Woodford Equity Income

ColdIron

(Industry) Sectors?

AnotherJoe

Yep you got it
https://www.investopedia.com/terms/s/sector-breakdown.asp

• Energy
• Materials
• Industrials
• Consumer Discretionary
• Consumer Staples
• Health Care
• Financials
• Information Technology
• Telecommunication Services
• Utilities
• Real Estate

cogito

I see that Woodford has just doubled his stake in Card Factory.

Would I want to invest in a business which sells purely on price, is vulnerable to increased rents and rates and to increases in the minimum wage and whose recent accounts were unimpressive. Personally, I wouldn’t.

This looks to me like another poor decision.

short_butt_sweet

i love the way everybody nowadays is confident that they know exactly why every move that woodford makes is wrong

and on the other side of the coin, that everything terry smith does is obviously right

(BTW, i don't hold either of their funds/ITs.)

LHW99

AnotherJoe wrote: »

Yep you got it
https://www.investopedia.com/terms/s/sector-breakdown.asp

• Energy
• Materials
• Industrials
• Consumer Discretionary
• Consumer Staples
• Health Care
• Financials
• Information Technology
• Telecommunication Services
• Utilities
• Real Estate

Morningstar shows that type of breakdown on the portfolio pages for funds IT's

cogito

short_butt_sweet wrote: »

i love the way everybody nowadays is confident that they know exactly why every move that woodford makes is wrong

and on the other side of the coin, that everything terry smith does is obviously right

(BTW, i don't hold either of their funds/ITs.)

Smith has made 72% for his investors in the last 3 years while Woodford has lost 12%. Smith acknowledges his mistakes (over Dominos Pizza and l'Oreal for example) whilst Woody continues to insist that it is only a matter of time before his investments come good.

Woodford may well be dealt a grievous blow if Kent Council cash in the £250m that they have invested with him.

bowlhead99

cogito wrote: »

Smith has made 72% for his investors in the last 3 years while Woodford has lost 12%. Smith acknowledges his mistakes (over Dominos Pizza and l'Oreal for example) whilst Woody continues to insist that it is only a matter of time before his investments come good.

Woodford may well be dealt a grievous blow if Kent Council cash in the £250m that they have invested with him.

It's certainly easier to tell your investors what you think went wrong with some poor investments if you have a stack of winners in your other hand.

The percentages are not really relevant though (other than to see that Smith is ahead of his peers while Woodford is behind his), as Woodford does not have a mandate to invest mostly ex-UK as Smith does. One fund is not a benchmark for the other. If Kent decides to replace their allocation to Woodford it will be for the Woodford fund failing to meet its objectives as a primarily UK-focused income-generating fund, and not for failing to meet Smith's objectives which are different.

Though the Kent support would be useful (not just because a quarter billion withdrawal is a pain to deal with, but because they are a UK public body and some of their investment information is public record), £250m is a relatively small amount compared to the net withdrawals he has already suffered since the fund's peak fund size.

cogito

bowlhead99 wrote: »

It's certainly easier to tell your investors what you think went wrong with some poor investments if you have a stack of winners in your other hand.

The percentages are not really relevant though (other than to see that Smith is ahead of his peers while Woodford is behind his), as Woodford does not have a mandate to invest mostly ex-UK as Smith does. One fund is not a benchmark for the other. If Kent decides to replace their allocation to Woodford it will be for the Woodford fund failing to meet its objectives as a primarily UK-focused income-generating fund, and not for failing to meet Smith's objectives which are different.

Though the Kent support would be useful (not just because a quarter billion withdrawal is a pain to deal with, but because they are a UK public body and some of their investment information is public record), £250m is a relatively small amount compared to the net withdrawals he has already suffered since the fund's peak fund size.

Yes, I agree with all that. The thing is that if Kent decide to pull out, Woodford will have to make redemptions from his liquid investments rather than the illiquid ones that are getting him into trouble. That will only worsen his problems.

short_butt_sweet

cogito wrote: »

Smith has made 72% for his investors in the last 3 years while Woodford has lost 12%. Smith acknowledges his mistakes (over Dominos Pizza and l'Oreal for example) whilst Woody continues to insist that it is only a matter of time before his investments come good.

Woodford may well be dealt a grievous blow if Kent Council cash in the £250m that they have invested with him.

we're both talking about woodford & smith, but that doesn't read to me as if you're directly contradicting anything i said. perhaps my problem is that i was being too oblique, so let me try to put it more directly ...

active investing - i.e. trying to beat whatever is a suitable benchmark for your style/remit of investing - is difficult. very difficult. mostly because you are competing with a lot of very clever, very well-resourced people, in a zero-sum game. (or after costs, a negative-sum game.) you can be very good at it, and yet still fail (to beat the benchmark), because you're up against people who are even better at it.

my problem with people dissing woodford is not that i think he's so good that his performance is sure to bounce back. i have no idea whether it will. my problem is that it's implausible that he's so bad that we amateurs can easily see what's wrong with it. it's far more likely that he is good at what he does. but so are the people he's up against. so he may or may not be able to beat them in the future.

even investors who are good enough to outperform in the very long term are likely to have long periods of underperformance. and even those who aren't good enough can have long periods of outperformance, before falling down to earth again. (the latter can be very dangerous, because they may be tempted to take big, risky bets in an attempt to keep good performance going. and doubtless there are others who have a long run of good luck and then retire at a fortunate time so we never find out it was mostly good luck.)

smith almost certainly also has some talent for investing, too. but does he have enough talent to outperform in the long run? or is it just favourable recent conditions for his style, plus a bit of luck, plus a bit of self-fulfilling prophecy as other active investors buy into the kind of shares he holds to protect their job security, making them go up more in the short term? i have no idea.

i think you, and many people, are looking at whatever woodford & smith do in the context of their recent records, and that massively colours whether you decide their latest moves make sense. and you're internalized some of smith's ideas about what are a good kind of companies to buy, so you automatically think companies that may fit his style are a good buy, and ones that don't are probably bad. but his kind of companies don't outperform in all periods. and whether they do, on average, in the very long term is debatable. especially since there's a large element of judgement in deciding which companies fit the style. (the stuff he's come up with about how the companies he holds would have done well in previous bear markets is very dubious - full of hindsight bias.)

tl:dr: we just don't know. just buy a multi-asset fund / world equities tracker.

cogito

short_butt_sweet wrote: »

we're both talking about woodford & smith, but that doesn't read to me as if you're directly contradicting anything i said. perhaps my problem is that i was being too oblique, so let me try to put it more directly ...

active investing - i.e. trying to beat whatever is a suitable benchmark for your style/remit of investing - is difficult. very difficult. mostly because you are competing with a lot of very clever, very well-resourced people, in a zero-sum game. (or after costs, a negative-sum game.) you can be very good at it, and yet still fail (to beat the benchmark), because you're up against people who are even better at it.

my problem with people dissing woodford is not that i think he's so good that his performance is sure to bounce back. i have no idea whether it will. my problem is that it's implausible that he's so bad that we amateurs can easily see what's wrong with it. it's far more likely that he is good at what he does. but so are the people he's up against. so he may or may not be able to beat them in the future.

even investors who are good enough to outperform in the very long term are likely to have long periods of underperformance. and even those who aren't good enough can have long periods of outperformance, before falling down to earth again. (the latter can be very dangerous, because they may be tempted to take big, risky bets in an attempt to keep good performance going. and doubtless there are others who have a long run of good luck and then retire at a fortunate time so we never find out it was mostly good luck.)

smith almost certainly also has some talent for investing, too. but does he have enough talent to outperform in the long run? or is it just favourable recent conditions for his style, plus a bit of luck, plus a bit of self-fulfilling prophecy as other active investors buy into the kind of shares he holds to protect their job security, making them go up more in the short term? i have no idea.

i think you, and many people, are looking at whatever woodford & smith do in the context of their recent records, and that massively colours whether you decide their latest moves make sense. and you're internalized some of smith's ideas about what are a good kind of companies to buy, so you automatically think companies that may fit his style are a good buy, and ones that don't are probably bad. but his kind of companies don't outperform in all periods. and whether they do, on average, in the very long term is debatable. especially since there's a large element of judgement in deciding which companies fit the style. (the stuff he's come up with about how the companies he holds would have done well in previous bear markets is very dubious - full of hindsight bias.)

tl:dr: we just don't know. just buy a multi-asset fund / world equities tracker.

Let me declare an interest here. I was an investor in Invesco Perpetual High Income for many years building up over £120,000 in my pension fund which is a lot of money for me. When Woodford set up on his own, I kept half with IP and transferred the rest to Woodford. I make a point of looking under the bonnet of the funds that I invest in and after a couple of years of decent returns, didn’t like his investments in unlisted companies and felt also that he didn’t have a particularly consistent approach. I recall that he was in and out of a couple of banks fairly quickly. Barnett at IP seemed to be following his former boss’s every move so I sold both and for once in my life, got the timing right.

Smith has been outperforming in the long run despite Hargreaves Lansdown's attempts to suggest otherwise. As adviser to the Tullett Prebon pension fund for a number of years before setting up Fundsmith, he produced annual returns of around 14% applying the same investment principles.

When it comes to investing, I take the view that if I can’t explain it to an 8 year old, I won’t invest. Smith explains very clearly why he does what he does whereas Woodford's strategy is beyond my understanding.

I also suspect that Woodford was frustrated at Invesco by his bosses who wouldn’t let him take the kind of risks that he has been doing since setting up on his own. Investing in start up companies in an income fund makes no sense at all to me. To take that a step further, you can think of companies that pay big dividends like tobacco companies as slowly self liquidating as they don’t know what else to do with their profits so income funds are not for me either.

I hope I'm wrong but I suspect that Woodford's fund is likely to fail unless his investments make a miraculous recovery. The ones who will suffer are the small investors who have swallowed Hargreaves Lansdowns 'advice' because they don’t know any better. Woodford will still rake in his management fee regardless.