Woodford Concerns

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.

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.