Woodford Predictions

brasso

atush wrote: »

He didnt get the sack, he set up on his own. Dont be a numpty

Getting sacked and setting up on your own are not mutually exclusive! That said, I think most would agree that Woodford, who brought a lot of success to Invesco over the years, is very unlikely to have been sacked. There may well have been a growing difference of opinion or style -- this happens in every business. But here, given the sums of money involved, I strongly suspect that Woodford's departure will have been discussed and agreed in great detail by all concerned over a lengthy period.

talexuser

Bandying returns around the Financial Times says he turned £1000 into £23000 over 25 years (no mention of the years but I guess a combination of Perpetual and the last 3 years in his own firm?). That works out something over 13% a year average

TheTracker

talexuser wrote: »

Bandying returns around the Financial Times says he turned £1000 into £23000 over 25 years (no mention of the years but I guess a combination of Perpetual and the last 3 years in his own firm?). That works out something over 13% a year average

It’s the figure bandied around 3 years ago.
http://www.thisismoney.co.uk/money/markets/article-2627587/Should-follow-Neil-Woodford-star-manager-turned-1-000-25-000.html

talexuser

Thanks, it's very slightly different saying High Income turned £1000 into £25349 in 26 years, that would be compound average very slightly less than the latest article, maybe his own firms years have now been taken into account or the very latest dip has not? In any case I'd be genuinely interested in the UK tracker that has done that.

bostonerimus

talexuser wrote: »

Bandying returns around the Financial Times says he turned £1000 into £23000 over 25 years (no mention of the years but I guess a combination of Perpetual and the last 3 years in his own firm?). That works out something over 13% a year average

Yes I worked out 13% too, which is fantastic. He managed to do well through some major down turns and handsomely beat a 60/40 indexing strategy. Since leaving Invesco his equity income fund is returning an annualized 5.2% and my 70/30 indexing portfolio has returns 8% so what to do?

I don't use active funds as I believe they introduce the extra unknown factor of the manager. If I buy the index then I can look back at historical markets and maybe use the statistics of those to guide my investing.

fun4everyone

bostonerimus wrote: »

I don't use active funds as I believe they introduce the extra unknown factor of the manager. If I buy the index then I can look back at historical markets and maybe use the statistics of those to guide my investing.

So you can use long term past performance to predict indexing results, but you cant use long term past performance to predict how an active manager will fair vs an index?

It is not that difficult to find areas where managers can add performance to investment in a sector. That's for those of us who are retail investors in the UK though. I wouldn't use actives in every sector. Large caps in the USA being the obvious one to index (for one). I believe in the US tax treatment on actively managed funds is harsh and you are better off just indexing everything if you live there.

There are also many millions of investors in poor active funds here in the UK, sold on bad advice due to commission or backhanders or paid for deals or whatever. That is where the bad rep is coming from as the funds they are in charge high fees and are basically closet trackers. It's also the safest (and the best generic) advice to tell people to index everything.

If you are willing to put in a little research and have an appropriately constructed portfolio, actives can very much enhance your direction and return.

talexuser

I agree, I was active for over 20 years because liked a punt on the managers record, and was very happy with the result. In the beginning there were not that many trackers here anyway. As things grow and you keep adding to Peps/Isas you get to the stage there aren't that many outstanding managers to choose from the dross, so now have some trackers too, particularly world and US funds.

bostonerimus

fun4everyone wrote: »

So you can use long term past performance to predict indexing results, but you cant use long term past performance to predict how an active manager will fair vs an index?

I didn't say that.....you can certainly do the statistics with active or index investing.....it's just that there's an added uncertainty with an active manager. Assuming markets are efficient is dodgy enough without the selection biases and errors of a manager to deal with too.

Of course there are active funds that beat indexes and you can always create a stellar portfolio of historical active returns, but equally you can create some stinkers. Woodford was good at Invesco, but he's not as good on his own so far. I'll be happy for the active investor that can beat a 60/40 indexing 30 year annual average return of 8.5%. 25 years of Woodford at Invesco would have easily done that, but how many were with him the whole way?

The active investor must always believe that they can use their research to beat the index., so we are doing an active vs passive comparison test in another tread and and it would be good for you to join and see how your research does over the next year. I expect to be mid pack with my indexes and I expect all the active investors believe they will beat me. The sample size is small, but it should be interesting.

Kendall80

Just watched a video interview with Woodford on CSD. Still seems confident in his Equity Income fund. I have to say looking at my portfolio where among the funds I have Lindsell-Train - there is a 43% gap between the 2 over the precise period I have held them. I'd like to know how he thinks hes going to bridge that gap.

bostonerimus

Kendall80 wrote: »

Just watched a video interview with Woodford on CSD. Still seems confident in his Equity Income fund. I have to say looking at my portfolio where among the funds I have Lindsell-Train - there is a 43% gap between the 2 over the precise period I have held them. I'd like to know how he thinks hes going to bridge that gap.

It's a manager's job to be confident. The telling thing is that he's giving interviews...... presumably to reassure his investors