Neil Woodford stops charging for research

Neil WoodfordCelebrated fund manager Neil Woodford has stopped charging investors for investment research used in compiling portfolios for its flagship income fund.

The move is part of an initiative by Woodford Investment Management to be open and transparent on all costs associated with running an actively managed investment fund, the firm said.

Woodford says the firm itself will absorb the research costs, rather than the CF Woodford Equity Income Fund.

“We are acutely aware that it is investors’ money, not ours, we are investing,” said Craig Newman, chief executive at Woodford Investment Management. “Research costs are a function of our role and we believe it is only right that Woodford Investment Management, not our investors, pays for it.”

Research costs are in fact “just a small part of the charges and costs that are deducted from a firm’s return”, the firm said in a statement. The total costs for Woodford’s equity income fund last year were 0.84%, of which just 0.02% was associated with research.

The fund provides a breakdown of all fees on a single page on its website, found here.

This move increases pressure on other asset management firms to follow Woodford. Research costs have been the focus of regulation over the years, and are a part of the current Markets in Financial Instruments Directive II.

“Only by knowing all the costs will investors be able to make a considered judgment on whether they are getting value from their fund manager or not,” said Newman.

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