Woodford Concerns

itwasntme001

AnotherJoe wrote: »

Some great points there.
Perhaps you could also send them to HL

There would be no point as they would just point the finger at Woodford and say "no guarantees in investing, could lose all your wealth, we are just the middle man who just rake in fees at your expense blah blah blah".

Linton

itwasntme001 wrote: »

If you had read on i did say an income fund would be a better benchmark.

Woodford couldnt really be classed as an income fund since from 2015 at least its dividends were less than those from the FTSE100. It certainly wasnt a Global Fund either since it was 80% or more UK. Perhaps the best comparison was with the FTSE AllShare.


That was the main reason I never considered investing in it - it was difficult to see what objectives it satisfied.

itwasntme001

Linton wrote: »

Woodford couldnt really be classed as an income fund since from 2015 at least its dividends were less than those from the FTSE100. It certainly wasnt a Global Fund either since it was 80% or more UK. Perhaps the best comparison was with the FTSE AllShare.


That was the main reason I never considered investing in it - it was difficult to see what objectives it satisfied.

The fact that it has lower dividend yield to FTSE100 does not mean it was not a fund who's main objective was to produce income for the investor in the form of dividends. That was it's main objective along with capital growth. So perhaps the basket of shares held by WEIF met both objectives (in the eyes of Woodford...) compared to blindly buying the FTSE100 and also that the dividends were more reliable overall compared to the FTSE100.


Is there some sort of rule that says a fund needs to have a certain yield to classify itself as an income fund?


And the fact that capital growth was also an objective does not make it immune to Woodford's decision to select those oh so very dodgy scam profitless "companies". You could argue about this all day, but if you have "income" a a main objective and/or "income" in your fund name, investing in anything that is as risky as he had done - and would seriously harm the income objective due to it being an OEIC - is completely unacceptable and anyone who had marketed or advised/recommended WEIF should be ashamed of themselves.

Moe_The_Bartender

bowlhead99 wrote: »

Difficult to pass comment without knowing what 'odd assortment of funds' he and his support team/ outsourced screening firm thought appropriate for you to hold.

Still, if you are going to say "just because I have a high tolerance for risk, doesn't mean you should use an emerging markets fund as part of the portfolio", something is perhaps lost in translation. Emerging EMEA should be no more 'off the table' for a 'high risk tolerance' investor than emerging Asia or Latin America. Whether you hold a single global emerging market fund or employ three managers for three emerging regions and rebalance them, neither approach is a fundamentally flawed choice, if you don't mind having more moving parts in the model.

That particular fund has done ok over the last decade or so, coming out of the last crash better than the IA Emerging Markets sector generally. Held on its own, you would probably say 'not one for widows and orphans', but it wouldn't be held on its own and you were not a widow or orphan, and had a high risk tolerance. Am I missing the point somewhere?

I fully understand the point you are making here. The IFA's fund selection was based on the risk tolerance questionnaire which we completed together at the time (about ten years ago). It was interesting because I recall discussing the GFC with him and saying that I would never invest in banks. The EMEA fund invests in Russian and South African banks. If I wouldn’t invest in a UK bank, why on earth would I put money into a Russian one?

It’s a long time since then and I have since come to the conclusion that investing on a geographical basis makes no sense at all. I can have exposure to these markets through Unilever, Diageo etc. so why invest in companies or countries where corporate governance and the political are two of the biggest risks?

Incidentally, the annualised return of Fidelity EMEA is less than 6% over the last ten years and the ongoing charge is 1.83%. Nothing really to write home about and far inferior to the investments which I selected for myself.

Thrugelmir

Linton wrote: »

Woodford couldnt really be classed as an income fund since from 2015 at least its dividends were less than those from the FTSE100.

For definition purposes.

UK Equity Income
Funds which invest at least 80% in UK equities and which intend to achieve a historic yield on the distributable income in excess of 100% of the FTSE All Share yield at the fund's year end on a 3 year rolling basis and 90% on an annual basis.

and for reference

Global Equity Income
Funds which invest at least 80% of their assets globally in equities. Funds must be diversified by geographic region and intend to achieve a historic yield on the distributable income in excess of 100% of the MSCI World Index yield at the fund’s year end on a 3 year rolling basis and 90% on an annual basis.

itwasntme001

Thrugelmir wrote: »

For definition purposes.



and for reference

So by that definition Woodford stopped being an income fund in 2015. Was the fund marketed as such before 2015 and did it continue to do so?


Even if it was never meant to meet the requirement of an income fund by that definition, his main objective was income and his investment decisions seriously harmed this objective and it was easy to see if one took time to investigate his holdings back in 2017/2018.


Although i understand some people may not be as clued up so would not know but many of these people would have used an IFA who should have been clued up and should have advised to exit Woodford back in 2018. IFAs and HL are both to be blamed for investor losses.

talexuser

I well remember the headlines of Income being reclassified from the Income sector to Investment Association All Companies or Unclassified because of a small fall in dividend. It was not a big deal at the time because performance was good and it has happened before to many funds (If my memory is correct it happened at Invesco too?). The same has happened to my best performing UK Income fund.

Brian65

Brian65 wrote: »

Panorama BBC1 Mon 21 Oct 8.30pm is about Fund Managers including Woodford.

Anyone else see it?
It appears the early 'growth' in Woodford's fund was his own inflated valuations, which increased his fees and sucked in more investors. The programme ended with a camera crew outside Woodford's office, where he ignored their questions and scurried past them away inside without saying a word, like a cowboy roofer on rogue traders.
Edit: Sorry didn't notice a separate thred has started on this programme.

bowlhead99

Brian65 wrote: »

Anyone else see it?
It appears the early 'growth' in Woodford's fund was his own inflated valuations, which increased his fees and sucked in more investors.

I don't think that's really the case. He had a 5 to 10 billion fund which increased its NAV by 25% over the first 18 months (end of 2015) and was up to about 40% after about 3 years (mid 2017), and they were only nudging over the 10% threshold for unquoteds by 2018 when FCA looked at them as their NAV and AUM fell.

The idea that the high percentage growth on billions really came from a few tens of millions of upwards valuations on the unquoteds is somewhat far fetched. Some of the 'notorious' upwards valuations such as IH did not happen until 2018, so it seems unlikely that little old ladies invested their life savings in 2016 in a fast growing fund which was only growing fast due to it rapidly marking up things like IH.

The programme ended with a camera crew outside Woodford's office, where he ignored their questions and scurried past them away inside without saying a word, like a cowboy roofer on rogue traders.

Hmm, analysts earlier in our programme are saying that some time ago it could be difficult to get a meeting with him even if you are considering investing £200m in his products, so we think the best way to get an interview is to go to his office in the dark and ambush him unannounced with a film crew as he gets out of his car to ask whether he overvalued companies in his fund and rant at him about 'what would you say to the people who put money in your fund and can't now get at it' as he walks past.

The result: presenter gives a strong sigh of exasperation for the cameras as unsurprisingly Neil doesn't choose to engage.

The guy has done a carefully crafted press release saying what he wants to say to the people who put money in the fund and can't get at it, and again when the redemption freeze was extended. So, what serious 'new insight' does the chap from Panorama think he will get by rocking up a some time later for an unscheduled ambush and hollering at him as he goes into his offce?

The visit was after the fund was gated but before Link delivered the news that the fund should not reopen and fired him. The reporter ended his segment with "That was the last time he went to work. One hour after we approached him, Neil Woodford was sacked by the administrator of the fund. All his funds have now been closed down".

That's a considerable amount of spin / artistic licence and does little to inform investors in the products about what is going on. So there are now probably some worried little old ladies with some 'savings' in WIF or WPCT who watched the show and think that the manager has gone and their fund is closed down and maybe they lost all their money because the programme was talking about investors losing hundreds of pounds every day.

In reality Woodford is still 'going to work' and employing staff at his management firm, continuing to discharge his obligations to WIF and WPCT which have not been closed down. WIF is suspended to avoid a run on it, with the assets managed by Woodford who is serving notice, and Link are looking at options. The daily reported NAV of WIF, still managed by Woodford, is 3.5% higher than it was when suspended a week ago. Meanwhile the WPCT board are looking at alternative management groups to put something in place during the three month notice period given to them by Woodford. As discussed upthread, WPCT investors who hold out may eventually get more or less than the current market price.

Brian65

bowlhead99 wrote: »

I don't think that's really the case. He had a 5 to 10 billion fund which increased its NAV by 25% over the first 18 months (end of 2015) and was up to about 40% after about 3 years (mid 2017), and they were only nudging over the 10% threshold for unquoteds by 2018 when FCA looked at them as their NAV and AUM fell.

The idea that the high percentage growth on billions really came from a few tens of millions of upwards valuations on the unquoteds is somewhat far fetched. Some of the 'notorious' upwards valuations such as IH did not happen until 2018, so it seems unlikely that little old ladies invested their life savings in 2016 in a fast growing fund which was only growing fast due to it rapidly marking up things like IH.

Hmm, analysts earlier in our programme are saying that some time ago it could be difficult to get a meeting with him even if you are considering investing £200m in his products, so we think the best way to get an interview is to go to his office in the dark and ambush him unannounced with a film crew as he gets out of his car to ask whether he overvalued companies in his fund and rant at him about 'what would you say to the people who put money in your fund and can't now get at it' as he walks past.

The result: presenter gives a strong sigh of exasperation for the cameras as unsurprisingly Neil doesn't choose to engage.

The guy has done a carefully crafted press release saying what he wants to say to the people who put money in the fund and can't get at it, and again when the redemption freeze was extended. So, what serious 'new insight' does the chap from Panorama think he will get by rocking up a some time later for an unscheduled ambush and hollering at him as he goes into his offce?

The visit was after the fund was gated but before Link delivered the news that the fund should not reopen and fired him. The reporter ended his segment with "That was the last time he went to work. One hour after we approached him, Neil Woodford was sacked by the administrator of the fund. All his funds have now been closed down".

That's a considerable amount of spin / artistic licence and does little to inform investors in the products about what is going on. So there are now probably some worried little old ladies with some 'savings' in WIF or WPCT who watched the show and think that the manager has gone and their fund is closed down and maybe they lost all their money because the programme was talking about investors losing hundreds of pounds every day.

In reality Woodford is still 'going to work' and employing staff at his management firm, continuing to discharge his obligations to WIF and WPCT which have not been closed down. WIF is suspended to avoid a run on it, with the assets managed by Woodford who is serving notice, and Link are looking at options. The daily reported NAV of WIF, still managed by Woodford, is 3.5% higher than it was when suspended a week ago. Meanwhile the WPCT board are looking at alternative management groups to put something in place during the three month notice period given to them by Woodford. As discussed upthread, WPCT investors who hold out may eventually get more or less than the current market price.

Sorry yes I meantthe inflated asset value of the trust not fund and should have said so.

One might have hoped he would have had an update for his worried punters when the BBC crew were there. Hard to imagine Woodford couldn't be bothered to talk to someone with £250 million to invest - rather he was evading answering their awkward questions - again.