Woodford Concerns

Sailtheworld

Prism wrote: »

Its harder than you make out though I would say. I don't use an IFA, but I do use some managed funds. I can compare against the world index but over a few years it really doesn't tell me much. I won't really know until after possibly 10-15 years if what I have chosen will do what I want it to do, which is help me retire early. I really need to see how it does during a recession but we haven't had one in the period I have been monitoring.

I would say its the same for an IFA approach - its really hard to tell how well its doing over a short time frame, but its also asking a lot to wait for 10+ years to find out. I'm not sure comparing performance vs an index over a 3 or even 5 year period helps much.

It has to be worth the effort to try and monitor the performance of people you employ surely? The wrong (or right) decision can make a huge difference over a decade.

You offer strong opinions on here frequently - how do you back them up if you're effectively saying we won't know if you're right or wrong for a decade or two. That would make them look like untested guesswork.

I don't buy into the idea that you need a good recession to test the mettle of a fund manager either. Sounds like a jam tomorrow sales pitch.

Prism wrote: »

If we take Woodford (since this is a thread about him), its not the performance that would worry me initially but the makeup of the funds holdings. Thats what I would want an explanation of from an IFA over the last few years.

You looked at the holdings but don't forget that puts you at the extreme of the bell curve.

The average punter does no due diligence other than read articles and advertorials about star managers and the flavour of the month. When one of these people see an IFA it's the easiest sell in the World (because they've already identified they're willing to pay a surcharge for the same thing just by walking into their office). Nobody, ever, put an IFA on the spot by asking them to justify the holdings of Neil Woodford.

gadgetmind

bowlhead99 wrote: »

I think you're well entitled to ask why the IFA felt that the fund was still appropriate for your portfolio

Maybe, but they got you to do the risk questionnaire, fed the outcome to someone else, computer said XYZ Equity Income, and there you go. They can't explain the reasoning as they don't know it. That doesn't prevent them woffling, but woffle is cheap. Or not.

I used to use IFAs, and this is what they did, and with their fees and fund fees, it was a rough ride. I took the reigns in my 40s (a little too late, I was busy, there you go), ditched IFAs, learned the rules, read some books on portfolio theory, went almost totally passive, and retired on pension+ISA+etc at age 54.

xylophone

I used to use IFAs, and this is what they did, and with their fees and fund fees, it was a rough ride. I took the reigns in my 40s (a little too late, I was busy, there you go),

From a Jack to a King?:)

Prism

Sailtheworld wrote: »

It has to be worth the effort to try and monitor the performance of people you employ surely? The wrong (or right) decision can make a huge difference over a decade.

It is but how to actually do that, especially for someone with little experience or interest in the stock market. If you told an IFA that you were expecting superior gains over a three year period then are you not putting pressure on the IFA to take more risk to try and make those gains. This agreement can surely only be based on trust - a trust in something you cannot test until the time is up. How you build that trust is the difficult part.

The same should be said for active fund managers - to a lesser degree maybe. Some of my funds have underperformed various benchmarks over an extended period. I have to decide if I trust the manager (by what they say and do) to continue for the long term. Comparing the fund performance over a few years it not the only measure, though certainly hard to ignore.

Its a tricky one. What I can say in relation to this thread is that several years ago I watched several videos of Woodford and read up as much as I could about his investment style. I decided pretty quickly that I didn't trust him to make money for me. In fact he became a manager I never looked back at.

The average punter does no due diligence other than read articles and advertorials about star managers and the flavour of the month. When one of these people see an IFA it's the easiest sell in the World (because they've already identified they're willing to pay a surcharge for the same thing just by walking into their office). Nobody, ever, put an IFA on the spot by asking them to justify the holdings of Neil Woodford.

I couldn't comment on what reasons some IFAs pushed this fund, or in fact many active funds. I get the feeling though that much of the investment in Woodford at least in the later days was self selected by those people that you rightly point out should not really be self selecting.

Sailtheworld

Prism wrote: »

I couldn't comment on what reasons some IFAs pushed this fund, or in fact many active funds. I get the feeling though that much of the investment in Woodford at least in the later days was self selected by those people that you rightly point out should not really be self selecting.

I think it was raised earlier. You don't get fired buying IBM.

There are hundreds of funds out there all raking in fees but when you look at the fund holdings they're, in the main, expensive tracker like funds containing BP, Astrazeneca et al.

It's a generalisation but I think, in the main, the fund industry is aimed at people who buy premium unleaded i.e. those willing to pay a little more for effectively the same thing.

jamei305

Schroders are to pick up WPCT and run with it, with added fees. I wonder what they will do with Industrial Heat.

AnotherJoe

jamei305 wrote: »

Schroders are to pick up WPCT and run with it, with added fees. I wonder what they will do with Industrial Heat.

Well, even though winters coming, they won't be using its technology to heat their offices, that's for sure

AnotherJoe

I see the Greater Fools are out buying today. NW created a pile of poo, people sold it, someone else bought the pile of poo, and all of a sudden it's coming up roses ? Maybe Schroeders should take this moment to flog IH before the penny drops.

Sailtheworld

AnotherJoe wrote: »

I see the Greater Fools are out buying today. NW created a pile of poo, people sold it, someone else bought the pile of poo, and all of a sudden it's coming up roses ? Maybe Schroeders should take this moment to flog IH before the penny drops.

I wouldn't put my money in IH but Woodford didn't make a secret of his fund's investment so I assume people buying his fund were really keen to get in at ground level on the next big thing.

That assumption is based on how Woodford investors are taking it on the chin obviously realising not every investment can be the next Microsoft or Google.

I didn't watch the TV show but I imagine it got a bit boring with people saying 'you win some; you lose some'.

bowlhead99

Sailtheworld wrote: »

It's a generalisation but I think, in the main, the fund industry is aimed at people who buy premium unleaded i.e. those willing to pay a little more for effectively the same thing.

x% more per litre at the pump, y% more miles per gallon if your car is designed to adjust for it.

AnotherJoe wrote: »

I see the Greater Fools are out buying today. NW created a pile of poo, people sold it, someone else bought the pile of poo, and all of a sudden it's coming up roses ? Maybe Schroeders should take this moment to flog IH before the penny drops.

Direct private equity is a pretty tiny part of Schroeders's business and generally the PE (ex-Adveq) part of their business invests in fund-of-fund situations or in coinvestments alongside other lead managers. But as it's not all unquoted and the unquoted holdings generally aren't control positions I suppose it makes sense that the appointee isn't a pure private equity buyouts business.

As a holder I'm pleased the performance fee structure isn't too aggressive but perhaps when they get their feet under the desk they will wish they had asked for more

The 'coming up roses' is often seen on stocks where there is a short term issue (manager with poor reputation quits or is fired with no immediate replacement) that gets resolved (new person appointed). There is still the overhang of WEIF's shares in WPCT needing to be dumped in the market. If a bit of confidence can be restored to the price first, perhaps they can be placed away at something closer to eventual NAV (whatever that may be), but unlikely to happen any time soon.