Investors in the fund formerly known as Woodford Equity Income should now have received their first cash distribution from the fund administrators. Much of this will be held on investment platforms via pensions and ISAs and many investors will not want to withdraw it from these tax efficient shelters. In the case of pensions they won’t be able to withdraw it if they are under age 55.
In addition, the fund formerly known as Woodford Income Focus will reopen on 13 February with a totally different portfolio to when it suspended.
Investors will now be considering where to reallocate their cash distribution and / or whether to stick with the new portfolio managed by Aberdeen Standard Investments or switch to a different fund.
Ryan Hughes, head of active portfolios at AJ Bell, looks at some options:
Troy Trojan Income
“In some respects Troy Trojan Income has some of the characteristics that were originally associated with Woodford given its focus on capital preservation and a willingness to buck the trend. Manager Francis Brooke has significant experience and has recently strengthened the team with the hire of Blake Hutchins from Investec. The fund typically focuses on large cap companies that are strong businesses with the ability to generate cashflow which in turn is returned to investors via dividends giving it a very traditional equity income approach. The fund yields just under 4%.”
Man GLG UK Income
“There are many income funds available that simply allocate to the big dividend payers in the index but this fund is different. Manager Henry Dixon takes a multi cap approach and also has a value bias, making it a good complement to other traditional equity income funds. In addition, the manager can invest in corporate bonds if appropriate, albeit in a limited manger making this a slightly different UK equity income fund. The strategy currently yields around 5% and pays monthly making it an interesting option for income seekers.”
City of London
“Investors who prefer the Investment Trust structure to funds could look at City of London. It is one of the most famous investment trusts in the UK, tracing its pedigree back to 1891 with current manager Job Curtis in place since 1991. With the UK having been out of favour for much of 2019, solid yields are now available with the trust yielding 4.3% from a dividend which is paid quarterly making it useful for income seekers. Combine this with a hugely experienced manager, a track record of increasing dividends for 52 years and one of the lowest OCFs in the market at 0.39% and you have a trust that is well placed for income seekers and also those who want to reinvest that income over time.”