Woodford Fund

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Surreyboy
Surreyboy Posts: 67 Forumite
in Savings & investments
Hi

I am trying to help my mother with her investments and would welcome people's views on one point. Pretty much all of her investments are held within the Portfolio Management Service (PMS) at Hargreaves Lansdown. This is a service where HL manage the money on your behalf.
I've advised her that she may be better off transferring out of the PMS (into the Vantage ISA) partly because it has not performed very well and the fees are very high. However, my biggest concern is that about 10% of her money is invested indirectly in the Woodford Equity Fund (the PMS basically puts clients' money in HL funds of funds and 10% of these funds are invested in Woodford Equity.) As she is not invested directly in Woodford, she is not affected by the current restrictions on the fund. I am concerned that in December or whenever the restrictions are lifted, everyone will try to sell out of Woodford and the value will really nosedive.
It seems reasonable to get rid of her (indirect) investment in Woodford whilst she can, but I wondered what others thought?
Thanks!
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  • masonic
    masonic Posts: 23,407 Forumite
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    If you believe the existing fund is not a good choice for her, and intend to switch, then there is no time like the present.

    Let HL deal with the problem of the Woodford fund increasing as a percentage of their fund of funds if others withdraw too. That's the main issue with the current arrangement. If the Woodford fund reopens, it will be after if has disposed of much of the stuff that could cause a nose-dive, likely itself causing a loss within the fund.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    Are you sure she isn't stuck with it?
    If she isn't I'd certainly get out now to avoid being in it when it closed in December or thereabouts (much much more likely than ever reopening but whatever happens it's only going one way), and I'd get out of their PMS at the same time. Put the sell order in ASAP.
  • nrsql
    nrsql Posts: 1,919 Forumite
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    As long as dealing in the fund isn't suspended then should be able to sell. There will be an illiquid part (the Woodford funds) but the liquid parts would be sold to support the deal. Same issue that Woodford had increasing the proportion of illiquid assets until sales could not be supported.

    Concern about Woodford at the moment is that trading is suspended but charges are still being taken. I would assume that the charges are a percentage of the fund value - but that value will be suspect (inflated) if the underlying assets are illiquid. In that situation it is very easy to manipulate the asset value by small (or no) trades or estimating value. Same thing that has happened a number of times before.
    I wonder if he thinks his reputation is shot and just needs to cash in while he has the chance.
  • SonOf
    SonOf Posts: 2,631 Forumite
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    I've advised her that she may be better off transferring out of the PMS (into the Vantage ISA) partly because it has not performed very well and the fees are very high.

    HL have suffered reputational damage from Woodford. Our firm has taken on new clients transferring out of HL's advice service and in each case the IFA option has been cheaper. I spoke with another IFA yesterday and he said he had several HL cases being transferred out and he was shocked to see HL's charges being so high. Basically, double what the IFAs have been arranging.
    It seems reasonable to get rid of her (indirect) investment in Woodford whilst she can, but I wondered what others thought?

    There are plenty of reasons not to be on that service
    1 - High platform charge
    2 - use of own-brand expensive funds
    3 - an advice charge despite using own-brand funds and rarely giving any advice.

    Woodford is just the icing on the cake.
  • Albermarle
    Albermarle Posts: 22,303 Forumite
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    HL have suffered reputational damage from Woodford.

    News from Monday -Among a sea of red in the blue-chip index today Hargreaves Lansdown stands out after slumping almost 7%.
  • xylophone
    xylophone Posts: 44,508 Forumite
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    Fine for you to help your mother (particularly if you have experience of managing a portfolio) but if not, be careful of "frying pan into fire" syndrome.

    There are other platforms which might be worth consideration -

    https://moneytothemasses.com/saving-for-your-future/investing/compare-cheapest-best-investment-isa-platforms

    or it might be worth consulting an IFA.

    https://adviserbook.co.uk/

    She would tick "confirmed independent" and such other specialisms she requires.
  • Surreyboy
    Surreyboy Posts: 67 Forumite
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    Thanks for your advice everyone
  • aroominyork
    aroominyork Posts: 2,841 Forumite
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    SonOf wrote: »
    I spoke with another IFA yesterday and he said he had several HL cases being transferred out and he was shocked to see HL's charges being so high.
    Not as shocked as I am that an IFA can know so little about his competition.
  • SonOf
    SonOf Posts: 2,631 Forumite
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    aroominyork wrote: »
    Not as shocked as I am that an IFA can know so little about his competition.

    HL is not generally a competitor of IFAs.
  • aroominyork
    aroominyork Posts: 2,841 Forumite
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    SonOf wrote: »
    HL is not generally a competitor of IFAs.
    If I want to pay investment advice my options include an FA, an IFA and HL. That makes them competitors.
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