By Simon Jessop and Esha Vaish
LONDON (Reuters) - British fund manager Neil Woodford announced plans on Friday to launch a 200 million pounds ($306 million) investment trust, aiming to make long-term investments in British companies and profit from taking a more patient approach.
Woodford is one of Britain's best-performing and most high-profile fund managers after making money throughout the financial crisis. Last year, he launched his own firm after more than 25 years at Invesco Perpetual and took in billions of pounds to his Woodford Equity Income Fund.
Woodford Investment Management said the new fund would trade on the stock exchange as an investment trust and would target a range of companies, both quoted and unquoted, aiming to deliver returns of more than 10 percent a year over the longer term.
The lack of a longer-term approach among the broader investment community had created a compelling opportunity to support businesses with outstanding intellectual property, the asset manager said.
The move echoes a regulatory drive to ensure financial service firms take a longer-term view to better serve clients such as pension schemes, which also have a multi-year investment horizon.
"Patient capital is the missing component for many companies and the reason why great innovation hasn't translated into commercial success for the UK economy," Neil Woodford said in the statement, referring to his strategy.
"Patient capital investors work closely with early-stage businesses and help nurture them to achieve commercial success. It takes involvement, flexibility and above all, it takes time."
NO MANAGEMENT FEE
Against a backdrop of reduced bank lending after the financial crisis, Woodford said capital open to young British firms was scarce and too short-term in nature.
While Woodford did not specify how long the average period of an investment would be, rival mutual funds globally hold stocks for an average of less than a year, Lipper data showed.
The new trust, to be called the Woodford Patient Capital Trust, is expected to begin trading in mid-April, the statement said, with Winterflood Securities acting as sole sponsor, financial advisor and bookrunner.
In an unusual twist, Woodford said it would not charge investors a fee to manage the investments and would instead be rewarded based on performance, through the issue of ordinary shares in the company.
Annabel Brodie-Smith, spokesperson for industry body the AIC, said the charge structure was unique. "I'm sure the rest of the industry will be interested to see how this works out. If it works out well, it may be something that they would follow."
The new trust is expected to consist of between 50 and 100 holdings, said Woodford, which had 9.3 billion pounds in assets under management at the end of January, with 4.7 billion pounds in the flagship Equity Income Fund.
Mark Dampier, head of research at fund platform Hargreaves Lansdown, said Woodford had an impressive track record of supporting new companies and helping them grow.
However, "those investors who wish to invest in this fund should similarly take a long term view, by which I mean at least 10 years," he added in an emailed response to the news.