Neil Woodford is widely considered to be the UK’s best fund manager. So if you’re looking for a fund manager that you can trust to take care of your wealth, Woodford is usually a safe bet.
He currently manages three funds, which target different areas of the market and are suitable for various types of investors.
And even though Woodford manages all three, his style of investing for them differs significantly, as each one has a different set of goals and objectives.
The all-rounder
The CF Woodford Equity Income fund was the first one Woodford set up after leaving his former employer Invesco to set out on his own several years ago.
The equity income fund is not, as its name suggests, a pure income fund. Instead, it aims to achieve both income and capital growth, which means that Woodford can invest across the investment spectrum. Everything from early-stage private biotech companies to the UK’s largest pharmaceutical companies can be found in the portfolio and while the fund’s dividend yield of 3.2% may be below the FTSE 100 average, the potential for capital growth more than makes up for the lack of income.
Due to its diversification and growth as well as income focus, the Equity Income fund is suitable for every investor, especially those just starting out on their investment career as, over the long-term, this fund should generate some impressive returns.
High risk, high reward
Woodford’s Patient Capital Trust may not be suitable for the most risk-averse investors. Its portfolio provides exposure to a mix of exciting, disruptive, early-stage and early-growth companies, together with some of Woodford’s high conviction mid and large capitalisation ideas. The combination of small and large-cap companies means Patient Capital isn’t as risky as venture capital-style funds, but it’s not going to make you rich overnight.
Investors who are not prepared to take any risk with their money, or put their capital at risk might do best to avoid this opportunity, and those investors who are unwilling to invest for five years or more should also look elsewhere. Nonetheless, if you’re still decades from retirement and are looking for a high-risk, high-reward opportunity, managed by one of the UK’s best fund managers, The Patient Capital trust may be for you.
Income focus
Lastly, there’s the Woodford Income Focus Fund, which is now available for investment with the launch period closing at midday on 12 April.
This fund is targeting an income of 5p per share per annum, with the prospect of modest, sustainable income growth in the years following. Unlike the other two, the Income Focus Fund will only invest in quoted stocks meaning that this opportunity may be more suitable for the risk-averse investor who is looking to generate income with minimal chance of losing money.
Up to you
Overall, the decision of which Woodford fund to buy for your ISA comes down to your own risk preference. Income seekers who prefer to play it safe should buy the new income fund, while income hunters with a long-term outlook could consider the Equity Income fund. Investors with the highest risk tolerance may want to take a look at Woodford’s Patient Capital trust.
