His firm has already sent out a questionnaire to intermediaries aimed at gauging demand for such an offering.
It is understood the questionnaire contains the standard questions typically seen in any such communication about a possible launch.
Should a launch go ahead the fund would target a yield of approximately 4.2-4.5% with distributions paid quarterly. At least 85% of the assets within the portfolio will be dividend paying and the fund will invest in quoted companies only.
Woodford’s existing fund has returned a fraction above 2% over the past year, comfortably ahead of the IA sector average of -1.82%. The current yield is 3.56%.
This performance together with his track record at Invesco would mean a new offering stands a very good chance of being popular.
“Anything with the Woodford name above the door is sure to garner fresh interest from investors, particularly if it comes with a higher income to boot,” said Laith Khalaf, senior analyst at Hargreaves Lansdown. “The flip side is the existing fund may have better total return prospects thanks to the inclusion of small unquoted companies which, while risker, have lots of growth potential. A new fund would allow investors to choose whether they prefer to focus on total return or income, or indeed hedge their bets with a bit of both.”
Khalaf also pointed out that if the new fund invests without geographical constraints that could also open up new opportunities for Woodford, but would mean the fund would have to sit outside the UK Equity Income sector.
Head of investing at AXA Wealth Adrian Lowcock noted that Woodford had a dual fund set up when he was at Invesco Perpetual but the returns generated by the two were not very different in terms of capital returns, dividends and volatility. This would need to change according to Lowcock.
