Neil Woodford Launching Woodford Patient Capital Trust plc, With Focus On FTSE 250 Companies

Woodford Patient Capital Trust is initially expected to be composed of established FTSE 250 (INDEXFTSE:MCX) firms

Mark Stones

Mark Stones (TMFMumbojumbones) joined The Motley Fool in 2014 and initially worked as a writer for Fool.co.uk, before joining the Fool’s analyst programme. Mark earned a BA in English from Loughborough University. Although he spends more time reading annual reports than Russian literature these days, he still appreciates a novelist’s antipathy toward the accepted view, which is a useful attitude when trying to sniff out hidden gems on the stock market. His approach to investing has been largely influenced by the principles of Warren Buffett and Peter Lynch. He also takes a special interest in the work of healthcare companies. Outside of investing, Mark plays guitar, enjoys good writing and has a guilty passion for combat sports.

Published 6 February, 2015 1:03 pm GMT

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The venerable fund manager Neil Woodford intends to raise £200m to launch an investment trust focused on early-stage growth companies, Woodford Patient Capital Trust. The portfolio is initially expected to be composed of established FTSE 250 firms, mirroring his favoured investing style over the last two decades.

The portfolio’s exposure to nascent businesses is expected to grow with time – a process that could take one to two years. According to Woodford, the capital available to these companies has been scarce, creating a “compelling investment opportunity”. Few investors, he claims, are willing to demonstrate the patience required for a great idea to become a commercial success.

Investors in the fund will avoid paying upfront fees, with a management fee awarded based solely on performance. This fee is payable in shares, aligning management’s interests with shareholders. Woodford is supported by a team of investment professionals, including Saku Saha and Paul Lamacraft, who have prior experience analysing smaller companies alongside Woodford.

Neil Woodford’s CF Woodford Equity Income Fund has returned 11.1% since it launched in June. The target of the new closed-end fund – meaning it will be traded on the stock market – is to return in excess of 10% annually over the longer term.