Woodford Fund

SonOf

However, this was one-off transactional advice. Maybe things would have been different if I had signed up for PMS.

For reference, the ones we have seen were on PMS. That may well explain the difference.

The expectation for a transactional case with an IFA is to end up in multi-asset funds (exceptions apply as investing has so much to do with opinion than fact). The FCA expects the investment solution to match the experience and knowledge of the consumer and if there is not an ongoing service, an appropriate solution should be considered. Or if the person is a bit more experienced and wants single sector funds, then an appropriate risk warning is given on the report.

Along the way I invested in Woodford Income Focus (to get this back on topic) as my sole active fund to generate income and (luckily) decided I didn't like the stocks he was picking so went all multi-asset.

That was the better of the two funds (which is not saying much) as it didn't have the high level of illiquid assets that the Income fund have. This is why a number of the research/due diligence companies that IFAs use pulled Woodford Income from their lists back in 2017 but not Income Focus. As one put it:
We have decided to remove the the Woodford Income fund and replace it with the recently launched Woodford Income Focus fund, which we believe to be a better fund for income investors as it does not include a long tail of illiquid unlisted companies.

As it happened, they pulled that fund from their list not long after as well.

masonic

OldMusicGuy wrote: »

However, this was one-off transactional advice. Maybe things would have been different if I had signed up for PMS.

I'm sure things would have been different. I don't think the service you received is a service that's available from HL today, or at least not without a serious amount of resistance to being pushed down the path of ongoing management.

OldMusicGuy

masonic wrote: »

I'm sure things would have been different. I don't think the service you received is a service that's available from HL today, or at least not without a serious amount of resistance to being pushed down the path of ongoing management.

Maybe that's the case. I know my adviser retired soon after I worked with him. Perhaps he saw the way things were going....

Alexland

SonOf wrote: »

If you want to eat food you can make it yourself, go to Mcdonalds or go to a restaurant.

Didn't you know Mcdonalds now do table service? Last week I was served by Woodford himself. He gave me one of their new paper straws. I had high hopes but was gradually disappointed and realised it would dissolve to nothing eventually. Neil explained the problem was other people kept shorting the straws but it was ok as he was getting paid anyway. It seemed crazy and didn't made sense but I am not sure he will work in the restaurant business again.

Alex

Alexland

I have just seen Neil at the car boot sale. He was paying really high prices for the stuff nobody else wanted. As he was loading up the van he explained it didn't matter as it wasn't his money and he was being paid commission for collecting all this junk. I asked what would eventually happen to it all but he didn't seem to know.

arnoldy

masonic wrote: »

Let HL deal with the problem of the Woodford fund increasing as a percentage of their fund of funds if others withdraw too. .

Yes dead right, your point is well made


Some of the HL Multi Manager funds themselves are heavily invested in Woodford - an ILLIQUID holding. And when Woodford reopens it will potentially crash in value, with the losses spreading to the HL MM funds.


Oh the irony of HL having the same (involuntary) behaviours - illiquid holdings - that their senior stable lads (Dampier & Co) belated made a song and dance about.


No wonder HL keep asking for the Woodford fund to phase release cash - although they gloss it as for their investors its as much to support/avoid stricken HL MM funds. They (certain HL MM Funds) may find it difficult to last through to December if people head for exit in large numbers.

AnotherJoe

I am of the strong opinion It's never going to reopen. They will shutter it, maybe end of the year or early next and liquidate anything left. They will have to because a rush for the exits you mentioned will immediately breach the illiquid holding limit again and they aren't idjuts (in that respect) and surely must know that. So they cannot open it because they would have to close it after an hour.
There will of course be a big loss to any funds holding it, how they account for that as the proceeds are gradually released I don't know. Really they should be accounting for it as perhaps half book value now.

Alistair31

I guess all this means NW will never be trusted again and may as well retire ?

Aretnap

arnoldy wrote: »

And when Woodford reopens it will potentially crash in value, with the losses spreading to the HL MM funds.

It's an open ended fund so it's valuation is based on the value of the underlying assets, not on whether people are buying or selling it today. I'm sceptical as to whether it will actually reopen, but if it does there is no reason why it would crash in value on reopening. The stated aim is to sell most or all of the illiquid stuff over the next months and reposition the fund as one focused on FTSE 100 and 250 companies. So if there is a drop in value it will come gradually, before reopening, as Woodford is a forced seller of large stakes in small companies and dodgy unlisted companies are written down in value and/or sold off at firesale prices. If/when it reopens whatever assets it holds should be liquid enough to cope with a stampede for the exits without a (further) fall in value or a need to close it again.

The risk for HL is that before it reopens/liquidates punters may lose faith in its MM funds and withdraw their money. As HL will have to sell every fund except Woodford to free up cash that leaves Woodford as an ever increasing percentage of the overall fund - potentially leading to a vicious spiral.

ffacoffipawb

Aretnap wrote: »

It's an open ended fund so it's valuation is based on the value of the underlying assets, not on whether people are buying or selling it today. I'm sceptical as to whether it will actually reopen, but if it does there is no reason why it would crash in value on reopening. The stated aim is to sell most or all of the illiquid stuff over the next months and reposition the fund as one focused on FTSE 100 and 250 companies. So if there is a drop in value it will come gradually, before reopening, as Woodford is a forced seller of large stakes in small companies and dodgy unlisted companies are written down in value and/or sold off at firesale prices. If/when it reopens whatever assets it holds should be liquid enough to cope with a stampede for the exits without a (further) fall in value or a need to close it again.

The risk for HL is that before it reopens/liquidates punters may lose faith in its MM funds and withdraw their money. As HL will have to sell every fund except Woodford to free up cash that leaves Woodford as an ever increasing percentage of the overall fund - potentially leading to a vicious spiral.

How do HL value the Woodford Equity Income fund for encashing their MM funds. Does WEIF still have a daily price even though it cannot be traded?