Woodford Concerns

Malthusian

arnoldy wrote: »

In which case some of the Hargreaves Landsdown Multi manager funds are in serious trouble. Some of these funds have 12%* invested in the gated Woodford fund and so you are looking at a 6% loss if you hold on the 50% train wreck at the end.

A 6% loss will be lost in the noise in the long term. It will hurt but "serious trouble" is going a bit far.

If you're in the HL MM Income & Growth Fund (the one with 12% in WEI) you're spending roughly 1.7% every year on unnecessary additional charges. Over a five year timeframe, that will lose you significantly more than HL's bad decision on WEI.

The WEI debacle has made it (even more) likely that HL MM funds will underperform the market, but anyone who cared about that wouldn't hold HL MM funds in the first place.

What could hurt significantly more is if large numbers of HL MM holders withdrew from the fund, which (assuming net outflows) would require HL to cash in liquid assets to meet withdrawals, which would mean the suspended WEI fund would make up a larger percentage of the fund.

In the extreme scenario, the HL MM fund might have to suspend to withdrawals as well, and only meet redemptions once WEI could be liquidated one way or another.

(This would ensure that everyone selling HL MM got their fair share of liquid assets and WEI proceeds. Currently any withdrawals from HL MM are based on the fictitious price of WEI as at the time of its suspension, and this fictitiously priced withdrawal is funded by selling from the liquid assets.)

However if a rush for the exits in HL MM funds was going to happen, you would assume it would have happened by now. Most HL MM holders are oblivious or don't care. Or they pay HL for advice, who naturally will tell them to hold on.

ColdIron

itwasntme001 wrote: »

Yeh the trade date was before the ex-div date. Are you sure settlement is not important? I also read the record date is the most important, but no idea what it is for woodford.

Might be worth a read
https://www.fool.com/knowledge-center/does-the-settlement-date-have-to-occur-before-the.aspx

itwasntme001

ColdIron wrote: »

Might be worth a read
https://www.fool.com/knowledge-center/does-the-settlement-date-have-to-occur-before-the.aspx

So what really matters is the record date. For simple single stock it would be easy as its just 2 days after ex-div, but for a OEIC i am not sure.

itwasntme001

Also for OEICs you need to consider equalization as well...

itwasntme001

agh i am never buying INC OEIC funds ever again!

bowlhead99

Malthusian wrote: »

Currently any withdrawals from HL MM are based on the fictitious price of WEI as at the time of its suspension

It's not the case that current HL MM withdrawals are based on the price of WEI at the time of its suspension. They are based on the NAV of WEI as of now, as published daily - which is lower than the price at the time of its suspension.

itwasntme001 wrote: »

If it helps it is the C (inc) class of the fund. It shows in the transaction history that the fund was bought in 2016 and the description being "CF WOOD EQ INC C Del....". But no dividends received for this fund ever since i bought until it was sold in 2018.

Are you absolutely sure it is the Income class and not the Accumulating class?

"WOOD EQ INC C" stands for Woodford Equity Income Fund, Class C. It doesn't say it is the income class or the accumulation class. It is saying 'INC' as part of an abbreviation of the fund's name. Did it actually say income class or distribution class anywhere on the contract note or in the holdings list when you held it ? Because if not, the fact you haven't received any dividends while you did receive dividends for other Inc funds you hold, may imply that actually you just bought the Acc version by mistake.

itwasntme001 wrote: »

Yeh the trade date was before the ex-div date.

If the trade date is before the ex-div date when buying, you get the dividend. Ex-div is the date on which an accepted order would be for the fund share 'ex' (without) the right to the dividend.

When you are selling, if you sell before the ex div date you will sell the right to the dividend and not keep it for yourself. If you sell after the ex div date, you sell 'ex' (without) the right to the dividend, and keep the dividend for yourself.

Are you sure settlement is not important? I also read the record date is the most important, but no idea what it is for woodford.

Technically the 'record date' is the most important because on the record date, they look at the shareholder records (the share register) and see who is a shareholder, and the people who are shareholders at that point will qualify for the dividends.

However: in order to get on the shareholder register in time for the record date, you need to have your order accepted by the fund manager before the published ex-div date. The ex-div date is earlier than the record date, and is the date at which it would no longer be possible to order shares and still make it on to the record in time for the record date. The reason for the time lag is because it takes a few days between placing the order and settling the order. When the order is settled your cash goes into the fund's bank account and your name goes on the record. For your convenience, the ex-div dates are published, so you don't need to worry about how long it takes to settle.

If you order shares on or after the ex-div date you will be dealing ex (without) the right to the dividend because your purchase will not settle in time for you to become a shareholder of record n time for the record date. But you said your trade date was before the ex div date, so you will definitely qualify - unless the order was somehow accepted by the fund manager on a weekend and all the days ahead of the ex div date were all weekends or public holidays, meaning you actually bought on ex-div date, which seems highly unlikely.

itwasntme001 wrote: »

So what really matters is the record date. For simple single stock it would be easy as its just 2 days after ex-div, but for a OEIC i am not sure.

See above - you can ignore the record date as long as you know when the ex-div date is.

itwasntme001 wrote: »

Also for OEICs you need to consider equalization as well...

They tell you the equalisation on your tax voucher that you get with the distribution, so it's not too hard to look out for it. Or on a consolidated tax certificate provided by the fund platform at the end of the tax year which amalgamates the income from your various holdings.

itwasntme001 wrote: »

agh i am never buying INC OEIC funds ever again!

If you buy them inside a tax wrapper (e.g. ISA or SIPP) it is not an issue anyway because you don't need to track your income tax or capital gains tax.

If you are buying them outside a tax wrapper, so that you *do* need to track the income and investment cost, many people actually find it more convenient to buy the Inc versions. That's because the cashflow received is a useful trigger to do your tax accounting, rather than in the Acc situation where the fund just internally reinvests the dividends into more assets within the fund without you noticing, and then you sometimes need to wait until year end to find out from your platform how much all that internal reinvestment amounted to, for both your income tax and your CGT calcs.

itwasntme001

Good spot Bowlhead - yes having a deeper look into it, it was the ACC funds i bought afterall! The transaction history is a bit misleading in the description as you mentioned hence the confusion. I always thought it was strange i would let 2k in dividends slip that easily.


So yeh i feel a bit silly about the whole thing but at least i am done with woodford.

AnotherJoe

itwasntme001 wrote: »

Good spot Bowlhead - yes having a deeper look into it, it was the ACC funds i bought afterall! The transaction history is a bit misleading in the description as you mentioned hence the confusion. I always thought it was strange i would let 2k in dividends slip that easily.

So yeh i feel a bit silly about the whole thing but at least i am done with woodford.

Maybe that's where Woodford went wrong.
"Cold Fusion? It's technology? I thought I'd bought a fusion restaurant chain specialising in salads. Dammit".

dividendhero

AnotherJoe wrote: »

Maybe that's where Woodford went wrong.
"Cold Fusion? It's technology? I thought I'd bought a fusion restaurant chain specialising in salads. Dammit".

Well he did have Chris Grayling on board as his scientific advisor, so maybe so

AnotherJoe

dividendhero wrote: »

Well he did have Chris Grayling on board as his scientific advisor, so maybe so

O.M.G. :eek: Seriously? Wow.



Reminds me of the comment in a Theranos* documentary where they refer to the board which is stuffed full of people like Kissinger, Schultz (ex US sec of State), Mattis (retired general), Roughhead (retired Admiral) and someone quipped "the board was well placed to advise on how to invade Vietnam , less so than on if this technology could work"





* seriously fraudulent multi $Bn blood testing company