Thought's on the Woodford equity income fund

Difficult to comment without an idea of how much of your portfolio it is, timescales to drawdown etc.

You obviously thought Woodford was going to beat the market when you bought in - has your viewpoint of him changed now - if it hasn't then why sell?

He was beating the benchmark initially but he has made some really bad calls - Capita, Astra Zeneca and Provident to name a few....

talexuser wrote: »

Same thoughts here. I bought in at 99p, so a 22% total return now is not absolutely terrible for 4 years.

It is terrible, if you compare it against the IA UK All Companies (40%) and a fund like Old Mutual UK Mid Cap (105%) over 4 years.

Whilst I have nothing against "star fund managers" in general, when they leave a big company like Invesco, or any other big house for that matter, you cannot expect them to replicate performance when they jump ship and join either a new house, or create their own business. The fund is not just the showman at the top, but the massive team of analysts and systems behind him.

A few years into his new Woodford venture, you could argue that he might have the infrastructure in place to start giving something back.

I think the lesson is, don't follow a fund manager unless you know what infrastructure is going to back him/her up. Personally, if any fund manager did similar, I would leave them to it for at least a few years before going back. That includes someone like Richard Watts (Old Mutual UK Mid Cap) if he decided to do something similar.

talexuser wrote: »

I do worry the alpha managers who did well in the past cannot adjust and do the same in the QE era market propped up by massive government debts and central bank permanent "emergency" interest rates boosting prices.

Woodford made his name during another era when everyone claimed "this time it's different" and that stockmarket / economic conditions were different to anything that had gone before. Back then it was "the Internet will change everything".

If the star manager of one "this time it's different" era can't be expected to generate alpha during a different "this time it's different" era (bearing in mind that every single time point in history is a "this time it's different" era) then no fund manager can be expected to outperform in the long term.

I had a six figure sum in his Invesco high income fund and took half of that out when he launched Woodford Equity Income.

After a couple of years of decent returns, I sold out of both funds because I was unhappy about the direction he was taking and his successor at Invesco seemed to be simply aping what he was doing.

What I didn't like was the unquoted companies that became an increasing feature of his fund. To me it was like two different funds under one umbrella. My feeling is that he has lived on his past reputation for many years and is no better and possibly worse than many of his peers. He certainly doesn't seem to fully understand the nature of some of the businesses in which he is investing other peoples' money. The performance of his Patient Capital IT seems to bear this out.

I look very carefully 'under the bonnet' of every fund I buy and avoid banks, insurance companies and extraction industries. That's why most of my money has been in the hands of Fundsmith and Lindsell Train for the past few years. I get some satisfaction when I compare the performance of those funds with Mr Woodford's.