Brewin Dolphin said the launch of the trust is an intriguing development in the space, because of its focus on unlisted entities.
“This is more than just a trust that is seeking to capitalise on smaller companies in the UK, it is a personal crusade to reinvent the way we finance these companies because he feels the traditional private equity model doesn’t afford entrepreneurs sufficient time for success.
“It also means that people will need to commit their capital to the trust for a long time, at least seven years in my opinion. This is not a trust for everyone.”
Charles Stanley Direct’s Stephen Peters agrees adding: “I have enormous respect for the manager, Neil deserves the reputation he has built up over 25 years, but I do have some reservations about the trust structure and, it will likely have some testing times when interest in bio tech wanes.”
He added: “I am concerned about the amount of hype around the launch, I think the amount of attention it has brought to the trust space as a whole is great, but I worry it may have drawn to the trust some investors that have ignored the word patient in the title.”
Little wild beasts
There are also some concerned about whether or not the increased amount of capital will be perhaps harder to deploy than expected. Judith MacKenzie, head of public equity at Downing told Portfolio Adviser that currently in the small and micro-cap space, the value is largely on display at the smaller end of the space, which makes deployment of capital more difficult as you need to have a greater number of them and they are more prone to volatility.
“They are like little wild beasts, “ she said, “that all tend to go off in their own direction.”
Woodford, however, seems unconcerned, explaining in a blogpost on Tuesday evening that the firm has around 30 ideas “ready to go” which they hope to execute on quickly.
Adding that they have some other quoted ideas that the team will use to populate the fund with as well.
And, of course, in the past WIM has been careful to explain that initially, much of the fund will be in liquid large cap stocks, which adds another complexion to it and, further differentiates it from the rest of the field.
Where to look?
Indeed, for Peters, there is nothing in the investment trust space that offers a similar proposition at the moment, especially its focus on unlisted UK tech.
According to Nick Sketch, senior investment director at Investec Wealth and Investment, there are, however, other ways to view it, especially for those investors that may not have got their full allocation.
