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Star fund manager Neil Woodford to launch a new income fund offering savers a 5% return

Published: 11:31 01 Feb 2017 GMT

Fund manager Neil Woodford
Woodford’s new fund is aiming to beat the FTSE All-Share Index by at least 20% over five years

Star fund manager Neil Woodford is to launch a new fund offering savers a dividend of 5% on their investment by the end of 2018.

The new CF Woodford Income Focus fund will be the fourth in the asset manager’s stable since he set up on his own after quitting Invesco Perpetual three years ago.

Unlike his flagship £9.6bn CF Woodford Equity Income, which pays out around a 4%, the new fund will not invest in unquoted companies and will also invest in overseas stocks.

Woodford’s new fund is aiming to beat the FTSE All-Share Index — made up of around 600 companies listed on the London stock exchange — by at least 20% over five years.

Mark Dampier, head of investment research at Hargreaves Lansdown, said: “The new fund differs from Woodford Equity Income by focusing on producing a high income.”

He added: “The new fund will also be able to hold over 20% overseas if the opportunities can be found, although we expect it to launch with a substantially UK focus to start with”.

Dampier concluded: “From a launch price of 100p, Woodford is aiming to provide a pretty punchy 5p income in 2018 and this will limit the opportunity for growth, so for me this fund will be very much for those seeking and prioritising income over growth.“

The fund manager’s listed-vehicle, Woodford Patient Capital Trust PLC  (LON:WPCT), which floated in April 2015, remains stuck below its 100p offer price, trading currently at 92.25p having been hit by some  disappointing investments in healthcare and technology stocks.

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