Who is taking a punt on CF Woodford fund?

bowlhead99

PippiShortsock wrote: »

How come the acc funds are already worth more per unit than the inc funds if no dividends are yet due?

They go ex div at the end of every quarter. So if you buy the inc version you have missed your opportunity to buy it at the price that would include the entitlement to Q3 income. Today, you are buying the shares excluding the right to that dividend (which will get paid during the next quarter). Consequently, the price of buying into the inc funds have dropped by about 80p compared to the acc funds.

Or do acc funds go up on the ex-dividend date rather than the payment date?

Actually it is not that acc funds go up, but that the inc funds go down, because with effect from 'ex div' day, the holders of inc units own their shares in one hand and the right to receive a cash payment in the other. The acc funds just own their (more valuable) shares in their first hand. But for the acc holder, their shares didn't become magically more valuable on ex dividend day. They are just worth 80p more than what the income shareholders hold in their first hand, because the income shareholders also have a second hand holding an 80p debtor.

And I'm almost positive that HL has been showing an ex-dividend date of 30 Jun 2014 and payment date of 30 Sep 2014 for the last few months

The fund didn't even exist in June so if it had gone ex-dividend on that date there is nothing to pay. It launched in July! HL's dates will just be from the standard annual timetable, in which the ex div dates will be end of June, Sep, Dec, Mar with the cash physically being received three months later. So the first payment is for income during Q3 which went exdiv on 30 September and will be received in Dec. See that linked article above.

at an estimated level of 4% pa. Feels like they're making it up as they go along!

Well they can't give you an actual figure because the fund didn't have any income or anything to pay for June. The stated target level is about 4%.

Annualising the 80p per quarter only gives you about 3.1%. However, of course the underlying companies don't pay equal dividends throughout the year, interims can be quite a bit smaller than final. So the cashflow won't be exactly even. According to the article, by looking at consensus forecasts for the portfolio's holdings, they are still on track for the 4%ish.

PippiShortsock

Thanks for explaining the acc/inc split, bowlhead. That makes perfect sense and helps clarify for me how funds operate when they go ex-dividend.

The fund launched on 19 June though - with invitations to apply for units going out two or three weeks earlier.
http://www.hl.co.uk/funds/fund-news-and-investment-ideas/fund-news--and--alerts/archive/cf-woodford-equity-income-fund-research-update-2014-07-18
I did think it was surprising that a dividend would fall due so soon after launch, but I wasn't going to complain.

And sorry if I wasn't clear. I didn't mean that estimating a dividend wasn't appropriate in advance of the income being made. I meant that getting the first dividend dates wrong felt a bit amateurish. It's not as though HL hadn't invested a whole lot of time and energy into providing information about this particular fund!