Woodford apologises for performance

Zola. wrote: »

http://www.telegraph.co.uk/business/2017/09/06/neil-woodford-right-criticised-sorry/

Another case for following the passive path and not chasing last year's fashionable star fund manager ?

Audaxer wrote: »

This surely strengthens the argument for passive investing, as it seems from this that it is very difficult to choose active funds and managers that consistently beat the market.

It's easy:

When a truly active fund beats an index tracker fans say "it might not continue to happen, buy trackers".
When a truly active fund does less well than an index, even though trackers always do, they say "trackers beat actives, buy trackers".
Then there are the times when the active fund beats the relevant index and tracker fans say it's underperformed and you should buy the tracker instead, as in this case.

The easy bit: active funds aren't trackers. They are supposed to behave differently. But like a stuck clock, whatever time it is, the tracker fan clock is saying buy trackers. All that changes is the news of the day that they can latch on to to say "buy trackers"

Woodford funds underperformed indexes during the dotcom boom and during the pre financial crisis years because he avoided tech then financials. Worked well. Likely that what he's doing will continue to be good but what it won't do is track an index. If you want a tracker don't buy his funds, his job is to not track an index.

Tracker fans don't like him because he is the living proof that an active manager can beat a tracker in the same general area over a long time.

The fact that you can't name that many others from all the managers available is the reason for having trackers, but trying to say Woodford did not make you far richer in the long term is frankly ludicrous.

Because everyone's apologising nowadays. It's the new hip trend. Politicians apologise for not abolishing tuition fees. Paul Hollywood apologises for going to a fancy dress party as General Von Klinkerhoffen 14 years ago. Woodford apologises because his fund's fallen in value.

Back in þe olden days, people only took offence if you did something to offend them directly, like insult their wife or steal their cattle, and consequently people cared about "losing face" and an apology was a major deal that usually had to be extracted at swordpoint. But now people take offence at absolutely everything, and the currency of apology is degraded along with it. If you do something to upset Twitter you get your PR rep to issue an apology and get on with what you were doing.

The answer to the question "why did Woodford apologise" is "why not?" It costs him nothing. He could say "I had good reasons to invest in these shares, I believe they'll come good and I apologise for nothing" but it would just get him dropped by even more fund pickers. It's clear they aren't interested in people who have the courage of their convictions or they wouldn't say "Woodford's the man for the long term" one minute and "Sell Woodford, he's underperformed" the next.

talexuser wrote: »

an active manager can beat a tracker in the same general area over a long time.

Yes but how do you pick the winning active managers in advance - without the benefit of hindsight?