New Woodford venture expects to triple investor cash in three years

Disgraced manager bullish on healthcare prospects

James Baxter-Derrington
clock • 4 min read

Neil Woodford's new portfolio projects it will more than triple investor capital over three years, according to a sales document that was sent to potential investors on an unsolicited basis.

'It is not a fund'

Both the concentrated nature of the portfolio and the projected returns have been called into question by industry commentators, with the tripling of returns in three years described as "extremely punchy" by managing director at Chelsea Financial Services Darius McDermott.

"A tripling of returns in three years is not unachievable, but it could be hard to justify," he said. "There is a high level of confidence and it is clearly a very concentrated fund, but I would think that they would have to be very careful on everything they say to potential investors, given the scrutiny they are under."

Morel also pointed to the concentration of the fund, describing it as more akin to a private equity product.

"Under the rules of diversification, you need to have at least 16 stocks," she said. "It is not a fund."

Ben Yearsley, co-founder of Fairview Investing, explained that the nature of the companies WCM Partners hopes to invest in require high returns to offset risk.

"In early-stage biotech and healthcare companies, you would expect high returns as the chance of failure is much higher too."

This return profile was described as "binary" by Ryan Hughes, head of active portfolios at AJ Bell, who also addressed the nature of the target firms.

"Woodford always had very high hopes for the biotechnology companies he invested in and these expectations seem to have continued with the projected returns from his new portfolio.

"Given the early stage nature of these companies, it is also possible that they may need additional capital in the future to help the realise their products.

"Either way, there can be no doubting that these companies are high risk with uncertain outcomes and therefore it will always be surprising that companies such as these made up such a large part of an open ended, daily traded fund."

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