HL Woodford Fund Class Action

LHW99

While IMO there are definate questions over Woodford's running of the trust and Link Solutions oversight, at least some of the (?proposed) investments definately didn't looki like anything he invested in at Invesco, and to me at least, lloked like the sort of things you might expect in a private equity / venture capital trust. Not mainstream, not close to commercialised.

It does emphasise that a star manager is rarely going to be the sole reason a trust makes money, the stuff under the bonnet has an effect too, and as investors we should remember to at least have a cursory glance beyond the manager's name. The internet now provides much more access to relevant information than was available even 10 years ago.

dunstonh

I have to strongly disagree and your comment suggests you haven't a clue about the facts.
Woodford was the star fund manager endorsed by financial firms like Hargreaves Lansdown.

Actually, Prism is a knowledgeable and well respected poster here and she knows what she is talking about.

Financial firms promoting a fund is not the same thing as advising you to buy them.  There is no such thing as endorsement in this respect.

Woodford broke the rules under the eyes of the regulator and deviated far from the portfolio so investors were totally unaware of how the fund was diversifying into extremely high risk illiquid zones.Actually, investors were aware.   In 2017, IFAs were warned by one of the major research companies not to use Woodfords fund due to the high amount of illiquid assets that are unsuitable for a UK equity income fund.   The data was available and visible for those that chose to look at it.

Those investors using a platform like HL, make their own investment decisions.   DIY investors bypass advisers to save money but that means they take on the responsibility for their investment decisions.     You can buy all sorts of rubbish that is going to fail.   That is the risk of buying without consumer protection.

Many investors lost large sums of money and cannot move on.Unfortunate but it is their own fault.     It is a fund that was designed to be held in a wider portfolio and not in isolation. It invests with a UK equity income focus which makes it a potential satellite fund rather than a core fund.

So, even if your portfolio had 25% allocated to UK equity, you would probably expect no more than 10-15% being in this fund (depending on risk profile).     

Those that went 100% into it were investing badly from the offset.   Even if it had not failed.

There are class actions appearing in the High Court now and the legal firms behind these actions have done their groundwork so it isn't "moving on" ; it is about fighting for justice and obtaining proper compensation".And who is going to pay that compensation?
Link has been on the hook for some failings.    Woodford is not personally responsible as the company was limited.   If there isnt the money in Woodford Investment Management Ltd then it doesn't matter what the courts award.   The company will go into administration and the investors will become creditors and get pennies in the pound.

Have you read the accounts of Woodford Investment Management Ltd at companies house?   There isn't much there to spread around.

Have a look at the Panorama documentary about the Blackmore Bond, although not directly relevant, it illustrates the failures of the FCA and other bodies that are supposed to protect investors.It is not even a close comparison to Woodford.  The FCA ignored warnings on that front but Blackmore's product was unregulated.    Unregulated products, by their very nature, are unregulated.

This isn't about backing the wrong horse and moaning if the favourite loses - this is serious and about irregularities and mismanagement. Claims run into billions !!There are going to be a lot of unhappy people if they think there is billions of assets available to repay their bad investment choices.

talexuser

I do sympathise with those who lost money, but to say that investors had no idea what was happening is clearly incorrect. Brokers were advising to drop Woodford at least a year before he went bust, the fact that Hargreaves was not one of them is a problem for Hargreaves and the customers who trusted them. If DIYers were not aware then perhaps DIY is not a good idea since reading around  different opinions would have raised concerns, and many got out early as the outflows before the eventual  implosion showed. Link may have some responsibility, and Hargreaves even more in my opinion, but the idea everyone should automatically be compensated seems to imply the market should be a one way bet, it isn't.

Prism

Pete_at_WFB said:

Prism said:

I hope that most of those Woodford investors can move on and forget about compensation. They made a poor decision and are probably best learning from that and investing in something more mainstream next time. 

I have to strongly disagree and your comment suggests you haven't a clue about the facts.

Woodford was the star fund manager endorsed by financial firms like Hargreaves Lansdown.

Woodford broke the rules under the eyes of the regulator and deviated far from the portfolio so investors were totally unaware of how the fund was diversifying into extremely high risk illiquid zones.

Many investors lost large sums of money and cannot move on.

There are class actions appearing in the High Court now and the legal firms behind these actions have done their groundwork so it isn't "moving on" ; it is about fighting for justice and obtaining proper compensation".

Have a look at the Panorama documentary about the Blackmore Bond, although not directly relevant, it illustrates the failures of the FCA and other bodies that are supposed to protect investors.

This isn't about backing the wrong horse and moaning if the favourite loses - this is serious and about irregularities and mismanagement. Claims run into billions !!

Look, I'm not saying that I don't have some sympathy - I don't want anyone to be in a situation that their plans are in tatters. However each individual takes responsibility for their own investments.

Being a star fund manager is not a reason to invest.
Being endorsed/advertised by an investment platform is not a reason to invest.

I looked at the fund based on the above two reasons and decided very quickly to avoid. Why? Because it was made entirely clear to anyone who made a passing attempt at looking into the fund how high risk it was. This was backed up by plenty of news articles commenting on its rather unusual makeup of high risk stocks. I have never known a fund makeup being so visible to anyone that cared to look.

Link may be at some fault for the management of the fund after they took control.

Malthusian

Pete_at_WFB said:

Have a look at the Panorama documentary about the Blackmore Bond, although not directly relevant, it illustrates the failures of the FCA and other bodies that are supposed to protect investors.

Although Blackmore Bond was a completely different kind of investment and a completely different kind of regulatory failure, there is one similarity with Woodford. Namely, that there is no prospect of the general public bailing out its investors. (In contrast to London Capital and Finance which was subject to the Rule of Allied Steel / Equitable Life / IceSave: if enough people believe an investment is risk-free, the Government has to spend everyone else's money to make it so.)
Which is what any talk of regulatory failure over Woodford is ultimately about.
The failure of the FCA to intervene earlier benefited a number of Woodford investors as it enabled them to get out before the scheme collapsed, and cash out based on hallucinatory values for the fund's unlisted junk. There's no prospect of getting money back from them either.
(If the FCA had intervened earlier the only possible result is that the fund would have wound up earlier and more investors would have been trapped, albeit with more money to go around them.)
The best course of action for any Woodford investor is to forget about it and treat any compensation that comes out of the various legal actions as a nice surprise.

eastmidsaver

thanks for the link to the facebook group.
i have kind of written off my losses from the woodford thing and it actually made me learn more about investing.
whilst i have joined the class action,  i am not going to expect anything.   
as stated by a poster above,  if any compensation comes then it will just be a nice bonus / surprise.

iancarbarns

https://www.investmentweek.co.uk/news/4165728/fca-reasserts-proposed-woodford-redress-subset-total-losses-sanction-decision-delayed?utm_campaign=Investment Week Newsletters&utm_medium=email&_hsmi=81635218&_hsenc=p2ANqtz-_6aw1xcekN3QYACEUYcBssi-p6Ven4xEJg-knMuZTx0-9olcv3JI8WYHuiIYQ7P2p_u298qLfzk1PQF7CEBG3I-mOJds0w_Vaueua5tl1aXiRE4eI&utm_content=81635218&utm_source=hs_email