Woodford Equity Income Fund Suspends Trading

[Alaric]

I don't know what rating was given on the KID for Woodford's Patient Capital trust, but it ought to have been a 6+.

https://static.woodfordfunds.net/prd/20 ... 181127.pdf

You are about to purchase a product that is not simple and may be difficult to understand.

But that's stated (misleadingly) for every Investment Trust.

We have classified this product as class 4 out of 7, which is a medium risk class. This rates the potential losses from future performance at a medium level, and poor market conditions could impact the capacity to pay you.

That's probably risk as in volatility rather than risk as in losing your shirt. Again that seems a standard rating for almost every Investment Trust.

[OhNoNotimAgain]

I love the quote from Gerry Grimstone:

"Never invest in a fund named after the manager"

So should I regret my eight years investing in Fundsmith? Only up about 300%.

If his fund price halved in the next week his investors couldn't complain too much. It would probably take something pretty serious to destroy half the value of his portfolio.

regards

Howard

http://www.morningstar.co.uk/uk/funds/s ... LK2Q&tab=3

[PinkDalek]

http://www.morningstar.co.uk/uk/funds/s ... LK2Q&tab=3

Should we skip the ad?

[AsleepInYorkshire]

Stockpicking: What goes up may go down

https://www.bbc.co.uk/news/business-48552659

If what goes up, must come down, it stands to reason that a professional stockpicker can't get it right all the time.

...

If you'd invested $100 in Berkshire Hathaway in 1965, the year Mr Buffett took over, it would be worth well over $2m now. But such returns shouldn't mask some mistakes, many in recent years.


AiY

[AsleepInYorkshire]

Hargreaves Lansdown boss apologises for Woodford suspension
https://www.bbc.co.uk/news/business-48573510
The boss of broker Hargreaves Lansdown has issued an apology following the suspension of a fund it sells. Chris Hill, chief executive, said he shares clients' "disappointment and frustration".

AiY

[AsleepInYorkshire]

Woodford Fund Breached Unquoted Limit 16 Months Ago - http://www.morningstar.co.uk/uk/news/19 ... s-ago.aspx
A letter from the FCA reveals that it has been in talks with Woodford fund manager since February 2018, but failed to act ...
The Woodford Equity Income fund first breached the limit on unquoted assets more than a year ago, and had 20% of its portfolio in illiquid holdings in February 2019.

AiY

[PinkDalek]

The FCA letter dated 18 June 2019 is available via here https://www.parliament.uk/business/comm ... nse-17-19/

I'm no defender of the FCA but I don't think "failed to act", as per the Morningstar sub-header, is wholly accurate.

Best to read the letter I suppose.

[Howard]

The FCA letter dated 18 June 2019 is available via here https://www.parliament.uk/business/comm ... nse-17-19/

I'm no defender of the FCA but I don't think "failed to act", as per the Morningstar sub-header, is wholly accurate.

Best to read the letter I suppose.

Thank you for posting this link. Reading the letter from the FCA one can get an idea of the complexity of regulating OEICs (UCITS), especially as the organisation they are regulating in this case is LINK, which controls the activities of the WEIF.

The monitoring activity was pretty intense. It's easy criticise the FCA, but if they had intervened earlier the results might have been worse than they are now.

This affair just confirms to me that diversification is so important and the principle extends to fund managers as well as individual shares.

regards

Howard

[terminal7]

Hargreaves Lansdown disclosed that more than 290,000 of the firm’s clients – or about one in four of its total customer base – have been hit by Woodford’s decision to halt withdrawals from the £3.7bn Woodford Equity Income Fund on 3 June.

It would also appear that Dampier/HL have a lot to answer by keeping the Woodford vehicle on their 'top' 50 list.

T7

[Dod101]

I must say I have not read all of this thread but the apparently cosy relationship between Woodford and HL should surely be looked at as well. In fact I think 'Best Buy' funds should be banned for platforms because they can all too easily be taken as recommendations, although HL would of course deny that.

As for the letter from the FCA, the fact is that that is what we would hope they would be doing, but the question is 'Has all that monitoring had the desired outcome?' It has not stopped a suspension so to that extent it has failed.

Dod

[MaraMan]

I have long been a happy client of HL, but equally have long been concerned by the way they have pushed Woodfords funds while at the same time doing the opposite for Fundsmith. Luckily I avoided the Woodfood funds, for no other reason than I just wasn't impressed by him or the way he behaved when he went solo as it were. I did put a chunk of money into Fundsmith however, for the opposite reasons, and it has to date been one of my better decisions. It seemed to me that the writing was on the wall for the Woodfood fund for a long time before HL took it off their Wealth list, for which they might pay a heavy penalty.

I think many people were helped by HL's Wealth 150 as was, now Wealth 50 I note, as a way to navigate through the myriad of funds available. The structure of HL's fees though means directing people toward OEIC funds is very self-service as there is almost always an equivalent IT which would make sense for most people, but I suppose HL would just change their fee structure if many people moved to them.

MM

[scotia]

On the HL Site today - a note as to the effect the Woodford suspension has on its multi-manager funds. The following is part of the note:-


Woodford Equity Income is one of more than 60 funds that make up the 10 Multi-Manager portfolios. Our Multi-Manager funds are, by their very nature, diversified.
These funds, in turn, invest in a wide range of underlying investments. As a result the negative impact of one of these funds underperforming, or in this case having dealing suspended, is limited.
The total invested in Woodford Equity Income is just 5.99% of the total value of our Multi-Manager funds. It is held in six of our portfolios – Balanced Managed, Special Situations, Income & Growth, Equity & Bond, UK Growth and Strategic Assets. The weighting in these portfolios varies dependent on the portfolio, from 2.6% to 12.2%, as at 1 July 2019. Please see the fund factsheets for more details.

The full version is available at:-
https://www.hl.co.uk/news/articles/wood ... s-affected

[AsleepInYorkshire]

Woodford informs staff their jobs are under threat
https://www.ft.com/content/8b526046-9da ... 459ed04726
Neil Woodford’s crumbling investment business has informed staff their jobs are threatened a month on from the decision to suspend trading in his £3.5bn flagship fund.

I can never know but I do feel a touch of narcissism on Woodfords part. His latest comment is that his money is invested in the fund too. Feels more like a defocusing comment, viz, "I'm in the same lifeboat". And everyone should forget who sank the ship.

AiY

[xeny]

Another gem from that ft link

Of its 45 staff, 22 worked in administration, 19 in sales and four in investment management roles.

I understand you've got to sell a product, but that ratio of sales to investment management staff seems ridiculous.

[Dod101]

Another gem from that ft link

Of its 45 staff, 22 worked in administration, 19 in sales and four in investment management roles.

I understand you've got to sell a product, but that ratio of sales to investment management staff seems ridiculous.

Not much research then but he did not need that as he knew it all.

Dod

[AsleepInYorkshire]

Disaster for Neil Woodford as his top lieutenant Saku Saha makes an abrupt exit
https://www.standard.co.uk/business/dis ... 85626.html
One of Neil Woodford’s top lieutenants has abruptly left the company, marking the highest-profile casualty of the crisis engulfing the troubled firm so far.

Neil Woodford starts to shed longtime associates at shrunken fund
https://www.ft.com/content/30300e56-a32 ... 1c6ab5efd1
Will Deer, who is responsible for institutional sales at Woodford Investment Management, has been made redundant, according to two people familiar with the matter. His departure follows the exit of Saku Saha, one of Mr Woodford’s lieutenants, who was responsible for analysing early-stage and unquoted companies.

AiY

[Alaric]

A thread on New River REIT suggests the Woodford holding in that fund has dropped below the disclosure level of 3%.

Does the fund have enough cash yet to meet redemptions? What have platforms done? Presumably they wouldn't take buy orders, but are they taking sale orders? If so perhaps the cash demands of investors bailing out are growing as fast as the sale proceeds. There is a problem that if all the readily realisable stuff is sold, that leaves an asset base of the unquoted and illiquid shares. How balanced does the residual fund after all the pay outs have to be before it's allowed to resume trading?

[Dod101]

A thread on New River REIT suggests the Woodford holding in that fund has dropped below the disclosure level of 3%.

Does the fund have enough cash yet to meet redemptions? What have platforms done? Presumably they wouldn't take buy orders, but are they taking sale orders? If so perhaps the cash demands of investors bailing out are growing as fast as the sale proceeds. There is a problem that if all the readily realisable stuff is sold, that leaves an asset base of the unquoted and illiquid shares. How balanced does the residual fund after all the pay outs have to be before it's allowed to resume trading?

Presumably his unquoted shares will have to be below (probably well below) 10% before he is allows to open the fund again. In fact at the rate he is going, I would think it will have to be mostly cash by then.

Dod

[AsleepInYorkshire]

Nightmare for fallen star Neil Woodford on Eve Sleep mattress sales blow
https://www.standard.co.uk/business/nig ... 92931.html
EVE Sleep had a restless session on the stock market today as it slashed revenue guidance for the year.

2nd December 2017 - Neil Woodford Warns of Stock Market Bubble
https://www.bing.com/videos/search?q=ne ... &FORM=VIRE

One has to ask what has been going through this mans mind when it comes to selecting stocks?

AiY

[Howard]

Worrying article which suggests the fund might never re-open.

https://www.thisismoney.co.uk/money/mar ... eopen.html

I sometimes reflect that my portfolio of more than 100 holdings might be too diversified. This is as a result of my having a flutter on a speculative small cap occasionally and using several brokers to minimise risk.

And then I read about the amazing risks taken by a "professional" investor who invests what seems to me to be insane amounts in risky companies.

Mrs H and I have had a few duds (including a bond with Lehman brothers!) but they haven't made huge dents in our average returns or our liquidity.

Hopefully the investors will get their money back.

regards

Howard