The move signals the start of a strategy to switch the struggling LF Woodford Equity Income fund's (WEIF) unquoted exposure from individual unquoted holdings to shares in WPCT.
The first tranche comprises fives unquoted firms – Atom Bank, Carrick Therapeutics, Cell Medica, RateSetter and Spin Memory – with a combined value of £72.9 million. WEIF has sold the firms to WPCT in exchange for shares in the trust.
WEIF is currently one of the worst performers in its sector and has fallen off a number of fund-buy lists, with worries over its exposure to private firms among the factors concerning investors.
In the three years to the end of January, WEIF has lost -5.3% versus a peer group average of 16.8% and is ranked 103rd out of the 104 funds in the sector.
WEIF intends to decrease its exposure to individual unquoted firms further as companies reach a more mature stage of their growth cycle.
According to Bloomberg, WEIF’s unquoted holdings, which have averaged around 8% of the WEIF portfolio since launch in June 2014, represent around 40% of the fund’s 15% total return since launch.
The move coincides with the LF Woodford Income Focus fund moving from the IA Specialist sector to the IA UK Equity Income sector.
Woodford Investment Management (WIM) believes it has a more clearly defined product set following the move based around three product pillars.
* Woodford Patient Capital Trust: for investors looking to benefit from a higher exposure to early-stage companies.
* LF Woodford Equity Income Fund: for investors looking for long-term, total returns bolstered by investing in companies with sustainable dividend growth.
* LF Woodford Income Focus Fund: for investors looking for a high income, predominantly from UK companies.
Commenting on the restructure, WIM chief executive Craig Newman said: 'The Woodford Equity Income fund has always aimed to deliver a growing income stream and a total return by investing predominantly in listed stocks, with some exposure to unquoted holdings to generate excess returns from disruptive technologies. These objectives remain firmly intact.'
He added: 'Neil is as passionate on the unquoted asset class as ever but having listened to feedback from clients we believe that moving the exposure to the asset class via a collective fund rather than individual unquoted stocks makes sense – both operationally and from an investor view.'