- A portfolio of 50 companies
- Exposure to high-yielding businesses of all sizes
- UK centric portfolio with significant exposure to housebuilders and commercial property
We recently received the first full portfolio of the CF Woodford Income Focus fund and it’s fair to say that it presented a few surprises.
In our meetings with Neil ahead of the fund launch we spent a lot of time discussing the structure of the fund and its ability to deliver a high and sustainable income. First impressions suggest that while the portfolio’s core is made up of the types of larger companies he has favoured for a long time, the list soon branches out with investments across the market. Indeed only about 50% of the portfolio is invested in FTSE 100 stocks with positions taken in companies right down into the higher-risk smaller company arena.
It is no surprise to see mega cap stocks such as AstraZeneca, Imperial Brands, Legal & General and Provident Financial as these are companies Neil already holds in his Equity Income fund. While these companies should bring stability and income to the fund, one of the strongest implicit views is on the UK economy. In Heather Ferguson’s recent article she details Neil’s decision to be more positive on UK-centric shares, which he sees as significantly undervalued. In the Income Focus fund we see significant exposure to house builders and commercial property companies. He is certainly not being backward in coming forward with this strategic view with two house builders in the top ten and around fifteen property holdings in total amounting to over 20% of the portfolio. By keeping the portfolio focused with only 50 holdings, each company will have a significant impact on performance, although it is a higher risk approach.
Delivering a high and growing income is no easy task and to deliver the results we hope to see Neil will not only have to be right on his positive stance on the UK economy, but also in his stock selection. While we will only be able to measure the success in the years to come our initial feeling is that Neil and his team have certainly grasped the bull by the horns and are backing their convictions.
Please note the fund’s charges are taken from capital which can increase the yield but reduces the potential for capital growth.