Revealed: The UK funds that pay a 5% income

1 mins. to read
Revealed: The UK funds that pay a 5% income

On the fifth of March 2009 the Bank of England reduced interest rates to the supposedly emergency level of 0.5%, and then cut them again last August to restore confidence after the Brexit referendum. The accommodative monetary policy has provided enormous support for those looking for capital growth, but it’s been a torrid time for income investors who have seen yields collapse across the board.

There is a huge investor appetite for reliable sources of high income, some of which will have been appeased by the launch of the new CF Woodford Income Focus fund. Neil Woodford is aiming to deliver an income of 5p per share in 2018 and if he succeeds it would be equivalent to a yield of 5% on the launch price of a pound a share.

The new fund will be more concentrated than his equity income portfolio with around 50 holdings. It will operate in the specialist sector to give Woodford the freedom to invest more than 20% of the assets overseas, although the initial allocation is unlikely to exceed this figure.

His £10bn CF Woodford Equity Income fund targets both capital growth and income and has a historic yield of 3.2%. It has had a poor year and is near the bottom of its sector with a return of 14.4%, although it is the best performer over the period since launch.

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