Woodford Concerns

Brian65

bowlhead99 wrote: »

That seems overly harsh, I can't see that is blaming anyone else for his lack of foresight.

He is pointing out the problem famously described by Donald Rumsfeld as the "unknown unknowns" - the things we don't know that we don't know.

He thought he knew what he did and didn't know about Marconi's prospects but didn't realise he should have known more about the capital or financing structure and the reliance on debt and the power of lenders or bond holders.

You are right that it may of course be best for him to stick to index trackers which are relatively easy to understand and lower risk than individual companies, which is presumably why he does do that now. But I don't see him 'blaming others' for his own misplaced enthusiasm.

Yes it destroyed my confidence in my ability to pick individual shares, and since the only funds I knew of were hideously over priced like St James Place, I was scared away from putting most of my money in the stock market until the emergence of market disruptors like Vanguard, which have made wide diversification easy and cheap.

ericthelobster

I've lost - or will have lost - a substantial amount of money currently invested in Woodford funds. My investments are well enough diversified for it not to break me but I am still one very unhappy cat.

I don't pretend to know much about the markets, and therefore, although I'm well aware of what most people think of IFAs, I pay one for a fully managed service to look after my investments. Although he has recommended other funds which have performed extremely well, as far as I 'm concerned the reason I pay for a managed service is to avoid stuff like this happening to me. I have not yet addressed this with the IFA - once the Woodford fund had been locked it was obviously too late for any remedial action anyway. Nevertheless I will be expecting some answers when I met him next week. Fair?

What specific questions should I be asking him?

NeilCr

ericthelobster wrote: »

I've lost - or will have lost - a substantial amount of money currently invested in Woodford funds. My investments are well enough diversified for it not to break me but I am still one very unhappy cat.

I don't pretend to know much about the markets, and therefore, although I'm well aware of what most people think of IFAs, I pay one for a fully managed service to look after my investments. Although he has recommended other funds which have performed extremely well, as far as I 'm concerned the reason I pay for a managed service is to avoid stuff like this happening to me. I have not yet addressed this with the IFA - once the Woodford fund had been locked it was obviously too late for any remedial action anyway. Nevertheless I will be expecting some answers when I met him next week. Fair?

What specific questions should I be asking him?

I don't know whether this helps or not.

First up I have never been invested in Woodford. I do have an IFA though (who I happen to think is rather good). At our annual review meeting in the Spring I asked her about Woodford out of interest. She said that her firm had been advising their clients to take their funds out of Woodford for the preceding twelve months.

I am not saying this to big her (or IFAs) up as I am sure there are people on here that were saying the same. But, perhaps, you could ask your guy why others "saw this coming" and he didn't?

AnotherJoe

What % did you lose, which fund(s) were you in? How has your whole portfolio done over the past 1,2,3 years?

You could read this for some differing views
https://portfolio-adviser.com/advisers-anticipating-woodford-comeback-were-kidding-themselves/

You'll have to make your mind up whether the good your IFA did is outweighed by the bad. Personally I think the writing was on the wall a long time ago but the fact is that no one can be right 100%. Did you ever discuss this with your IFA a year or two ago and ask why you weren't getting out? Maybe it's time for you to be getting more hands on an DIY you won't necessarily avoid losses but you won't have IFA costs on top. At least, perhaps start looking in more detail at what you've got and what its doing to see if you coudl DIY.

Linton

ericthelobster wrote: »

I've lost - or will have lost - a substantial amount of money currently invested in Woodford funds. My investments are well enough diversified for it not to break me but I am still one very unhappy cat.

I don't pretend to know much about the markets, and therefore, although I'm well aware of what most people think of IFAs, I pay one for a fully managed service to look after my investments. Although he has recommended other funds which have performed extremely well, as far as I 'm concerned the reason I pay for a managed service is to avoid stuff like this happening to me. I have not yet addressed this with the IFA - once the Woodford fund had been locked it was obviously too late for any remedial action anyway. Nevertheless I will be expecting some answers when I met him next week. Fair?

What specific questions should I be asking him?

Couple of points first...
1) Dont take what you read on this forum as being what most people think. It tends to attract people who are keen on managing their own finances and believe that everyone else should do the same without the help of professionals. There are many forums covering many topics like this.
2) Dont be too hard on your IFA - its a bit like asking someone for the best route for a cross country drive and then blaming them if you get held up for hours because of a car crash. Woodford was a one off and the only example of its type I can think of in my past 20 years of investing. Of course the IFA could have could have got out of Woodford earlier but that could be said of many potential disasters, most of which did not actually happen. I would have one main area of concern - was the % Woodford unjustifiably high and what was its purpose in the portfolio in the first place.



However the important thing now is the future, not the past. You cant change the past. I suggest you discuss the following topics with your IFA:
- Given the collapse of Woodford are you still on target to meet your objectives?
- If you are, how should the portfolio be rebalanced?
- If you are not on target what should you do:
-- change your objectives? What objectives would now be realistic?
-- become less cautious with the aim of larger returns?
-- if you are currently making contributions to your investments should you increase them?

Sailtheworld

ericthelobster wrote: »

What specific questions should I be asking him?

I know you want to be hands off but before the meeting you should calculate your investment return and compare that to the return on a World Equity tracker.

Hopefully you're ahead but you might want to ask what additional risk you're being asked to take to achieve this. If you're behind you might wish to double-check why you've decided to pick him to pick fund managers on your behalf.

Sailtheworld

Linton wrote: »

Woodford was a one off and the only example of its type I can think of in my past 20 years of investing.

For fund managers under-performance is the norm. Woodford is only a one-off in that we don't usually get such a spectacular demonstration.

The chap who lost money on Woodford is reliant on an awful lot of good decisions. First he's had to pick a good IFA. Then he's got to hope the chosen IFA has a knack for picking funds. Then he's got to hope the fund managers aren't like most and can pick stocks to achieve a return (after fees) ahead of the benchmark. It all sounds very unlikely.

Prism

Sailtheworld wrote: »

I know you want to be hands off but before the meeting you should calculate your investment return and compare that to the return on a World Equity tracker.

Hopefully you're ahead but you might want to ask what additional risk you're being asked to take to achieve this. If you're behind you might wish to double-check why you've decided to pick him to pick fund managers on your behalf.

That only works if you are 100% equities - more difficult when including other sectors like bonds and property. Its also only meaningful after we have had a full cycle including a crash or downturn. Many managed funds are set up to protect during those events and will not show their true worth until that happens.

gadgetmind

Prism wrote: »

That only works if you are 100% equities - more difficult when including other sectors like bonds and property.

You can compare against a Vanguard Lifestrategy, but these haven't been running very long.

Many managed funds are set up to protect during those events and will not show their true worth until that happens.

Yes, and I do hold some investment trusts with that mandate, but the under-performance during the good times can test your patience.

gadgetmind

Sailtheworld wrote: »

Then he's got to hope the chosen IFA has a knack for picking funds.

Most IFAs don't even try and do this and outsource to companies that construct a portfolio for them.

And even if an IFA did choose the funds, what does adding another layer of management gain?