Tuesday, 14 August 2012

July 2012: Following Woodford update.

OK so lets take a quick monthly look at the 3 ways to follow Woodford strategy, or the Woodford way, as I think of it.

Just to remind you that this is an experiment, so the holdings are virtual, although I have previously held the Invesco Fund (New Trial Investment Strategy: 3 ways to follow Neil Woodford!),  and I currently own Vodafone in my personal portfolio (June 2012: Portfolio Update.).

Interesting to see that the flagship Invesco Perpetual High Income Fund has slipped to the back of the 3 following the receipt of dividends into the other 2 options.
A healthy £82.74 has been received into the Edinburgh Investment Trust which is enough to claw it above the Invesco fund.

Remember that both the Fund and the Trust are operated by Invesco and that the renowned Neil Woodford manages both. 
And, whilst the Edinburgh option appears to be slightly cheaper in terms of charges it could be said to carry more risk due to the options available to the Trust to leverage its assets ie. borrow to invest. 
Ultimately this could give it more upside, as well as downside, than the unleveraged Invesco Fund.

As for the 3 picks option (picked from the 3 highest weighted sectors represented in the High Income Fund's top ten holdings), a dividend of £23.46 (distributed quarterly), was received from Glaxo, and a further dividend from Vodafone will drop in on the 1st August.

Shares31.07.12Value % Perf
Inv. Perp. High Income1110.145.516121.452.02%
Edinburgh Investment Trust1182.005.136063.661.06%
3 Picks

Invesco Perp. High IncomeN/A
Edin. Inv. Trust31/07/12Div82.74
3 Picks

Click to enlarge, close to return.
So the 3 picks option remains out in front. 
It is probably still the riskiest option as it is the least diversified. And would be the costliest to set up with 3 sets of  dealing charges and stamp duty.
Although eventually I would think that the charges might even out, or even prove favourable given time and the drip, drip of annual management fees applied to the fund and trust.
There is also a little more self management required to keep an eye on things.

But after 5.5 months it is comfortably infront despite the slight headstart given to the other 2 options.

Interestingly, none of the 3 picks are currently the largest holdings of their represented peer sectors in the High Income Fund which are currently AstraZeneca (pharmaceuticals), Reynolds (tobacco), and BT (telecoms).

Its been a bit of a sideways trading market since I started the experiment on the 14 March with the FTSE 100 currently down from the 5945.43 that it closed out at on that date.
Turning the clock forward to the end of July, the FTSE 100 closed at 5635.28 which represents a fall of -5.22% over the same (very short!), 5.5 month period of the experiment.

So as well as registering a positive performance in a short space of time, all 3 options have also comfortably outperformed the FTSE 100.
You could also compare their performance (as they are net of charges), with any current savings account remembering, of course, that this is only 5.5 months in and the the risk/reward balance of each product/options

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