What’s new?

Woodford Investment Management is to launch Woodford Patient Capital, an investment portfolio of 50-100 quoted and unquoted businesses. The trust will invest in firms with intellectual property. Early-stage investments – around 75 per cent of the portfolio – will focus on areas such as “disruptive” alternative finance as well as medical science firms.

They say…

“This is something I’ve wanted to do for a very long time,” Neil Woodford said, explaining the new fund would give him free-rein to back early-stage biotechnology and medical science companies.

“Britain has had a fantastic record of invention and innovation for centuries, but we have been very poor at capturing and commercialising this innovation. There has been a very sad lack of long-term patient capital in this space. It is my belief that commercial success for intellectual property requires the application of patient capital.”

Good news?

Industry reaction has been largely positive. “Neil Woodford has an impressive track record of supporting new fledgling companies, and nurturing them to success with his long term investment approach,” said Mark Dampier, head of research at Hargreaves Landsdown. “This new Investment Trust will allow him greater freedom to uncover the great companies of tomorrow.”

Adrian Lowcock, head of investing at Axa Wealth, said Woodford “stood out as an exceptional manager”, praising him for “investing for the longer term, ignoring the noise that can often dominate short term stock market performance”.

The Trust will target annual returns of 10 per cent. Uniquely, the fund will charge a performance-based fee (rather than a standing fee), and its manager will be paid in shares of the fund itself “further aligning [their] interests with shareholders”.

Any caveats?

It is a different type of investment to the funds to which Woodford made his name – equity income. Woodford himself has made it abundantly clear that the fund is only for long-term investors. Those seeking short-term returns, or income, should look elsewhere.

Furthermore, the fund will invest significantly in unquoted investments, which implies a higher degree of risk.