Neil Woodford: The investment trust I’ve bought for income Neil Woodford buys new investment trust for income

Neil Woodford has revealed the investment trust he has been buying for income for his new fund.

 Neil Woodford buys new investment trust for income

Woodford is keen on the prospects for the UK consumer

The trust in question is Honeycomb, a recent launch. Woodford commented, ‘We participated in a placing in Honeycomb Investment Trust, a specialist UK consumer finance investment business, which offers a very attractive yield.’

He continued to outline the investments he has made for the fund he said, ‘Another new addition was Vodafone. Over the last few years, we have had concerns about Vodafone’s strategic focus, the scale of its capex commitment, operational execution and, above all, the sustainability of its dividend. These concerns have, however, diminished to the extent that we have initiated a small position. We had a very encouraging meeting recently with Vodafone’s finance director which outlined a much clearer strategy for the business and we are becoming more confident in its ability to deliver against that strategy.

Elsewhere, we took advantage of share price weakness to add to Redde, and continued to build a number of positions, including Lloyds, Non-Standard Finance, Topps Tiles and British Land.’

Meanwhile, shares in British American Tobacco reached an all-time high during the month, in contrast to its tobacco peer Imperial Brands, which fell back. We continue to be attracted to both companies for their dependable growth characteristics, but Imperial Brands now looks by far the more appealingly valued of the two. Along with Imperial Brands, other detractors from performance included AA on no news and Redde, which gave back some of the prior months’ gains.

Read more: Neil Woodford: Revealed: Neil Woodford buys UK property share

In terms of portfolio activity, we added three new holdings during the month. We participated in a placing in Honeycomb Investment Trust, a specialist UK consumer finance investment business, which offers a very attractive yield. We also bought shares in a placing in Countryside Properties. Countryside is a well-managed property construction and development business which has a close relationship with the public sector, specialising in improving social housing. We see the company as extremely well placed to deliver strong growth.

Another new addition was Vodafone. He said, ‘Over the last few years, we have had concerns about Vodafone’s strategic focus, the scale of its capex commitment, operational execution and, above all, the sustainability of its dividend. These concerns have, however, diminished to the extent that we have initiated a small position. We had a very encouraging meeting recently with Vodafone’s finance director which outlined a much clearer strategy for the business and we are becoming more confident in its ability to deliver against that strategy.’

He next turned his thoughts to the outlook for the wider economy.

The veteran investor said, ‘Turning to the investment backdrop, we remain cautious on the outlook for the global economy despite the market’s lingering optimism on growth. Meanwhile, we continue to warm to the prospects for the domestic economy, in contrast to an increasingly bearish consensus. The UK election result doesn’t change the fundamentally positive backdrop for the UK economy, in our view. Indeed, with its implications for looser fiscal policy and a softer Brexit, the UK economic outlook appears to have improved still further and the portfolio is positioned to benefit from this outcome over the long term.’

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