Woodford Concerns

tin586

Johnnyboy11 wrote: »

Thanks, but I recall another HL video specifically justifying Woodford's fund passing the cut into the Wealth 50.

I’m not aware of that on YouTube. You might be thinking of an archived item on the HL website from 2018 titled “A follow up with Neil Woodford”.

Sorry I can’t post links, but you could google it.

fun4everyone

Neil Woodford refuses to waive fee on suspended Equity Income fund

Woodford Investment Management has refused to waive the fee on its suspended flagship fund, Telegraph Money can disclose.

https://www.telegraph.co.uk/investing/funds/neil-woodford-refuses-waive-fee-suspended-equity-income-fund/

I think he will be forced to backtrack on this, Nicky Morgan getting involved now.

Audaxer

itwasntme001 wrote: »

Dividends are usually the first things that are cut when a company faces financial difficulty. Its easy to do and is also tax efficient. In practice it is done in combination with rights issue, debt issuance etc etc. Dividend cut are just a lot easier to do then other methods to raise finance so is done first usually.

While that would be more of a risk if investing in individual company shares, I think with mainstream equity income funds or ITs with many underlying shares, there is less chance of big dividends cuts. I hope that is the case anyway - that fund dividends are a lot less volatile than the funds' capital values.

talexuser

fun4everyone wrote: »

And in 2017 as a whole he returned only 0.8% approximately when everything else rocketed. That's after that completely awful 2016 where the same thing happened. The fact is over the whole lifetime of the fund the first year was good and the next 4 were tragic. This is not just a couple of years of poor performance it was woeful for a considerable time.

That's just proving the point about about taking any random points in time to paint any picture you like. The first year was 20% or so, the peak involved yet another 20% which is not exactly tragic if you timed it right. If you held on it's tragic, many didn't since the outflows started at least over a year ago and accelerated from there. Now he's toast.

fun4everyone

talexuser wrote: »

That's just proving the point about about taking any random points in time to paint any picture you like. The first year was 20% or so, the peak involved yet another 20% which is not exactly tragic if you timed it right. If you held on it's tragic, many didn't since the outflows started at least over a year ago and accelerated from there. Now he's toast.

Taking the entire lifetime of the fund is not picking points to suit an argument. The entire lifetime of the fund is completely tragic, over the whole 5 years, and that has been due to performance over 4 of those years.

"If you timed it right" however is exactly taking a random point to prove any point you like.

bowlhead99

fun4everyone wrote: »

https://www.telegraph.co.uk/investing/funds/neil-woodford-refuses-waive-fee-suspended-equity-income-fund/

I think he will be forced to backtrack on this, Nicky Morgan getting involved now.

Nicky Morgan can bluster all she wants and say that she will 'raise it with the FCA' next time she meets them. They (who understand the rules) will explain the rules to her, about how a fund can freeze subscriptions and redemptions to protect investors, whether or not such rules are contrary to her electorate-pleasing position of moral outrage.

Woodford continues to manage the fund in pursuit of the most positive outcome for investors. Simply by letting the gating restrictions come into play, he has already lost the investors' faith en masse and he is not magically going to get it back by waiving a small fraction of the annual fee which is under 0.1% a month. A bad outcome due to an enforced fire sale would cost tens of percent. So, why work for no pay? The investors will not thank him for costing them 9.9% instead of 10.1%, so there is little point in working for free when he could instead be charging them £80k a day for managing the portfolio.

He is still managing the money and getting paid. The investors are still having their money invested and paying for the service. Some of them would prefer not to still be invested, but we can infer that they knew the rules when they invested because distributors such as HL will have told them to read the documentation as a condition of investing.

HL will try to claim the moral high ground by temporarily and benevolently waiving the platform fee that they have been charging for years to all the people who bought into their advertorial. The poor customers were buying what HL considered to be the best fund to promote in the UK equity income space, right up until it became actually uninvestible rather than merely intellectually uninvestible.

dividendhero

bowlhead99 wrote: »

Nicky Morgan can bluster all she wants and say that she will 'raise it with the FCA' next time she meets them. They (who understand the rules) will explain the rules to her, about how a fund can freeze subscriptions and redemptions to protect investors,#.

Nicky Morgan is a former corporate lawyer, I imagine she already understands the stuff about suspending funds. I would suspect her line of enquiry with the FCA will cover

- How Woodford was allowed to stray away from the funds intended remit so much.

- Woodford flouting the rules by indulging in tactics such as listing unquoted companies on the Guernsey stock exchange and selling assets to his others funds

- Symbiotic relationship between HL and Woodford, why did they still keep "guiding" their clients into Woodford when they had a team of analysts who must have known what was going on

Brian65

aroominyork wrote: »

Evening Standard

But what Standard?
I stopped taking that rag seriously when it hired Osborne :rotfl:

redux

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.

I recently received an invitation to one of these, and your comments helped me decide to go.

However, if that event also descends into complaints about Woodford, I might leave early, on the basis they're supposed to be talking about a range of choices, not just one.

MK62

bowlhead99 wrote: »

Nicky Morgan can bluster all she wants and say that she will 'raise it with the FCA' next time she meets them. They (who understand the rules) will explain the rules to her, about how a fund can freeze subscriptions and redemptions to protect investors, whether or not such rules are contrary to her electorate-pleasing position of moral outrage.

Woodford continues to manage the fund in pursuit of the most positive outcome for investors. Simply by letting the gating restrictions come into play, he has already lost the investors' faith en masse and he is not magically going to get it back by waiving a small fraction of the annual fee which is under 0.1% a month. A bad outcome due to an enforced fire sale would cost tens of percent. So, why work for no pay? The investors will not thank him for costing them 9.9% instead of 10.1%, so there is little point in working for free when he could instead be charging them £80k a day for managing the portfolio.

He is still managing the money and getting paid. The investors are still having their money invested and paying for the service. Some of them would prefer not to still be invested, but we can infer that they knew the rules when they invested because distributors such as HL will have told them to read the documentation as a condition of investing.

HL will try to claim the moral high ground by temporarily and benevolently waiving the platform fee that they have been charging for years to all the people who bought into their advertorial. The poor customers were buying what HL considered to be the best fund to promote in the UK equity income space, right up until it became actually uninvestible rather than merely intellectually uninvestible.

You are correct of course, but perception is everything, and in this case Mr Woodford appears to be ignoring that......perhaps he feels the game is up and there is no coming back from this, and so nothing to be gained from waiving (or at least reducing) his fee.......

To me, it seems like sticking two fingers up at his investors......especially after HL's gesture (no matter how symbolic that might be in reality).