Woodford Concerns

Prism

Interesting article on liquidity by Lindsell Train
https://www.lindselltrain.com/~/media/Files/L/Lindsell-Train-V2/investment-insights/2019/Reflections%20on%20Liquidity%20and%20Capacity%20-%20May%202019.pdf

dividendhero

Beenie wrote: »

We attended a very interesting seminar at lunch time. It was billed as Hargreaves Lansdown Investment in Retirement, and we did indeed get an excellent presentation from one of their staffers. However, the beginning of the meeting was entirely taken up with Woodford questions. I think they are back-pedalling to cover their embarrassment as we were told that they knew Woodford was performing badly two years ago but couldn't take him off the Wealth 50 list as it would have spooked the market and we would have the situation we have now (with suspended dealing) but two years earlier. I didn't know about Terry Smith's comment that you paid to be on the list, and HL certainly didn't mention it. They have come out of this badly tainted imo.

Thus far HL seem to have been very complacent. On their website, amongst the usual "best fund for cat" stuff, there's a piece about Woodford - message seems to be similar to saying that Doctor Shipman was a good GP if you were under 65. :mad:

Would have expected much more from HL, they're a £10bn company with a good reputation - they could announce that they're taking over Woodford investments. This would bolster their reputation and halt the slide in their own share price :money:

talexuser

Filo25 wrote: »

To be fair unlike Woodford he has the recent track record to back that up

But Woodford had a great record till July 17. Timing is everything, no active fund goes up forever without a fall somewhere along the line, nobody can say what will happen to Train or Smith tomorrow (I hold both)

dividendhero

talexuser wrote: »

But Woodford had a great record till July 17. Timing is everything, no active fund goes up forever without a fall somewhere along the line, nobody can say what will happen to Train or Smith tomorrow (I hold both)

I'm quite happy with a degree of volatility and under performance at times, I hold Smith myself and expect he'll experience this at some point. My gripe about Woodford is him going so off-piste in investing in startups in an income fund !!!!!! :eek:

Filo25

talexuser wrote: »

But Woodford had a great record till July 17. Timing is everything, no active fund goes up forever without a fall somewhere along the line, nobody can say what will happen to Train or Smith tomorrow (I hold both)

Same for any passive fund then really.

fun4everyone

talexuser wrote: »

But Woodford had a great record till July 17.

His performance in 2016 was utterly awful as well. The fund only made about 3.2% that year when every single other one out there did miles better.

He had a really good June 2014-June 2015. A lot of investors joined after that period and were met with dire performance ever since.

Thrugelmir

dividendhero wrote: »

I'm quite happy with a degree of volatility and under performance at times, I hold Smith myself and expect he'll experience this at some point. My gripe about Woodford is him going so off-piste in investing in startups in an income fund !!!!!! :eek:

How many investors actually consider what they are buying in terms of underlying investments. Whether it be active or passsive. The day will come when a Blackrock\Vanguard passive fund is going to produce a poor return. Simply because a fund tracks an index of some description doesn't make it immune. Jack Bogle's original concept and reasoning is being severely stretched .

masonic

MK62 wrote: »

If you invested in "companies that make up the index, in a similar proprortion as they make up the index" then you can't really outperform that index as you have essentially created a closet tracker......you can only outperform an index by being different to that index (with the reverse also being true of course).
I suppose a manager could attempt to create some outperformance by actively trading the investments, and while there is a small element of that in all active funds, too much will only end one way.....I think Mr Woodford has recently had this reinforced on him, even if he hasn't been doing the trading by choice.

The way that you invest in companies that make up the index, in a similar proportion as they make up the index and outperform the index is by screening out the companies that will do less well in the future while concentrating the portfolio with companies that will do better. This can be achieved while maintaining the overall size and sectoral (is this a real word?) balance of the market (and hence the index). Active trading needn't be used, but it can be.

masonic

Sterlingtimes wrote: »

I thought that during the freeze period, the displayed price would remain unchanged, but I notice that it is changing from day-to-day. Will the price reflect ongoing adjustments as they happen?

The fund is valued once daily based on the last known valuation of each asset it holds. Some of those assets are listed companies that are rising and falling in value on a daily basis, some are unquoted companies whose value is speculative and updated less frequently. But the suspension of trading makes no difference to the valuation of the fund.

Sterlingtimes

masonic wrote: »

The fund is valued once daily based on the last known valuation of each asset it holds. Some of those assets are listed companies that are rising and falling in value on a daily basis, some are unquoted companies whose value is speculative and updated less frequently. But the suspension of trading makes no difference to the valuation of the fund.

Thank you, that helps me. It seems then that each time an unlisted asset is sold either the cash value of the sale or the value of the replacement listed asset will be reflected into the daily price.

One financial commentator said (without much explanation) something like, "they'll be lucky to get half of their money back". This leaves me very worried.