Following a visit to Woodford Investment Management’s offices this week to meet with Craig Newman, CEO and Neil Woodford, Head of Investment, we are pleased to present our thoughts below in a Q&A format.

What inspired the creation of Woodford Investment Management (WIM)?

The firm was established on the basis of a genuine desire to build an asset management business that is founded upon investment competence and a focus on its clients.  Simplicity, transparency and openness are the firm’s watchwords.

Craig Newman and Neil Woodford have known and worked with each other for many years and they are building a business with investment at its heart.  Both believe that the institutionalisation of asset management is leading to poorer outcomes for investors and that new entrants have the opportunity to re-focus on investors’ needs, without the challenges of legacy issues.

There is a clear division of responsibility between the two protagonists, with Craig leading on business issues and Neil leading on investment issues.  The goal is to ensure that Neil is free from the day-to-day aspects of managing a business.

What is the initial set-up?

It is important to recognise that winning the St James’s Place mandate means that the business launches in a cash flow positive state, which is highly unusual.

A series of senior hires in Operations, Compliance, Technology, Sales and Communications reinforces the message that the build-out is robust and that the business is appropriately resourced to cater for its initial plans.

Neil has now been joined by three former investment colleagues from Invesco Perpetual.   Each of these individuals was employed by Neil at Invesco Perpetual and they are well schooled in his investment disciplines.  They have extremely diverse backgrounds and this is in keeping with Neil's desire to work with well-rounded and thoughtful investors.  The only people reporting to Neil are the analysts and his own PA!

How does the Woodford team measure near and long-term success?

The team will measure its success in a number of ways.

Successful interaction with clients will be a key objective, thereby demonstrating their intention to be open and transparent.

The ability to maintain their existing external relationships will be tested in the initial phase of the firm’s development.  These external relationships include the market sources that Neil has traditionally drawn upon to assist him in the management of the funds, as well as the distribution network that supports the growth in the asset base.  He expects to continue to have good access to company management, given his reputation and his long-term and committed approach, but also acknowledges that establishing WIM as a credible and robust organisation is a critical factor in all these respects.

Longer-term therefore, they will measure their success by the degree to which they have established a scalable asset management business based upon core beliefs and a clear culture, that is taken seriously by the market and, more importantly, by their clients.

Are there any changes to the investment process?

There will be no change in investment style or approach.  As before, Neil seeks to provide attractive absolute returns for his clients, based upon compelling long-term opportunities.

Neil will still make use of the ability to invest up to 20% in international markets and the fund will also have exposure to unquoted investments, as before.

The St James’s Place mandate has been continuously managed in the investment style that will also be applied to the CF Woodford Equity Income fund.

What will the fund cost?

The fund is available through platforms with an annual management charge of 0.75% (class C).  A cheaper share class (class Z) is available for entities with more than £500m invested in the fund.

The Class A share class has an annual management charge of 1% and is available for nominee business (above £150,000 threshold).

What is The Adviser Centre's initial opinion?

Our initial thoughts about the business and the fund are positive:

• The infrastructure supporting the existing mandate and the new fund launch are robust.
• The business is designed to be highly efficient and to accommodate growth.
• It is very encouraging to see a mix of experienced people in the business with different skills, with full acknowledgement given to the importance of their individual roles.
• The plans for growth are ambitious but given the relatively strong financial position of this new entity, they seem plausible.
• The continuity of the investment approach seems assured.There is a determination for the investment team to be focused and not be distracted by the wider business issues.