Income Focus Fund opening portfolio

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Mitchell Fraser-Jones 17 May 2017 Est. reading: 2 min read

Home > Words > Insights > Income Focus Fund opening portfolio

Today marks the release of the first fully disclosed portfolio for the CF Woodford Income Focus Fund. You can find the full list of portfolio holdings here, as at 30 April 2017.

The portfolio contains a number of familiar companies but, with a stronger focus on income generation, the new fund’s portfolio is also quite different, with several holdings not currently present in the equity income fund.

As with that fund, however, Neil has been keen to capture some of the contrarian opportunity he currently sees in domestically-focused cyclical stocks which we believe have become too cheap to ignore in the wake of last year’s Brexit vote.

As Neil explains:

“In the run up to the launch of the Income Focus Fund I had said that I believed there was an attractive domestic opportunity, in part because people were too downbeat about the UK economy. The new portfolio is a manifestation of this view but in a more income-focused way.

The bearish mood has resulted in very big share price falls in some domestic cyclical sectors and it is this opportunity set that I see in the stock market right here, right now. I have been taking advantage of some of the depressed valuations in domestic cyclicals, selectively buying stocks in sectors such as housebuilders, banks, construction, building materials and property for the new fund. There are also some familiar names in the portfolio, which is in great shape and I am extremely confident it will deliver the income target we set when we launched the fund in March.”

– Neil Woodford, Head of Investment

The CF Woodford Income Focus Fund aims to meet investors’ increasing demand for a high level of income1, together with capital growth.

View the full portfolio here


  1. The fund manager will aim to deliver an income of 5p per share per annum. Investors should be aware that there is no guarantee that any specific level of dividend or yield will be achieved over any given time period

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  1. Is there any relation to the timing of Woodfords buying of Lloyds and the Governments sale of the company? A discount deal perhaps?

    1. Hi Mark,

      Only a notional relationship – the completion of the sale of the Government’s stake in Lloyds is an indication that the bank is fixed.

      Kind regards

      1. Thank you

  2. I wonder if you could explain what “Raven Russia 12% pref” means? Forgive my ignorance, I thought things with %’s in the title tended to be bonds but I’m guessing not in this case. Thanks.

    1. Hi Lee,

      These are preference shares, which have a mixture of equity-like and bond-like characteristics. This particular preference share pays out 12p per annum which, based on the original issue price of 100p, equates to the mentioned 12%. They were issued by Raven Russia in 2009 but do not trade at 100p these days nor were they purchased at that price. They do however still offer a very attractive income stream from a business that we know well.

      Kind regards

  3. Very pleased with those holdings. This fund is going to be very successful over the next 10+ years.

    One question, seeing as tho Neil still has faith in Capita, is he not even slightly interested in Carillon? It seems to me Carillon is more attractively valued and offers a better yield

    1. Thanks Sean. We agree.
      We have looked at Carillion in the past. The yield is appealing but clearly we haven’t been able to build enough conviction in the investment case for it to force its way into the portfolio. The competition for capital is intense…
      Kind regards

      1. Andrew MacKenzie 19 May 2017 at 9:09 am

        Hi Mitch
        Has there been any re-evaluation of Rolls-Royce in recent months by yourselves.

        1. Hi Andy,

          Yes, we look at it regularly. We had a very recent call with an analyst about the company and are still in close contact with management.

          Kind regards

  4. Can you tell us what is the estimated yield on the current portfolio? Or what the trailing 12 month yield would have been?

    1. Hi Ernest,

      Bloomberg gives me an estimated yield of 5.0% for the current financial year which is encouraging – but this is not a robust way of monitoring or predicting income / yield. For example, that analysis will not include any special dividends that have not yet been announced. On the same basis, the trailing yield comes out at 4.7% – this number will include special dividends paid last year but several stocks didn’t fully contribute in income terms last year.

      Our investment operations team monitors and forecasts income in a more robust way than Bloomberg is capable of, and that analysis is what gives Neil the confidence that the fund will deliver at least 5p per share in 2018 and long-term growth in income thereafter.

      Kind regards

  5. How comes idex wasn’t included in portfolio

    1. Hi L,

      Great business with excellent long-term potential but as things stand, it doesn’t pay a dividend…

      Kind regards

  6. Can Neil woodford hold share holder meetings just like Fundsmith.
    It can be our chance to talk to the Fund manager directly.

    Kind regards

    1. Hi Mavin,

      We have considered that in the past and will continue to do so. But primarily, we prefer to use technology to give investors access to Neil – via the blog, responses to comments and our live Q&A sessions. That way he can maximise his time doing what he does best – managing your money.

      Kind regards

    2. Terry Smith claims that he’s the only OEIC fund manager to hold such a meeting. I’ve been to a few, and it never disappoints. I would like to be able to say that it baffles me as to why nobody else does this, but I suspect strongly that it’s because the increased scrutiny that it would bring is simply not welcome!

      1. Public speaking is not for everyone.
        They are the only fund(s) that disclose their entire portfolio and one of the few who facilitate comments and updates. That’s enough in my book.

  7. Peter Maverick 19 May 2017 at 1:29 pm


    Very instructive to see these holdings, thank you.

    I was beginning to doubt your confidence in ABBV, having not heard much news. Are you only attracted to the dividend or do you think the price can materially appreciate – you’ve spoken a bit about the robustness of the Humira IP protection, but do you also place significant value on their pipeline / more broader prospects?

    Have also been thinking for some time that GILD might end up in one of your funds – is this a pure-yield play or do you see long-term capital appreciation? Was curious about the crux of the investment thesis.

    Thanks, and keep up the great work.

    1. Hi Peter

      We believe that the valuations of both these business (in yield terms, or indeed, in any other metric) are too low. The implication appears to be that the market views them as ‘ex-growth’ but we continue to believe these businesses have plenty of room to grow.

      AbbVie has one of the broadest pipelines in the sector with, in our view, plenty of underappreciated assets that could develop into successful therapies. Also, we believe that the robust patent estate around Humira will provide protection for much longer than the market currently gives it credit.

      As for Gilead, we believe the company’s HIV franchise is far more attractive than its valuation implies. Remember that part of the rationale for selling Glaxo was the looming threat of competition in the HIV market. Phase III trial results for Gilead’s bictegravir are anticipated in the next few months. Furthermore, Gilead has a huge amount of cash on its balance sheet which it can use to fund future growth, both organically and potentially through M&A.

      In short, we believe both of these businesses are still capable of delivering attractive and sustainable rates of growth. If we are right, we will get the benefit of a growing dividend and in time, when the market starts to come round to our view, a re-rating. In the meantime, we will be well-rewarded for our patience via the attractive yield.

      Kind regards,

      1. Peter Maverick 20 May 2017 at 3:39 pm

        Really appreciate this detailed (and rapid!) response – thanks Mitch!

  8. Interesting portfolio. One question though, while as an income seeker RUSP are no stranger to me, I’m intrigued as to the inclusion in the fund of Raven Russia shares, which unless I’m mistaken currently are not paying a dividend, and given current geopolitical uncertainties seem perhaps unlike to climb back up to their highs of a few years ago anytime soon? I know Neil has a long history with the firm, but this particular inclusion seems at odds with the new fund’s overall policy.

    1. Hi Matt,

      Technically, you are correct – Raven Russia does not pay an orthodox dividend. It does however, regularly make shareholder distributions via tender offer, which are classified as income.

      Kind regards

  9. I am always a little sceptical about the valuation placed on unquoted ‘risky shares’ presumably based on the last fund raising round.

    1. Hi Patrick,

      You’ve chosen an odd place to make that observation considering the Income Focus Fund has no exposure to unquoted securities. However, if you wish to be reassured about our unquoted pricing policy, we can confirm that it is in line with International Financial Reporting Standards as well as International Private Equity and Venture Capital Valuation Guidelines. In that context, the valuation of the last funding round is a valid input. it isn’t the only input, however, and all unquoted valuations are revisited at least twice a year.

      Hope this helps.

      Kind regards

  10. Do you and Neil have a view on the effect the possible election outcomes will have on the fund and the markets more widely? For example I read today of suggestions that the pound could fall between three and five per cent depending upon the nature of the government if the Tories don’t win the election.

    1. Hi Melvin,
      Clearly the polls suggest a closer contest now than when the election was first called but a Conservative majority remains the most likely outcome. We won’t speculate about what might happen – I’m sure you can find that sort of analysis elsewhere – but we will respond to the election outcome if it has relevant implications for our long-term investment strategy.
      Kind regards

  11. Peter Maverick 31 May 2017 at 6:45 pm

    Hi Mitch:

    I stumbled into WIM’s 13F filing and noticed purchases in Biogen and Bioverativ but did not see these positions reflected in your latest update.

    Have these since been disposed?

    I also saw that WIM had been reducing its position in Abbvie. I assume this was merely to free up some capital for other purposes rather than a fundamental shift away from the company, given your prior comments?

    Thanks in advance,

    1. Hi Peter,
      We manage several other mandates alongside the Woodford funds you can explore on this website. The holdings you mention are held in those other portfolios.
      Correct re AbbVie – as we have previously confirmed, we remain attracted to the long-term investment case here.
      Kind regards

      1. Peter Maverick 07 Jun 2017 at 4:09 pm

        Many thanks, Mitch

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