Woodford Trust Loses Cash in Year One

NEWS YOU CAN USE: March was a busy month for fund management - not least because of the Budget and US political uncertainty. We round up the latest fund news and views

Emma Simon 24 March, 2016 | 12:16AM
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March has been an uncertain month. One of the cornerstones of the financial year, the Budget, had to be revised 48 hours after it was delivered, after planned welfare cuts were abandoned.

But political questions about how the books will be balanced don’t detract from fact that this still looks like an excellent Budget for savers and investors: with future cuts to capital gains tax, a new ‘Lifetime ISA’, and no plans – as yet at least – to abolish higher-rate tax relief on pensions.

There are other uncertainties though, not least around the forthcoming ‘Brexit’ vote.  The Bank of England said that the uncertainty around this debate itself could pose a risk to economic growth regardless of what the outcome of the referendum. However, Peter Hargreaves, founder of stock broker Hargreaves Lansdown, was less pessimistic, saying fears about leaving the EU were “overblown”.

Meanwhile M&G’s respected bond manager, Richard Woolnough, said that the US presidential election, was more of a threat to markets than Brexit.  He said ‘noise and uncertainty’ around the EU vote is likely to cause volatility, in credit markets at least. But he warned: “Investors should be less concerned with the EU referendum and focus more on the possibility of Donald Trump as US president.”

Elsewhere, the fund management industry was kept busy by the usual end-of-tax-year rush. Higher earners in particular have been looking to maximise pension contributions ahead of a sharp reduction in the annual allowance. This will curb pension contributions for those earning more than £150,000.

It remains to be seen whether market volatility has dampened ISA investors’ enthusiasm. Below we look at the other fund stories making headlines this month.

Woodford Waives Fee on Investment Trust

Neil Woodford announced he wouldn’t be taking a fee for the first year of trading on his Patient Capital Investment Trust (WPCT).

The trust has a minimal 0.1% fee, and the manager will only take a higher performance-related charge if it delivers a 10% return to investors over the course of 12 months.

The trust, which launched last April, has lost money in its first year. It invests in early-stage and early growth companies, and its holding in the healthcare sector in particular have been hit by market volatility.

Woodford said: “Although recent short-term performance has been challenging and uncomfortable, we remain convinced that our strategy remains appropriate, especially for the prevailing economic conditions.”

The trust also announced it was suspending further fundraising, announced in January, amid continued uncertainty and lower liquidity in markets.

New Direction for Jupiter Global Trust

Jupiter Global Trust (JPG) looks poised to ditch its manager and become UK focused, rather than global trust. The board of the £49.4 million investment trust is recommending that the manager, Richard Curling be replaced by Steve Davies, manager of Jupiter’s £1.6 billion UK Growth Fund.

As a result they would like to see a more UK-centred mandate, with a focus on growth stocks. This would align it more closely to the open-ended fund run by Davies. The trust would change its name to the Jupiter UK Growth Investment Trust. Management fees would also be reduced as part of these proposals.

If these changes go ahead Curling will continue to run the Jupiter Fund of Investment Trusts, the Jupiter Monthly Income fund and institutional assets, as well as the Jupiter UK Alpha fund.

This trust originally launched in 1972 and was known as the Primadona Growth Trust.  Over the last three years it has returned 18.5% for investors. The AIC Global sector returned 19% over the same period. The trust is currently trading at a 6% discount.

New Hargreaves Fund

Hargreaves Lansdown has announced it will launch a new multi-manager High Income Fund, investing in a portfolio of equity income and bond funds.

It will be managed by Lee Gardhouse and Ellen Powley and offers investors a starting yield of 4.5%.

This latest offering extends Hargreaves range of multi-manager funds. A spokesman said: “The aim is to offer the best of both worlds in a single fund - the benefits of potential capital and income growth from a selection of the best equity income funds, plus the prospect of higher long-term income and lower volatility from a selection of our favourite corporate bond fund managers.”

Initially the fund will be 60% invested in equities and 40% in bonds. Hargreaves is offering the fund at a £1 fixed launch price until 5pm on April 12. Its first day of trading will be April 13. 

JPMorgan Manager Takes ‘Leave of Absence”

Peter Kirkman, the manager of JP Morgan Asset Management’s £242 million Global Unconstrained Equity fund is to take leave of absence from the end of March.

He has run this unconstrained equity strategy since 2013. He has been with the company for 15 years, holding senior positions in both the US and Japan. Sam Witherow and Tim Woodhouse will take over the running of this fund.

He has also passed over responsibility as co-manager on the on the Global Developing Trends fund Global Financial funds. JP Morgan did not say when he would be returning.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for Morningstar.co.uk