Woodford Concerns

Mark Dampier cashing out of HL is only insider dealing if the fact that Woodford's fund was crashing wasn't already public knowledge.

Which it was.

poppy10 wrote: »

The archive is from September 2018, not that long ago and well after he went balls-deep into Industrial Heat.

The handbook explicitly states that borrowing must be a short term measure - typically for less than three months, and only for the purposes you describe, rather than as part of a gearing approach or investment strategy. But WEIF had a maxed out overdraft for over two years, not to meet short term liquidity issues but as part of a long term strategy.

Fair enough. If it's true that it was permanently maxed out to gear the fund then that doesn't look good at all. But then neither does having almost 20% of the fund in unlisted equities, which the FCA has basically ignored so far.

HL's own page on the Wealth 150 makes it clear that it is a recommendation, specifically designed to guide investors as to which funds to invest in - "The Wealth 150 was launched in 2003 with the simple aim of helping investors to pick good quality funds for their ISA, SIPP and investment portfolio.

That's not a recommendation and certainly not advice. "Buy Woodford" is a recommendation. "Here is a list of 50 funds which we think are good" is not a recommendation. Anymore than "Here are 800 funds which we think are good enough to make available on the platform in the first place" is a recommendation.

Somewhere there is a threshold at which "We think these [number] funds are good enough to consider investing in, (disclaimer disclaimer disclaimer)" becomes "You should invest in these funds" and you can't disclaimer that away. If [number] is one then that's clearly a recommendation to invest in that specific fund. If [number] is 2 then that's probably a recommendation too, to invest in both. If it's 800 it's clearly not a recommendation to have a portfolio of 800 funds. I don't know where the threshold lies but I do know that 50 is below it.

HL is not going to compensate investors for worshipping at the altar of Woodford. This is the risk you sign up for when you DIY. When you take regulated advice you can get compensation if you are missold. When you don't you can't be missold and you can't get compensation.

The banks paid compensation on PPI because customers were specifically told they should take out PPI (or had it taken out in their name without their knowledge). If the banks had put PPI on a list of 50 insurance products that could be suitable for them and no more, they wouldn't have paid a penny in compensation.

masonic wrote: »

A recommendation and guidance are two very different things. One is a regulated activity and constitutes advising in investments in this context, the other is unregulated and doesn't confer any liability if acted upon. The Wealth 150 would fall firmly in the latter category of guidance.

While what you say is true from a regulatory perspective, the fact remains that HL now have something of a reputational problem and they don't seem to be a doing much about it thus far.

It's fine them having top notch customer service, but their fawning of Woodford even while alarm bells were ringing will take some getting over.

They could have done a lot more, if they really have faith in Woodford - then maybe they could have bought some of the assets in his fund :money:

Clearly if you already own units in the Income Fund you now have no choice but to hold, but I'd be interested to hear peoples views on the Income Focus Fund and Patient Capital Trust, especially if you're already invested in them.

Buy, hold or sell?

I own units in the Income Focus Fund (currently 5.5% of my portfolio) and I'm going to continue to hold them.

My thinking is that his investment strategy adds diversification to my portfolio and given time may do quite well (he's done it before!), but if it continues to underperform then it's only a small part or my overall investments so I'm not losing any sleep.