What caught my eye this week.
They say all publicity is good publicity, but perhaps we’ll make an exception for Neil Woodford. The troubles of the former star fund manager dominated the personal finance news this week like no story I can remember since the run on Northern Rock.
And it’s essentially been a run on Woodford’s near-£4bn equity income fund that’s caused this Sturm und Drang.
For those with better things to do than monitor the latest bungling of the UK financial services industry, a quick recap.
Neil Woodford was a market-beating fund manager for many years at the giant house Invesco. He prospered across several bull and bear markets, and for what it’s worth I think he proved he had skill – or edge, as the pros call it – in as much as we can be sure such a thing even exists.
Anyway it’s a truth universally known that a man in possession of a large fortune, a super public profile, and a proven ability to beat the market generally wants to do it bigger and better. Five years ago Woodford set up his own fund shop in a blaze of publicity and raked in billions. Even the BBC described him as “The man who can’t stop making money.” By early 2017 his equity income fund alone was managing more than £10bn.
Yet scarcely two years later and Woodford’s reputation is in tatters. What happened?
Well, for one thing his returns have been lousy – enough to see his fair-weather fans pull money from his main fund so that by the end of May it was down to £4bn.
But that isn’t the real problem. What did for Woodford was that for reasons that would make little sense to students of financial history – but would be readily understood by, say, the writers of age-old Greek myths – this erstwhile bagger of big blue chips decided to stuff his income fund with a stash of illiquid and unquoted companies.
At first this odd departure wasn’t an issue. But as his mainstream income picks floundered and investors began to withdraw their money, Woodford had to sell assets to meet redemptions. The liquid holdings went easiest, which left a growing rump of harder-to-sell and “what’s it even doing in a Woodford income fund anyway?” fodder piling up on the books. It got to the point where the fund was in danger of upsetting the regulator.
Shenanigans ensued to try to manage down these problematic holdings. Nothing illegal, I stress, but also nothing much to do with the everyday business of running a vanilla income fund.
A few commentators began to warn of a looming crisis, and then one big investor asked for its £250m back.
Eek!
At this point, Woodford – sensibly enough, given where he’d gotten to, but you wouldn’t want to get there – decided to gate the fund, preventing investors from withdrawing their money. Woodford said he needed breathing space to reposition the portfolio without resorting to a fire sale.
The suspension was initially for 28 days, but it can be rolled over if deemed necessary.
Would you believe it?
The result of all this has been shock, anger, fear, gyrating share prices, grave dancing, and the usual dollop of nonsense.
The market had already sniffed out Woodford’s woes, and had been selling down the shares it thinks he’s going to have to unload. This got worse in the days following the suspension. Meanwhile the share price of Hargreaves Lansdown has plunged over the ramifications of the platform championing Woodford’s funds in its Wealth 50 recommendation list. Woodford’s Patient Capital venture-focused investment trust has seen its share price slammed, too, presumably on concerns the value of its holdings will be hit by any liquidation of shared holdings in Woodford’s main fund. (Ironic, given that an investment trust is exactly the right vehicle for long-term investment in illiquid assets.)
Meanwhile press and pundits – or at least those without egg on their face, or the chutzpah to talk through it – have endless perspectives on the urgent takeaways from Woodford’s downfall.
Merry Somerset-Webb in the FT [search result] offers one of best recaps, highlighting the apparent hubris behind some of Woodford’s decisions. However she concludes by bemoaning his personal money-making over the past few years. That seems to me a bit of a populist take – few complained about Woodford’s pay when he was in the ascendant and clients were shoveling £15m a day into his fund. (In a similar vein there are stories about Hargreaves Lansdown bigwigs making a mint selling shares in the platform in the weeks before the Woodford hit the fan.)
Some see Woodfall’s downfall as proof – amply backed up by all experience and evidence – that active fund management is doomed to mean reversion. The Evidence-based Investor offers a pretty temperate perspective to that affect.
A few believe Woodford’s creep into unquoted holdings is a canary in the goldmine of a wider problem. They warn that pension funds have been similarly encouraged into unsuitable alternative holdings by historically low interest rates – and that they’re just a financial crisis away from being found out. Even the Bank of England governor Mark Carney dropped hints last week.
And then there are the spokespeople and journalists bemoaning how Woodford has tarnished the reputation of all those fund managers who are delivering for their clients. If the financial services industry has done anything wrong, they suggest, it’s in putting the wrong person on a pedestal!
Perhaps the apogee of this is the commentator who blames not Woodford but the FCA for – um – Woodford’s problems, and says the takeaway from the drama should be to “put trusts on buy lists”.
No no no.
We all know what the answer is
Look, I like investment trusts as much as the next inveterate active investor. And it’s abundantly clear that Woodford shouldn’t have had illiquid holdings in an open-ended fund.
But so what? Anyone who believes that the answer to this week’s soul searching is for platforms to tout trusts on the same buy lists that cherry-pick open-ended fund managers hasn’t been paying attention for – oh – the past 20 years.
What all these writers should be saying is: “Forget about active managers! The average investor should simply put their money into a diversified portfolio of cheap index funds. The evidence has shown us again and again that most active fund managers fail to beat the market. Go and read the Monevator website, or that book by Lars Kroijer. Then get a new hobby.”
They don’t for a variety of reasons. As we’ve discovered over the past ten years of blogging about passive investing for a revolving door of readers, the main ones are there’s not much money in it, and there’s not even much of a long-term audience.
Listen, if I was my passively-pure co-blogger, I’d no doubt be penning a screed against Woodford and the very idea of active investing. But The Accumulator never writes Weekend Reading, and his punishment is I get to ride my own hobby horses.
And personally, I understand the pull of active investing. I like stock picking. I read books about great managers. I get it.
But that’s exactly why I recruited my co-blogger to fill the blog full of articles about the boring index funds that people actually need.
The way some have covered the Woodford drama, you’d think index funds didn’t exist. To paraphrase:
- “Investors will wonder where they can turn if they can’t even trust a star like Woodford!”
- “Woodford reminds us that we need to watch our investments like a hawk and ditch losing managers!”
- “You need to know who the investing heroes are of today – not yesterday!”
- “There’s no advice for people who just want a comfortable retirement”.
To which I say:
- Turn to index funds
- No you don’t
- Ignore fund managers because they overwhelmingly fail to beat the market
- Yes there is – read this blog.
Can’t see the trees for the Woodford
There will always be people – like me – for whom investing is a hobby. We enjoy picking stocks, and following the ups and downs of the market.
But we’re the investing equivalent of my brother. He’s a mechanic who likes to get hold of scrap cars to do up over several years in his garage.
Did you drive to work today in a car you built from the bolts up? Do you feel the need to? Are our daily newspapers full of tips about how to refit a dashboard or re-tune an engine?
Of course not. And none of the equivalent fund investing guff in the media or on the platforms is there for the benefit of the average saver, either.
It seems doubtful that Woodford will regain his standing. We’ve seen him scapegoated this week, but we might note that his fund at the centre of all this hasn’t lost much money. It hasn’t wiped out fortunes – it’s just lagged a benchmark and delivered a flat performance. By the pyrotechnic standards of financial scandals, that’s hardly the greatest crime.
The real lesson from Woodford’s woes is you’re better off just tracking the benchmark with an index fund. This is all most people need to hear.
Once the storm passes, however, I’m sure there will be a new Woodford to be feted – Nick Train or Terry Smith perhaps, or as I pointed out last week James Anderson.
Pundits who don’t know (or worse, ignore) that active investing is a zero-sum game will go back to writing illogical nonsense – claiming that the bull market is drawing to a close, and so it’s “time for active management to shine”.
We’ll also hear more from active fund managers about how index funds and passive investing threaten market stability – even as we all gradually forget about the £4bn income fund run by the most famous active manager in Britain that locked-up the money of its investors.
This is ridiculous – investing for the masses is a solved problem.
It’s 2019, and someone saving for their retirement needs a star fund manager about as much as they need a horse.
From Monevator
BlackRock MyMap fund-of-funds reviewed – Monevator
From the archive-ator: How to construct your own asset allocation – Monevator
News
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1
Bank overdraft fees targeted in major shake-up – BBC
More than £90bn was saved in workplace pensions in 2018 – Pensions Expert
Freelance contractors face a looming tax nightmare [Search result] – FT
Housing minister’s plan to let young people raid their pension pots for a deposit to buy a home is branded ‘dangerous’ and ‘bonkers’ by experts – ThisIsMoney
Four million people have now fled the former socialist paradise of Venezuela – Guardian
The bond market hasn’t been this far out of whack since the tech bubble – via Hargreaves Lansdown
One in ten adults (and one in six young people) have gone cashless – Guardian
You can buy a home in the hills of Sicily for $1, but there’s a catch – CNBC
Yields are down, but is the bond market really so smart*? – A Wealth of Common Sense
*Yes it is! – Fat Tailed and Happy
Products and services
The case for the Vanguard All World ETF as your go-to global tracker – IT Investor
Five-year fixed rate mortgages now nearly as cheap as two-year deals – ThisIsMoney
Ratesetter will pay you £100 [and me a cash bonus] if you invest £1,000 for a year – Ratesetter
Got a Topshop or Miss Selfridge gift card? Use it now – Guardian
Has adding ‘liquid alternatives’ to portfolios improved performance? – Morningstar
Two-bedroom city centre flats for sale [Gallery] – Guardian
Comment and opinion
The randomness of global equity returns – Independent Thought
Should you rebalance your portfolio more frequently? – MoneySense
Dividend growth investing to fund a 30-year retirement [US but relevant] – Retirement Field Guide
The Goldilocks zone of personal finance – Of Dollars and Data
Is the bond market predicting recession? – Pragmatic Capital
With hedge funds floundering, endowment funds like Harvard need to lower fees not pay – Yahoo
Good ideas can’t be scheduled – Morgan Housel
How early-stage VCs decide where to invest – Wired
A new valuation for Tesla – Musings on Markets
Sainsbury’s 5%+ dividend is no reason to invest [PDF] – UK Value Investor
Things to consider for ESG portfolio construction [Nerdy!] – Alpha Architect
Brexit
Heavyweight Tory fantasists up the pace on the road to nowhere – Marina Hyde
Jeremy Corbyn shrugs off referendum calls after by-election win – Guardian
Kindle book bargains
The Millionaire Next Door by Thomas J. Stanley – £0.99 on Kindle
How to Make a Living with your Writing by Joanna Penn – £0.99 on Kindle
The 80/20 Principle: The Secret of Achieving More with Less by Richard Koch – £0.99 on Kindle
The Square and the Tower: Networks, Hierarchies and the Struggle for Global Power by Niall Ferguson – £1.99 on Kindle
Off our beat
Too many people want to travel – The Atlantic
Why can’t we believe unmarried childless singletons are happy? – Guardian
The danger of comparing yourself to others – Farnam Street
When adults get caught up in teens’ AirDrop crossfire – The Atlantic
Julius Caesar at the Battle of Hastings [Podcast] – Hardcore History
And finally…
“Back in those less complicated times, there were lots of industries that operated more or less by rote: the old banker’s motto, for instance, was ‘3-6-3’: take money in at 3 percent, lend it out at 6 percent, and be on the golf course by 3 P.M.”
– Bethany McLean, The Smartest Guys in the Room
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I was looking forward to your Woodford analysis which didn’t disappoint. Your objective assessments work every time!
This is a must read for anyone who is feeling fragile over their Woodford investement, or are indeed about to embark on the investing journey.
This is a “must read” .
Great collection of links too.
Many thanks.
“some see Woodfall’s downfall”
Writing Sun headlines now?
I got bored with the ‘Woodfall’ 😉 story as all I saw were the same interviews with the same retired Colonel, expressing surprise because he didn’t ever remember this happening before. Really? I remember it happening after 2008, I would guess it happened after the dot com bust? What about through the 90s and 80s. If you’re in your 60s with hundreds of 1000s to manage, should this possibility be coming as a surprise?
There isn’t much scandal here
He was just lucky … until he wasn’t
Also there were probably a few more people than just him responsible for his funds success at Perpetual than just him
The real story here is the folly of blindly following the loudest most confident voice in the room
Hmm … Boris Johnson…
“……it is hard to outperform the stock market consistently. This makes it all the more vital for investors to be aware of their costs. The easiest way to build up wealth in the financial markets is to give away as little of it as possible to money managers. That aim is easily accomplished by investing in passive funds.”
A quote from the Monevator archive? No, it’s an extract from a leader in today’s Times. Perhaps the message is getting through.
The wonderful thing about life is that the life forms cannot stand still- you get eaten!
Humans are no different-easily bored and always looking for the new thing or the lion eats us!
This hard wired biological survival mechanism from the plains of Africa where we originated -doesn’t suit/does suit investing.
There will always be individuals pushing the envelope-most get eaten by the lion a la Woodford but the one or two who survive take us all forward in their slipstream -Amazon,Google,Apple etc
Investors must decide what category they are in quickly at the start of their investing career -Index Funds or aiming to shoot the lights out
For most of us control your instincts (quite an ask!) and index
Thank goodness for the innovators who take us ahead -are you one?
xxd09
‘Housing minister suggests using a pension for house deposit branded dangerous and bonkers’
Isn’t that effectively just a LISA?
The message is simple.
Active funds have to take bigger and bigger risks to keep ahead of the remorseless slow grinding progress of the cold arithmetic of compound interest that drives passive funds.
It was always going to be interesting how with so may similarities a comparison between Woodford’s funds and Fundsmith was going to play out and now there are some indications. It seems Terry freed from his former employer’s rules still broadly stuck with what he knew best, while Neil used the freedom to try out new ideas instead. In an era when QE money-printing has lifted all boats, creating a stockmarket bullrun less related to the business acumen of listed companies, lagging the index is all the worse. Taking into consideration that Fundsmith’s stable of only a select few chosen companies are supposed to be defensive and yet are still outperforming comparable competitors also reflects badly on Woodford’s new strategy.
Yes, there have been a few mentions of index funds in the coverage mix — as we know the growth of passive investing proves the message is getting through. And we are just a small part of the picture of course. 😉 Other passive purveyors are available, as the BBC used to say.
However I think you have to question why there is really any non-specialist publication saying anything other than “use index funds” in 2019. It’d be like a slot on The One Show about the best way to apply your own leeches. 😉
@Ben — RE: “Downfall”, yes, perhaps I’ve been too immersed in the *cough* saga this week. 😉
Woodford reminds us that deviating away from your core competance is often a bad sign. Plus that buying illiquid private equity using an OEIC with daily liquidity is borrowing short and lending long. Liquidity mismanagement and mandate drift. Oh dear.
With regard to the passive vs. active argument, however, I’m not sure what it adds. When I started at an investment bank over 20 years ago, I was told that active S&P managers had information ratios (active return/tracking error) of zero. I don’t think much has changed on that score.
To apply that to all asset classes is not a fair extrapolation. I was shown data in 1998 that active bond funds had IRs greater than zero. The data I see now implies the same is still true: active bond funds are still outperforming their indices, assuming fees are not too much over the tracker. I understand most Monevator readers seem to use bonds almost as a pure cash substitute but I want my bond funds to generate decent returns. I’m seeking country, duration and yield curve risk. So personally I prefer to have almost 100% trackers in equities and 100% active funds in bonds.
@ZXSpectrum — Morning. I’ve was thinking about you this week… for some reason I’ve suddenly got addicted to watching Total War replays on YouTube when I need my brain to switch off for 20 minutes, and your idea of retiring to a life heavy with playing video games has seldom looked so appealing. 🙂
Regarding the case for active bond funds, I’ve read multiple times the case is essentially the same as it is for active equities. I’ve heard bond specialists argue the structure of the market / nature of buyers and how they behave makes a difference, but I’ve also read stuff like this from respected expert Larry Swedroe (quoting research by Martin Rohleder, chair of Finance and Banking at the University of Augsburg):
https://www.etf.com/sections/index-investor-corner/swedroe-active-bond-funds-no-better
I appreciate this is your professional field, and thus you may have insights that enable you to select winning bond managers. Fair enough. 🙂
However that doesn’t change the situation at all for ordinary individual investors, who would be extremely poorly placed to select the better funds, and who in general are going to be more swayed by recency bias, marketing, and so on.
In other words even if I saw evidence of a small out-performance by active bond funds in aggregate, then I’d still feel more comfortable suggesting private investors simply buy a cheap bond ETF where they know what they’re getting rather than play the hit-and-miss game of finding the winners for small incremental gain.
As I always say I invest actively, and I don’t doubt some people have edge. I imagine you do in fixed income, from what I know from your comments! 🙂 But I don’t see this as something that implies a different stance for the average investor.
I think there are two lessons from the Woodford implosion:
1) Illiquid investments shouldn’t be in an open-ended fund, or at least not above something like 10% in total (not exactly a novel idea, and most pundits seem to have picked up on this one)
2) 99% of investors cannot tolerate short-term underperformance.
The second point is more interesting. As Buffett has said:
“Failing conventionally is the route to go; as a group, lemmings may have a rotten image, but no individual lemming has ever received bad press”
Woodford’s old fund fell by much more than his new fund, but it fell during the crisis when everything else was falling, so nobody cared.
Now that he’s underperformed for a handful of years, most investors want out because most investors cannot stomach even a small amount of underperformance.
I think we have close to zero evidence whether Woodford has lost his ‘magic touch’ because we don’t have anything like enough data. 10 years might be a good start, but we’re only at year 5 (his fund launched in 2014).
Switching to an index tracker doesn’t promise better performance, but at least you can’t underperform (or beat) the market if you track the market.
Joel Greenblatt found much the same thing with his Magic Formula fund a few years ago. Although long-term performance may have eventually been significantly better than the market, the fund’s investors couldn’t hold on when the strategy underperformed for even short periods.
His answer? To hug the benchmark much more closely so that investors are not shaken loose by short-term underperformance.
So despite all the talk about how benchmark huggers are bad, they’re actually what most investors really want, and by most I mean people who invest in active funds as well.
Woodford probably thought he was doing what MPs and regulators wanted in the post-crisis world; having a fund with a large ‘active share’, i.e. significant differences from the market. Unfortunately for him, people don’t like active share, because even if it will eventually outperform over 20 years they’ll sell as soon as it inevitably underperforms over the two or three years.
So for those who still want to invest actively, take a close look at how far you’re moving from the market index and ask yourself whether you’re comfortable zigging while everyone else is zagging.
@John — Afternoon! I think a solution for those who see the logic of index funds but can’t resist the allure of active funds — and who go in with their eyes open — is what used to be called ‘core and satellite’ or ‘index and a few’.
That is, cover off the bulk of your portfolio / benchmark tracking with the cheapest index funds, and then use a few selected active funds (if you must) or stock picks (if you enjoy the process) to round things off and add some excitement.
Closet tracking active funds aren’t just terrible because they don’t do what they say. They also cost a lot more to run! With a strong core of cheap index funds, you’re getting that same core coverage very cheaply, so the burden of your active forays is much lighter to carry.
Personally I think stock picking is a much better approach than active funds for those very enthusiastic about investing, though. You get all the fun, and you’re not paying for someone else’s Ferrari. (More seriously, you don’t have to pay for their 0.5-1% annual fee load, and if you have edge for some reason I think it’s as likely to show up in stock picking as in being able to select active winners. Indeed if you can do the latter, go earn millions running a fund of funds!)
Most people should just use index funds though. 🙂
@John
I think that captures half the saga. I think the other half is that Woodford is /the/ rockstar fund manager. At a time when active investing is ‘under attack’ like never before, he was a man you could point to and say “see, it works” and everyone bought into that.
Essentially Woodford was a bubble, and like nearly all bubbles, this one went pop. Now we will begin the hand wringing, and then a new rockstar will be selected.
The little details matter. As TI says, Woodford did nothing illegal, but all those little things didn’t feel right at the time. The listings in Guernsey, relying on IPOs to get the unquoted stakes down, the swap deals with the Patient Capital closed-ended fund. Cutting those little corners until there’s nothing left to cut. And people were calling him out on it. Repeatedly. You can find it in the FT archives, among others.
Obviously I’m a chartered accountant by trade, but this is why corporate governance is important. I wonder if such problems would have happened if Woodford stayed at Invesco. You have teams and processes and red tape. Little roadblocks to try and stop things going tits up. Save you from your own hubris. You also have all the annoying people continually asking “why are you investing X when your expertise is in Y?” It surely must have been much harder for anyone to challenge Mr Woodford when his name is on the door and he was The Superstar Investor.
Things like risk management, operations, compliance all sound boring. How annoying they are. We like the action, the sexy bits. But they are there for a reason. Silently keeping the lights on.
Of course, no surprise that the FCA starts investigating once the horse has bolted. I remember seeing many calls for the FCA to look into what was happening 2 odd years ago. Maybe that would have saved a lot of people a lot pain. Wishful thinking.
@TI. While I do work in fixed income and FX, I don’t really work much with bonds (derivatives only please!). So I don’t think I have any edge picking bond funds.
The data I’ve seen over the past two decades does seems to imply that active global bonds funds are, as an aggregate, outperforming vs. the index for many (but not all) bond fund classes. I can’t link to this data but this AQR report sees the same (https://www.aqr.com/Insights/Research/Alternative-Thinking/The-Illusion-of-Active-Fixed-Income-Diversification). There are some classes such as domestic US funds that seem to struggle. Now, it’s debatable how much of this is alpha vs. systematic beta. AQR say it’s systematic beta (but AQR are the systematic beta house so …). There have been a number of persistent themes and risk premia to be exploited in recent decades. Moreover, we’ve been in a secular bull bond market for 30years+ so even a dumb active manager might get the joke at some point. It also has to be borne in mind that the idea that investment is a zero sum game (Sharpe’s “The Arithmetic of Active Management”, 1991) is based on the implicit assumption that index is never reconstituted and that there is no primary market. For many bond markets, that assumption is not valid as academics such as Pedersen discuss (https://www.aqr.com/Insights/Research/Journal-Article/Sharpening-the-Arithmetic-of-Active-Management).
I suppose my take is that active funds can pick up enough in terms of pure RV trading, auction concessions, index rebalancing to justify say another 15-30bp in fees over the tracker. It’s also my experience that tracking error is very poor on some trackers. For example, when I sold out all my UK equities to buy long duration UK gilts in early 2011, I bought a portfolio of funds, both passive and active. When I sold most of this after the Brexit vote in 2016, I found that the Vanguard tracker (VUKLDGA) had performed shockingly. The index had returned around 100% over that period but Vanguard was down at 96% while all my active funds were in the 100-105% area. It’s fees were 25bp but it was underperforming by more like 75bp/annum. I discovered that in the first couple of years it simply hadn’t been taking the concessions from DMO gilt auctions and was getting consistently ripped off on monthly index reweightings. Passive good, dumb passive not so good.
p.s. Modding Total War games was my hobby before I had kids.
@TI/ZX – Total War, what about EU4?
https://www.telegraph.co.uk/investing/funds/definitive-way-invest-every-major-market/
a piece from 30 April this year which suggests a pick n mix approach to active vs passive and says (on the basis, they claim, of actual numbers from A J Bell) that it pays to use trackers for Global, USA and Europe, active elsewhere including UK.
I hasten to say I am reporting, not supporting, this approach.
Well it’s just not good enough. Where was the regulator? It’s a disgrace, etc, etc…
Good post. Do people never learn? HL Wealth 150, Wealth 50, Wealth 10 or whatever it is. Have peeps not worked out why these always have high fees? If it says Wealth something just move on, and DON’T even think of giving them any money. When HL pushed up my fees on my low cost trackers I moved my money to someone else (iWeb actually).
But I’m enjoying all the publicity — it was all so predicatable.
Keep up the good work.
@Anonymous Coward — Just to be clear I’m not recommending the approach as a way of getting better returns. 🙂 For most people it will probably lead to worse returns than if they’d just indexed entirely. I’m saying it’s less bad, and specifically if they’re scared of deviation from the benchmark like someone (John?) mentioned then it’s a cheaper way to get your benchmark hugging while still having a few active lottery tickets. 🙂
@TDM — EU4? (I’m a bit out of touch.)
I am all in trackers save that against my better judgement I have around 25% of my portfolio in Fundsmith. I believe it’s known as FOMO or fear of missing out.
Europa Universalis 4
@TI. Paradox Interactive’s Europa Universalis 4. Paradox does produce great strategy games. Unlike Creative Assembly’s Total War series which have become increasingly “arcade like”. Nonetheless, once the TW games are modded/scripted to increase depth, there is nothing quite like reversing the fall of the Western Roman Empire by defeating Atilla at the Battle of Châlons. Perfect for any nerd dragon and far more interesting than debating “active vs. passive”!
@Joe 45 – Trackers + Fundsmith works for me too.
Thank goodness I found you. Otherwise I may gave been taken
In by the Sundays. A little late perhaps, but ! Well you all know the saying. Cheers
@Just a dude
Fairs fair – ‘Wealth’ funds, managers etc do indeed generate wealth. Just not for the investor…..
Yes yes, all good, but what I really want to know is if WPCT shares has tempted anyone yet!
My wife, who knows about as much on investing as I do about Love Island, said to me this morning “That’s shocking about that Neil Woodford stopping people taking money out of their own accounts!” She’d been reading the Mail on Sunday. For her, and millions like her, this is why the stock market is “Here be dragons” and she’d never knowingly dabble in it. Most readers of this blog know the score and make our decisions accordingly, but for Joe Public this story is a good advert for keeping their money under the bed. It’s a shame, and Woodford should be ashamed, but I’ve yet to read anything that tells me that he or Hargreaves Lansdown are doing anything but laughing their way to the bank.
@ZXSpectrum48k @TDM — Aha! Looks like something I would have appreciated back in my “Civilization: The Lost Years”… 😉 Must be honest it’s the arcade element of these later Total Wars (I haven’t played them since the Shogun days!) that have drawn me in. That and the commentary, which I’ve made fun of friends for enjoying on Twitch etc for the past 3-4 years and now find myself curiously addicted to. I think it’s probably the Attila mod that I’m fancying — all those bright shields and heraldry. Does appear to become a grind-mosh-fest though. Historically most losing armies fled the field (albeit sustaining most of their casualties on the way out) but I see TW has continued with its Battle of Cannae style body counts!
Agreeing with John above – re people not being able to handle short term under-performance and further more investing for the wrong reasons. Like this one from the Guardian……
“I‘m getting married on 10 August and we’ve been saving for over two years. My final bill to the venue and suppliers is due at the start of July. If I can’t withdraw my money I’m going to be looking to beg, borrow or steal until I can get it released.”
James M, 28, Newcastle
https://www.theguardian.com/business/2019/jun/08/neil-woodford-fund-manager-rise-and-fall-investors-bright-star-black-hole
So….you were investing in a fund to….pay for your wedding???
as pre ka suggests, as and when the fund comes back online, the contrarian move would surely be to buy a bit? sentiment being so terrible, price prob very good?
@rhino
Already looked at that last week
Woodford Patient Capital has debt, about £150m of it, as a short term overdraft, so I’m not sure that really works even at a 30% discount
Mind you…. everything has a price
I’m kind of surprised it used gearing considering it was investing in early stage companies
I’ve seen a lot of private equity trusts use gearing (which is gearing on gearing already in the investments) however
The cynic in me says that the investment trust used gearing to increase the assets under management and therefore the fees to Mr Woodford
@NL – Fund frozen, but possibly only for selling, can you still currently buy?
That would be brilliant! you can’t have your money back but feel free to keep giving me more
Is there a scandal in the HL bigwigs cashing out millions the preceding week? Or are the amounts, though large in absolute terms, relatively small in proportion to total wealth of HL bigwigs?
I wasn’t sure whether their trading could be any given week or whether my righteous indignation muscle should be triggered?
@NL
You are correct the figures don’t work with NAV at these levels but if one believes that one or two of the holdings in WPCT will make the big time then I suppose it’s worth a punt.
‘Can’t see the trees for the Woodford’
Surely there is a punishment for this, erm , ‘pun’ or whatever it is. We should demand justice, or at least a firm promise to try and do better.
the block is on both incoming and outgoing funds
i wonder if he will cave to the FCA and also suspend his fees?
@TheRhino – I think you’re talking at cross purposes. Woodford Patient capital that’s trading under NAV is a listed investment trust. The suspended fund is an OEIC, Woodford Equity Income.
@TI yes, I’m talking about the fund, I think NL and PK are talking about the IT.
That IT is the one he was using to swap stuff around from the fund right?
I am sure I read a few years ago that Woodford bought into a cold fusion company. I would not trust any of my money to someone who that was likely to be a good investment.