New Woodford Equity Income fund

gadgetmind

His Invesco funds always seemed to be a core of equity income big names and then a whole load of other stuff off the visible table well outside the UK equity income index. From memory a fair bit was smaller companies (some even Private Equity), overseas, etc.

Nothing wrong with that, as long as people know what they're buying.

Old_Slaphead

le_loup wrote: »

I held inc units in his HI fund between 2002 and 2013 and it made me just over 10% PA ROI.
I'm tempted.

Indeed the boy done good over 10 years but for last 5 years the fund has only been 3rd quartile. Not sure that this merits (ex)manager's cult status.
Can't see any particular reason to rush to buy...will keep it on my watchlist for now.

bowlhead99

gadgetmind wrote: »

Nothing wrong with that, as long as people know what they're buying.

That's true - if you look at the top 10 holdings it was most of the usual suspects (except for avoiding banks in the credit crunch and a few other strategic calls which worked well).

He differentiated himself with some of the less obvious picks which as you say were off the radar. Hopefully for his followers who like what he did, he'll maintain his style (and should be able to better deploy capital in a small fund).

But if someone was looking at taking this to replace a pure play largecap income fund (80% + focused on UK)it might not be a pure apples to apples comparison. You would have to check out the small print of the fund's investment strategy and listen to his interviews to see how you might expect him to implement that strategy.

And he's not going to tell you exactly what he's going to do every given situation because that's a trade secret...

Bottom line, no active manager is going to follow the exact same strategy as another with the same benchmark, because they'd all like to try to outperform using their proprietary models and bright ideas. So arguably two equity income funds producing different results is not an apples apples comparison. One can outperform the other and do a "better job" in a set of economic circumstances but there is perhaps a different level of inherent risk baked in.

gadgetmind

bowlhead99 wrote: »

and a few other strategic calls which worked well

Like selling Vodafone to buy G4S?

gadgetmind

Interesting news regards new venture picking up Woodford's stamp collection.

http://www.ftadviser.com/2014/05/12/investments/equities/woodford-eyes-deal-to-buy-unquoted-stocks-from-invesco-QWjeyVHpYWxgc4MEoBFiQI/article.html

Fool thread that I stole this from.

http://boards.fool.co.uk/hardly-high-yield-investments-13025225.aspx?sort=whole#13025225

bowlhead99

Old_Slaphead wrote: »

Indeed the boy done good over 10 years but for last 5 years the fund has only been 3rd quartile. Not sure that this merits (ex)manager's cult status.
Can't see any particular reason to rush to buy...will keep it on my watchlist for now.

If, as he did, you successfully avoid the worst of the 2007 downturn (compared to the "IMA uk equity income" average), then you don't need to scramble into riskier stuff to recover over the next 5 years. If he lags the sector average since the crash it is not by much (though of course average is not the same as median).

If you looked at a chart of the returns from May 2007 to now, rather than from May 2009, he's probably made you 20% more than the sector in general. Some years a bit better, some a bit worse. But overall being in roughly the right companies at the right time has worked out well for his investors.

So, some might think he is not doing better than the average guy from day to day, and is just resting on the old glories of missing the worst of the credit crunch, recovering fantastically better than everyone else in the 6 months immediately post 9/11, and rebounding from the bottom of the market in 2003 very successfully.

For people in his funds for a 15 year period, they would tell you that those key events improved the performance of their portfolios fantastically and they will follow him into the next downturn, whenever it happens, very happily.

gadgetmind

bowlhead99 wrote: »

If, as he did, you successfully avoid the worst of the 2007 downturn (compared to the "IMA uk equity income" average), then you don't need to scramble into riskier stuff to recover over the next 5 years.

Some fund managers were going to achieve this. Some weren't.

In the same way, some horses are going to get around the course at the Grand National, and some aren't.

Put your money on a horse that didn't fall last time, and hope for the best. What could possibly go wrong?

Perelandra

bowlhead99 wrote: »

And he's not going to tell you exactly what he's going to do every given situation because that's a trade secret...

Which is a shame, as I'd love to know what he's intending to buy, and whether his weighting would be any different from other income funds... particularly IP ones.


Not because I necessarily believe that he makes the right calls, but I'd expect a lot of people to buy his fund on his name alone. And hence inflate demand for any share he's decided to overindex on.

IronWolf

Surely the point of an income fund is not to beat the market, but to provide a sustainable stream of income above that which could be gotten from a tracker?

talexuser

IronWolf wrote: »

Surely the point of an income fund is not to beat the market, but to provide a sustainable stream of income above that which could be gotten from a tracker?

Very true, and the best can provide some capital growth/protection too. In fact if you don't need the income straight away, reinvesting can give better returns than a lot of growth funds in mature markets like the UK?

NB I bought his High Income for £6000 pep in 1996 and never switched out, the only original fund I've never switched.