The change gives him flexibility to shape the mandate to more closely mirror CF Woodford Equity Income Fund which, in line with the IMA UK Equity Income sector definition, can invest up to 20% in international stocks (currently 16%).
Well known for his love of pharmaceutical and tobacco stocks, Woodford can now invest the SJP UK High Income Fund into the likes of Roche, Sanofi, Reynolds American and Philip Morris International – all holdings within CF Woodford Equity Income Fund.
Approved at the EGM on 13 August, the mandate change becomes effective from 15 September.
SJP’s investment committee has been reviewing the mandate ever since it announced its intention, in April, to stick with Woodford and consequently pull £8bn away from his old employer Invesco Perpetual.
“After a strong run for the UK equity market over the last five years, Neil believes that having greater flexibility and a broader opportunity set from which to identify new investment ideas represents a practical evolution of the investment mandate for his strategy,” said Chris Ralph, chief investment officer.
“This does not represent a fundamental change in Neil’s approach and the fund will continue to invest primarily in UK equities. Consequently, the committee believes that allowing Neil to invest up to 25% of the fund in overseas equities is in the best interests of clients and provides the additional flexibility to continue to achieve strong returns over the long term.”
Richard Whitehall, senior investment consultant and senior portfolio manager at Morningstar Investment Management, commented: “By allowing investment overseas, this gives Woodford the ability to diversify his holdings more and play the big themes with less stock-specific risk.
“For example, in healthcare he will be able to diversify from AstraZeneca and Glaxo, and similarly in tobacco he can diversify away from British American Tobacco.”
On Monday, Woodford made headlines with his intention to sell his recently acquired stake in HSBC in CF Woodford Equity Income Fund, on the back of concerns that the growing number of regulatory fines faced by banks are “increasingly being sized on a bank’s ability to pay, rather than the extent of transgression”.
Are you a holder of SJP UK High Income Fund? Is the change for the best? Let us know your thoughts.
