Three things your clients may call you about this week …

Revealed: the real risk of Woodford

When Neil Woodford left Invesco Perpetual in 2013 to start his own firm, loyal investors followed him in droves, notes this Sunday Times article - before going on to put the case that his flagship Woodford Equity Income fund has since become "risky".

According to the piece, more than 50% of the fund used to be invested in FTSE 100 companies - today, however, the proportion is closer to 20%. Similarly, volatile smaller companies make up more than a fifth of its holdings - against just 7% when the fund was launched in 2014.

Back then, it held 51 stocks, including big names such as BT and Glaxo Smith Kline but, at the start of last week, it held 105, including biotechnology start-ups, foreign property developers, peer-to-peer lenders and a cryptocurrency website - and just three FTSE 100 companies.

Tilney Bestinvest managing director Jason Hollands tells the Sunday Times: "Woodford's strong, long-term track record was earned primarily from investing in mostly large and medium-sized listed, dividend-paying companies, and a lot of investors have traditionally associated him with having a fairly defensive approach.

"The Woodford Equity Income fund today is very different and, I would argue, is quite risky in position because of its high exposure to small companies, AIM stocks and the healthcare and biotech sectors."

Cash Isas: canny choices could earn you nearly 2%

While banks have offered "terrible rates" over recent years, this Guardian article says it is time to think again because it is possible to earn 1.9% a year - albeit with a few strings attached.

The piece goes on to say so-called ‘challenger banks' are upping their game compared with the more established players - Lloyds, Santander, HSBC and Barclays may be paying between 0.15% and 0.35% yet Virgin Money and  Marcus are offering 1.49% and 1.50% respectively. For those willing to be tied down, even higher rates are available - the Charter Savings Bank, for example, is offering 1.9% on balances above £1,000, with a 95-day notice period.

"While rates are still low they are much better than they have been," says Savings Champion co-founder Anna Bowes. "Two years ago the best easy access rate you could get was about 1% - today it's 1.50%. Those people who have their savings cash languishing with a high street bank are still getting a really raw deal - even though there have been two base rate rises."

Watch the pensions trap when you divorce

Divorced women can end up more than £2,000 a year worse off than divorced men in retirement because pensions are not considered during divorce proceedings, according to this Sunday Times piece, with lawyers failing to factor in retirement savings and the rising state pension age for women.

A divorced woman in England aged 65 to 74 earns £170 a week in pension income, on average, compared with £212 for a divorced man in the same age group, the charity Age UK points out. The piece adds that a divorced woman aged 75 to 84 earns £161 a week, compared with £213 for a divorced man while the gap even exists at the age of 85 and above - a divorced woman receives £151 a week; a man £188.

The Sunday Times also notes women who might have stayed at home longer than their partner will therefore have a smaller pension - and indeed the issue of pensions is "not just one of wives losing out to husbands". "In some cases, a husband could miss out on a wife's valuable pension income if they fail to discuss pensions when splitting assets," it explains. "However, pension poverty is statistically higher among women than men."

• Tweet  
• Facebook  
• LinkedIn  
• Send to  

• Topics
• Your profession
• Neil Woodford
• cash ISA
• divorce
• pensions sharing and divorce