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Woodford Equity Income Fund Suspends Trading

Closed-end funds and OEICs
jackdaww
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Re: Woodford Equity Income Fund Suspends Trading

#226911

Postby jackdaww » June 4th, 2019, 5:30 pm

simoan wrote:
simoan wrote:Well, I only hold two stocks in common with the Woodford fund and I doubled up my position in Burford this morning. My old nan used to tell me never to look a gift horse in the mouth. Thanks Neil! Enjoy your pie, mate! :-)

All the best, Si

Well, that was fun... someone started dumping Watkin Jones (WJG) about 3pm this afternoon (WJG is the other holding I have in common with Woodford). Lots of AT trades so probably him reducing further. It was difficult to get filled but managed to get a top-up at 202.5p. Thanks again, Neil, the gift that keeps giving.

All the best, Si


=====================

another NW faller today is morses club.

i already have a big holding in watkin jones bought several years ago before NW got in .

:)

MusingMarket
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Re: Woodford Equity Income Fund Suspends Trading

#226912

Postby MusingMarket » June 4th, 2019, 5:32 pm

Lootman wrote:It is what Dod said. Smith was smart enough to structure his less liquid funds as closed ended, meaning that fund redemptions don't force the sale of the underlying holdings. Woodford was too much in love with the open-ended concept. Sectors like private equities and emerging markets are more suited to a closed structure


Smith talked about liquidity in funds (prompted by the usual "is the fund too big" query) for 30 seconds a couple of months ago:
https://youtu.be/YZM9dhiDbzI?t=4680

As Dod says, this is very basic stuff, Smith wasn't smart to structure FEET and Smithson as close-ended companies, just sane.

Any retail investor of Woodford should have realised this was possible if not probable. You had the Guernsey listing shenanigans and the offloading of assets to WPCT. Three years ago dealing in many property funds were halted after Brexit and, of course, there was the liquidity crisis during the banking crisis.

I'm rather amazed authorities allow illiquid assets to be directly held in an open-ended structure, at the very least the OEIC should hold illiquid assets in a listed company so we get a good idea of its actual market value.

mm

JoyofBrex8889
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Re: Woodford Equity Income Fund Suspends Trading

#226916

Postby JoyofBrex8889 » June 4th, 2019, 5:36 pm

I too have been bottom feeding today among Mr Woodfords cast-offs. Forced seller= opportunity!

I dont actually think he is a bad fund manager. If his luck had held we would be saluting his vision and stockpicking skill, so it is probably fair that he takes the brickbats now. I just think he has shot himself in the foot by handicapping himself with illiquid unquoted companies then taking big risks on low quality companies at a time when just about everything is getting disrupted by tech and political uncertainty.

No at this stage he is just cursed. Gordon Brown was the same: A decent, moral guy who just had the curse that everything he touched rapidly turned to sh1t, to the extent that he was nicknamed "Jonah" by some in the media.

AsleepInYorkshire
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Re: Woodford Equity Income Fund Suspends Trading

#226971

Postby AsleepInYorkshire » June 4th, 2019, 7:32 pm

I wonder if this article seems to provide some clues that Woodford was pushing the boundary regarding liquidity?

https://citywire.co.uk/wealth-manager/n ... dford/d927

However, to help manage the fund’s liquidity around continued outflows and keep the fund’s unquoted exposure under the regulatory threshold of 10%, it sold its holding in OSI to a combination of family offices and overseas investors, according to The Times.

AiY

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Re: Woodford Equity Income Fund Suspends Trading

#226986

Postby Alaric » June 4th, 2019, 7:54 pm

AsleepInYorkshire wrote:I wonder if this article seems to provide some clues that Woodford was pushing the boundary regarding liquidity?


I expect it does. It may also help explain the share price movement in Imperial Brands, which has fallen in recent weeks despite an increase in dividends and no obvious new bad news.

A big part of its position in tobacco giant Imperial Brands (IMB) had to be sold to deal with redemptions, for example.

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Re: Woodford Equity Income Fund Suspends Trading

#227074

Postby maximan » June 5th, 2019, 7:41 am

I would have thought that Imperial Brands being a FTSE 100 share the holding could have been placed in the market with much less disruption.

Dod101
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Re: Woodford Equity Income Fund Suspends Trading

#227087

Postby Dod101 » June 5th, 2019, 8:10 am

maximan wrote:I would have thought that Imperial Brands being a FTSE 100 share the holding could have been placed in the market with much less disruption.


Sentiment has been against the tobacco shares for at least the last year with or without any of the Woodford problems so it would not be like say placing a line from Shell.

Dod

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Re: Woodford Equity Income Fund Suspends Trading

#227178

Postby Daytona » June 5th, 2019, 12:03 pm


flyer61
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Re: Woodford Equity Income Fund Suspends Trading

#227281

Postby flyer61 » June 5th, 2019, 6:35 pm

maximan wrote:I would have thought that Imperial Brands being a FTSE 100 share the holding could have been placed in the market with much less disruption.


Not once the market makers realised the extent of Woodford's problems. They'll have had his pants down hence the freeze. My guess/bet is that IMB will head higher now that the 28 day freeze is on.

AsleepInYorkshire
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Re: Woodford Equity Income Fund Suspends Trading

#227335

Postby AsleepInYorkshire » June 6th, 2019, 12:10 am

We trusted Neil Woodford with our money'
By Kevin Peachey
Personal finance reporter

https://www.bbc.co.uk/news/business-48532529

AiY

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Re: Woodford Equity Income Fund Suspends Trading

#227347

Postby Dod101 » June 6th, 2019, 7:17 am

These were not silly people sucked into a fly by night investment. They were simply decent people who thought that they could trust Woodford and his reputation. The fateful thing they did not realise is that open ended funds can have problems with redemptions. They probably did not even understand the concept.

HL, Woodford and the regulator each ought to bear some responsibility. I am not suggesting compensation but I do think that the rules ought to be more stringently applied re unquoted investments, and HL should not be allowed to promote any investment. HL may not have been providing advice but their Wealth 50 was pretty close to that. AS I said they have a conflict; they need to look after their clients but they also need to look at their own bottom line and need therefore to be more than usually looked at very carefully by the regulator. Regulators in the UK have a hopeless reputation though.

Dod

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Re: Woodford Equity Income Fund Suspends Trading

#227351

Postby Dod101 » June 6th, 2019, 7:46 am

I might have said that regulators in the UK have a hopeless and well deserved reputation though.

Dod

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Re: Woodford Equity Income Fund Suspends Trading

#227379

Postby OhNoNotimAgain » June 6th, 2019, 9:55 am

Dod101 wrote:These were not silly people sucked into a fly by night investment.

HL, Woodford and the regulator each ought to bear some responsibility.

Dod


Blaming everyone but the individual is the typical response to this situation. Everyone thought he was a genius.

Indeed, anyone who questioned the man on these boards, for example, rapidly became unpopular.

But it was clear from launch that the fund was taking big bets on high risk stocks but, to use industry jargon, the information ratio, i.e the excess return over the excess risk, was never positive. The additional risk was not being rewarded by additional return.

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Re: Woodford Equity Income Fund Suspends Trading

#227382

Postby jonesa1 » June 6th, 2019, 10:02 am

Surely when investing your hard earned cash, you have a responsibility to make sure you understand what you're investing in and that it's right for you? Woodford has always been open about the fund's strategy and holdings, much more so than most of his peers. Most recently the post-Brexit vote issues with property funds highlighted the risks of illiquid assets being held in open ended funds. Ignorance and lack of due diligence are the main issues here.

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Re: Woodford Equity Income Fund Suspends Trading

#227396

Postby Alaric » June 6th, 2019, 10:32 am

jonesa1 wrote:Ignorance and lack of due diligence are the main issues here.


That applies also to those such as Hargreaves Lansdown who (heavily) promoted the Woodford fund(s).

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Re: Woodford Equity Income Fund Suspends Trading

#227398

Postby Dod101 » June 6th, 2019, 10:40 am

jonesa1 wrote:Surely when investing your hard earned cash, you have a responsibility to make sure you understand what you're investing in and that it's right for you? Woodford has always been open about the fund's strategy and holdings, much more so than most of his peers. Most recently the post-Brexit vote issues with property funds highlighted the risks of illiquid assets being held in open ended funds. Ignorance and lack of due diligence are the main issues here.


Easy to be wise with hindsight and I am usually very unsympathetic to those caught up in 'too good to be true' investments. Woodford though had a decent reputation to say the least, and HL have built up a good reputation for service and general 'nous' over the years and many people including many on these Boards appear to use them with satisfaction. So I do not think that the people in the BBC piece highlighted by AiY were looking for something for nothing and indeed Woodford was all the more dangerous for having apparently been successful in the past. They were in other words lulled into a false sense of security, and it would almost be better to have no regulator than a thoroughly incompetent one.

Anyway by the standards of contributors to these Boards I would imagine that most of the population is ignorant about investing and I am sure they thought that due diligence had been carried out by HL. Alaric just beat me to it.

According to The Times this morning St James Capital has withdrawn their mandate to Woodford and that amounts to around £3.5 billion or about one third of hid funds under management. Surely the end for Woodford?

Dod

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Re: Woodford Equity Income Fund Suspends Trading

#227399

Postby Nimrod103 » June 6th, 2019, 10:41 am

Good article by MSW in the FT.
Google with the heading 'Neil Woodford broke the ground rules — now investors will pay the price', to get the article for free. Shame she didn't write it 3 months ago.

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Re: Woodford Equity Income Fund Suspends Trading

#227422

Postby SalvorHardin » June 6th, 2019, 11:12 am

Nimrod103 wrote:Good article by MSW in the FT.
Google with the heading 'Neil Woodford broke the ground rules — now investors will pay the price', to get the article for free. Shame she didn't write it 3 months ago.

In case people can't get the FT article it can be found at the link below:

https://www.businesstelegraph.co.uk/nei ... the-price/

What we're seeing is the open-ended fund equivalent of a bank run. There's quite a bit of panic out there with a lot of investors wishing to sell immediately, leading to a level of redemptions that is vastly greater than the fund would normally expect. The situation is worsened by many of the portfolio's holdings being in illiquid and unquoted shares, so in order to meet the redemptions the managers have to sell their more liquid shares (which may be the ones they'd prefer to keep).

This is a great advertisment for investment trusts over open-ended funds. In similar circumstances the investment trust's share price would fall without the need for forced sales.

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Re: Woodford Equity Income Fund Suspends Trading

#227436

Postby simoan » June 6th, 2019, 11:27 am

SalvorHardin wrote:This is a great advertisment for investment trusts over open-ended funds. In similar circumstances the investment trust's share price would fall without the need for forced sales.

Of course, this does not only apply to OEICs. The same also applies to some ETFs where there is a veneer of liquidity in the ETF instrument that is not mirrored by the underlying assets. I think some ETF holders are going to get a nasty shock at some point in the future.

All the best, Si

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Re: Woodford Equity Income Fund Suspends Trading

#227437

Postby terminal7 » June 6th, 2019, 11:30 am

Someone’s made a huge pile of money since 2014. You were told it could be you. It’s actually been Neil Woodford
as per MSW article. Of course add HL and other platforms.

I have built up a medium sized personal pension portfolio of some 40 bonds, trusts, individual shares and cash. The largest single element accounts for 8% - ex cash now - (largely as a result of a five fold growth and not initial investment size in one share - I really should sell off some of these!).

Any investor with an ounce of nowse surely knows - never over expose your portfolio to any single investment. I have little sympathy with the stories of small investors saying they put all/most of their savings in Woodford. HL, YouInvest etc do not provide advice - however their 'top picks' provide an evident badge of approval to those who fail to read the health warnings. How many times do we hear the same song?

Personally, I did make some small profits from Woodford at Invesco - many erstwhile colleagues made a lot more than I by putting 'all their eggs in one basket'. I am aware that some followed him after his departure from Invesco - not sure what has happened to them. Surprised that KCC had £250m+ invested - apparently some 4% of their pension fund -seems a high level in my estimate and needs a review into due diligence.

I suspect that there is more to come.

T7


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