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Woodford factor: how much will star’s offer period attract?

by Robert St George on May 08, 2014 at 07:00

To assess the opportunity set differently, in March (the latest month for which IMA figures are available) the UK Equity Income sector attracted £1.6 billion in gross sales (up from a month earlier) and UK All Companies £2.5 billion (up from £2.1 billion in February).

Oliver predicts that the offer period will bring in ‘well north of £100 million’ but ‘not anywhere near £1 billion’.

The offer period also serves as what marketing types deem a ‘call to action’: there is an implicit sense that investors have a limited window in which to buy. Should they jump in on day one?

Sexton sees no reason for Woodford aficionados to hesitate. ‘Why would you wait if you were a big fan of his? There is no point waiting for him to re-establish a three-year performance record.’

And is it a propitious time to be putting billions of pounds to work in the equity income sector? Sexton notes that the market has pulled back from some of its recent peaks. ‘It will probably be easier to start running that money on 1 June than it would have been on 1 January.’

Sleep observes that plenty of Woodford’s traditionally favoured sectors, such as tobacco, are still highly valued. But he maintains that there is value in the market, highlighting the oil majors like BP despite ‘its warts’.

Oliver nevertheless counsels against opting into Woodford’s new fund to make a short-term return, but does not envisage performance problems on any standard investment horizon – especially once the dividends are factored in. ‘But it is up to individual investors to decide whether to buy at these valuations,’ he concluded.

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