Woodford Concerns

gadgetmind

dividendhero wrote: »

or will they just hang their customers out to dry?

Yes, as will Woodford. They take chances with investors' money, and skim some off the top whether they win or lose, so they will always have the yachts.

I have been passive (and totally DIY) since before the dot com crash, and am 100% happy with this position.

OldMusicGuy

dunstonh wrote: »

Income focus is the lower risk version of the fund without the illiquid assets. There is no reason to suspend it as the assets can be traded with only settlement being the delay.

I invested in the Income Focus at launch for three reasons:

- I wanted an actively managed income-focused fund as part of my retirement portfolio
- I liked the strategy of the fund with its focus on quoted funds with the ability to invest globally
- I fell for some of the HL marketing

I sold out after about 9 months because it wasn't doing that well and when he started taking big positions in companies like PurpleBricks I realised it was not a fund I wanted to be with. I would not hold PB myself and if I was disagreeing with my stock picker to whom I was paying a premium, what's the point of having an active fund?

This convinced me to go all global multi-asset and drop active funds. The performance of PurpleBricks (biggest negative performer in the portfolio) and the fund overall made me very happy with that decision.

While the IF fund is lower risk, I'm glad my money isn't in it anymore.

masonic

bowlhead99 wrote: »

There was some trading at 63p ish maybe about 8.15-8.20 and I wondered if it would go lower... but by the time I got around to going for it, it had already gone back up 5% or so. You never catch the bottom! It's currently over 70p now.

I got a quote of 61.Xp, but chickened out in the end.

Thrugelmir

OldMusicGuy wrote: »

I sold out after about 9 months because it wasn't doing that well and when he started taking big positions in companies like PurpleBricks I realised it was not a fund I wanted to be with. I would not hold PB myself and if I was disagreeing with my stock picker to whom I was paying a premium, what's the point of having an active fund?

Without opinions there'd be no active markets.

londoninvestor

Malthusian wrote: »

The chance of them breaking exactly even is nil. You could however define "breaking even" as "losing or winning a small amount that puts you within the middle 33%".

That aside, the "lucky rat" theory is completely correct. When I first saw it, it involved getting 1,000 lab rats to pick stocks by putting a button in their cage wired to a stock ticker. Then you discard the ones that do badly. As you say, eventually you will be left with one that has never lost in 17 straight years. You'll also have a few rats that are still geniuses because they only had one bad year and 16 straight years.

The caveat is that you have to ensure the button has a lock-out delay on it, otherwise the rats become day-traders and will whittle the fund down to zero. As long as all the rats are churning stocks infrequently enough to capture the long-term growth in the market, then some will start outperforming and if you started with enough rats, eventually you'll have a Woodford.

Yes - and getting onto a bit of a tangent here - the case for investing in active funds can't only be "look at these funds that have beaten the market". It has to be "look at this robust process which, without the benefit of hindsight, reliably picks funds that will beat the market".

londoninvestor

gadgetmind wrote: »

2) If you go for conviction, and put it all on a star manager who does the same, then things will be great until they aren't. Reversion to mean is real, "hot hands" are a myth.

Even more of a tangent... while it remains true that we're humanly too prone to see patterns where actually there's just randomness, the original "no such thing as a hot hand" research accidentally overstated its case by missing some statistical subtleties.

https://www.thecut.com/2016/08/how-researchers-discovered-the-basketball-hot-hand.html

londoninvestor

masonic wrote: »

Unlike the OEIC, this one is doing what it says on the tin, so I can't see the board taking action in the short term. The trust doesn't require a periodic continuation vote to avoid wind-up either, so most likely it will limp along as WEIF disposes of its position in the fund.

The equity trade between the funds was carried out with WEIF buying shares in WPCT at NAV, when the fund was trading at a significant discount, so the trust probably did quite well out of that. If WEIF now needs to sell at market price, that initial purchase will certainly appear to be a significant error in judgement.

Both fair points. WPCT certainly can't be knocked for holding lots of small caps, because that's what it's for!

I do wonder if (even in return for a premium to market value) the stocks that WEIF wanted to offload were a good deal for WPCT - we'll see.

I hold a little bit bought after the initial hype cooled off. Not material to my portfolio, and no need for me to be a distressed seller, so it will be interesting to watch.

fun4everyone

FT reporting Hargreaves actually promised Woodford assets would be channeled into his funds if he gave them a reduced fee

Mr Woodford also benefited from the deal, by ensuring any fee cuts were met with a promise of assets funnelled into his funds

https://www.ft.com/content/cf332cf4-86d8-11e9-a028-86cea8523dc2

All of their multi manager fund of funds have Woodford funds in them, some with huge weightings.

Thrugelmir

londoninvestor wrote: »

Yes - and getting onto a bit of a tangent here - the case for investing in active funds can't only be "look at these funds that have beaten the market". It has to be "look at this robust process which, without the benefit of hindsight, reliably picks funds that will beat the market".

Investors will have different time frames. Investing in a contrarian manner may require considerable patience. As you'll need to wait for others to see the value on offer.

arnoldy

How can the HL 'Fund of Funds' keep trading? They have huge positions in Woodford and the value of the Woodford funds is unknown - the required fire sale will be painful. So sellers now of the HL funds will take an unfair slice of the fund if its based on the last price for Woodford Equity Income at suspension? Surely the regulator has to get involved? Its going to take years to regain trust in HL. An immediate and fullsome apology would be the start of that long road to redemption and rehabilitation.