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Woodford Equity Income - Transfer of unlisted investments

Woodford Equity Income’s exchanged some of its unquoted investments for shares in Woodford Patient Capital Trust. We think the move benefits investors in both.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Our latest view on Woodford Equity Income

This article was published on 1 March 2019 and no longer reflects our current views. Read our latest view for up-to-date information.

Woodford – our view

The Woodford Equity Income fund is transferring some of its unlisted investments to the Woodford Patient Capital Trust. In exchange it’ll receive shares in the Woodford Patient Capital Trust.

The investments Woodford’s transferred aren’t listed on a stock exchange. It’s a planned move to reduce, and eventually remove, all direct investment in unquoted companies from the Woodford Equity Income fund.

The companies being transferred are Atom Bank, Carrick Therapeutics, Cell Medica, RateSetter and Spin Memory and their values have been verified by an independent third party. They only make up a small part of the Woodford Equity Income fund and it’s going to take more time to completely eliminate all unquoted investments from the fund.

Holding listed shares in an investment trust is a better way for an open ended fund to invest in unlisted companies than owning them directly. We see the move as a positive step. Woodford thinks the higher-risk unlisted companies have a bright future ahead of them and the transfer still allows Woodford Equity Income investors to benefit if they do well.

Investors in Woodford Patient Capital Trust get more exposure to the exciting young businesses it was set up to back.

We would like to see Woodford take steps to make sure investors in Woodford Equity Income aren’t also charged a fee by Woodford Patient Capital. Woodford Patient Capital is some way off charging a performance fee so it’s not an immediate issue.

In another development Proton Partners, an investment in both Woodford Equity Income and Woodford Patient Capital, has listed on the NEX stock exchange. Proton Partners provides proton beam therapy which is used to kill cancer cells with less damage to surrounding healthy tissue than other treatments.

Our view

We still think Woodford Equity Income has good long term potential, though it’s targeting total returns as opposed to delivering the highest income possible.

We also think Woodford Patient Capital has excellent prospects, if you’re happy with higher-risk unquoted investments.

We’re seeing Woodford this month and we’ll provide a full update after the meeting.

Key Investor Information for the Woodford Equity Income Fund

Key Investor Information for the Woodford Patent Capital Trust

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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