Woodford Concerns

dividendhero

AnotherJoe wrote: »

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All three of those comments can actually be backed up with facts.

1. He bought into a company based on impossible technology from a twice convicted fraudster.
2. In the U.K. equity sector his fund is 91st out of 91 according to no less than HL, and in the area of listed funds he's had several major purchases lose the majority of the investment due to mismanagement which he failed to spot.
3. His company broke the liquidity rules multiple times, used dubious devices to evade the liquidity rules and got himself into a precarious position whereby he was extremely vulnerable to downturns causing a vicious spiral

Adding to that list of ineptitude, the board of Patient Capital consisted of people working for the companies the fund invested in

Jonbvn

dividendhero wrote: »

Adding to that list of ineptitude, the board of Patient Capital consisted of people working for the companies the fund invested in

If I was a lawyer, I think there are quite good grounds to build a legal case. I guess the FCA might be wary of doing that, since the fund would tank.

Brian65

cogito wrote: »

None, AFAIK. Why?

If punters knew what other funds HL have concerns about that they are still plugging in their Wealth 50, they might be able to get their money out before it goes down?

MK62

You have to bear in mind that while some funds do lose money, for a variety of reasons, what has happened at WEIF is pretty rare......there is currently no reason to think that any other funds on HL's Wealth 50 are about to close, nor any other mainstream UK fund.

PS.....However that doesn't mean anyone should take their eye off the ball....

MaxiRobriguez

Jonbvn wrote: »

If I was a lawyer, I think there are quite good grounds to build a legal case. I guess the FCA might be wary of doing that, since the fund would tank.

Don't be silly. Financiers don't get hit with lawsuits or criminal trials.

Brian65

MK62 wrote: »

..there is currently no reason to think that any other funds on HL's Wealth 50 are about to close

But how do you know that when HL keep quiet about their concerns and keep recommending the fund and taking their cut until they have sold their own HL shares?

cogito

Brian65 wrote: »

But how do you know that when HL keep quiet about their concerns and keep recommending the fund and taking their cut until they have sold their own HL shares?

I think that what you’re missing is that there have been red flags over WEI for three years or so. HL were clearly wrong to continue promoting the fund but as far as I can see there is no cause for alarm about any others. You have to do your own research and not be swayed by marketing hype.

dividendhero

MK62 wrote: »

You have to bear in mind that while some funds do lose money, for a variety of reasons, what has happened at WEIF is pretty rare......there is currently no reason to think that any other funds on HL's Wealth 50 are about to close, nor any other mainstream UK fund.

PS.....However that doesn't mean anyone should take their eye off the ball....

Whole point of "Wealth 50" is that HL have so called experts who do have their eyes on the ball :mad:

Don't forget the people on this forum are interested in finance, hence we have our eye on the ball.

Drp8713

dividendhero wrote: »

Whole point of "Wealth 50" is that HL have so called experts who do have their eyes on the ball :mad:

Don't forget the people on this forum are interested in finance, hence we have our eye on the ball.

Surely people dont just randomly pick one UK Equity Income fund from a list of 50 though?

If they were going to use the Wealth 50 you would pick one from each main sectors at least.

If they had done that, this would be a drop in the ocean as the WEIF would be 10% of your portfolio and even if it takes a 20% haircut you are talking 2% of your investments, which the rest of your portfolio would gain back in a few months.

seacaitch

Brian65 wrote: »

But how do you know that when HL keep quiet about their concerns and keep recommending the fund and taking their cut until they have sold their own HL shares?

If investing in funds of any type, it's crucial to look under the bonnet so as to understand what the fund actually holds. This should be totally obvious but there can be a tendency for some people to regard funds somewhat as black boxes, and this seems to be most common when there is a big brand (whether a personality or an organisation) managing the fund.

It's the assets the fund holds that determine the fund's returns.

It's true that when when investing via a fund you are outsourcing a lot of responsibility to the fund manager but you are also responsible, indeed, ultimately responsible for what you're investing in if operating your own portfolio.

A look under the bonnet of WEI made it very clear that this was an unusual fund running a very unusual portfolio that contained a lot of specific risks compared to other funds with "equity income" in their name.

How many IFAs do you think were allocating their clients' money into WEI? Not that many I would guess.

Perhaps what this episode does highlight is that some HL customers might've been better off paying someone explicitly to run their money for them rather than paying someone to allow them to DIY it themselves without perhaps knowing enough about what they were doing.