Woodford Concerns

elona

Blast!

I was going to contact them to cash in some of my ISA's. Looks as if I left it too late , at least for the fund which has suspended trading. Will have to phone HL in the next day or two and see if I can rescue anything.

As my late husband and I chose the funds together I had kept them partly out of sentiment and loyalty so I am now kicking myself.

arnoldy

Well HL have come out of this tarnished and up to their neck in this sordid mess. Why did they put it on wealth 50? Why did they get themselves so pregnant with their own find of funds investing in W E I? Conflict of interest if ever there was one. Sorry I'm trusting AJBell over HL after this cats cradle of concerns. As ever regulator has disappeared off pitch and won't slap HL/Woodford wrist.

londoninvestor

Wildsound wrote: »

"Hargreaves Lansdown head of research Mark Dampier told Citywire the fund would be removed from the broker's Wealth 50 buy list."

The head of the stables assured us that they'd be shutting the door really pretty soon now.

dividendhero

Jonah01 wrote: »

My concern and my main question to the people in the know here is can funds completely tank. By this I mean is it possibly that an investor could lose all of the money they have invested in fund? Can the fund go bust?

In theory it's possible for an open ended fund to go bust, but highly unlikely. Worst case scenario for a fund is that it's liquidated and the proceeds passed to investors. In the case of large caps like Diageo the effect will be minimal, but the sale of a large number of shares in small cap companies will depress their prices..

londoninvestor

dividendhero wrote: »

In theory it's possible for an open ended fund to go bust, but highly unlikely.

Yes - possible for ITs if they have gearing and the assets become insufficient to cover the debt, but hugely unlikely for an open-ended fund.

dividendhero

Not a word of this on HL's or woodfords website :mad:

poppy10_2

Wildsound wrote: »

"Hargreaves Lansdown head of research Mark Dampier told Citywire the fund would be removed from the broker's Wealth 50 buy list."

cogito wrote: »

The reputational damage will not be small.

fun4everyone wrote: »

Live scenes at Hargreaves Lansdown

It's funny in a way, but deadly serious for Hargreaves Landsown. When funds have blown up in the past, IFAs and others have been held liable for mis-selling and forced to pay massive amounts of compensation. As a platform HL had huge sway, and they kept Woodford in their top 50 list despite knowing his fund was crap purely because of the massive fees they were creaming off. You can see in archives of their recommendation page that they were describing his fund as a "defensive" one. Publically available portfolio information showed that it was nearly 20% invested in highly speculative illiquid early stage companies, had a 10% overdraft (unheard of in an open ended fund), and that the tenth biggest holding was Industrial Heat, a company that claimed to have broken the laws of physics by harnessing cold nuclear fusion, which is widely known to be impossible to replicate.

There is absolutely no way HL should have been recommending this to naive investors. They were questioned repeatedly about their recommendation in the media over the last few years, as it became clear Woodford was moving far away from his original equity income remit, yet never had any justification for sticking by him other than "but look at his long term record." They only eventually removed it when they were forced to by the fund literally shutting down. Not good enough and they will surely be held liable for mis-selling in due course

fun4everyone

Voyager2002 wrote: »

I hope this will not affect his Patient Capital trust.

Most of this is just speculation on my part. The facts are that the WEIF is directly invested in WPCT, and it is now a forced seller of liquid holdings. It's also a fact that a lot of the larger sized holdings that NW bought are involved in all of Woodford's funds .

My own personal opinion on what that means is that it is not good for the WPC trust. Unwinding what has to be unwound of the joint holdings will cause drops for all the funds. WEIF might be a forced seller of WPCT. I can see WPCT opening massively lower tomorrow.

Is WPCT geared? I believe it is. The bank might get worried now and start to call in loans. Of course, I do not know how it works in reality for WPCT. They would have to sell stuff to repay the loan if there is one that's called in.

If I remember correctly, WPCT cannot charge a fee unless it has made 10% annualised. It's so far off that I can't see it ever getting there. My opinion is eventually it will be wound up because of this. WEIF dying could accelerate that happening.

fun4everyone

dividendhero wrote: »

Not a word of this on HL's or woodfords website :mad:

Massive banner with a link to a statement is the first thing I see on Woodfords website, and has been since the news broke.

itwasntme001

arnoldy wrote: »

Well HL have come out of this tarnished and up to their neck in this sordid mess. Why did they put it on wealth 50? Why did they get themselves so pregnant with their own find of funds investing in W E I? Conflict of interest if ever there was one. Sorry I'm trusting AJBell over HL after this cats cradle of concerns. As ever regulator has disappeared off pitch and won't slap HL/Woodford wrist.

When it comes to money, don't trust anyone.