Woodford anyone?
Discussion
LeoSayer said:
I saw a report that Woodford's fund was 20% invested in illiquid securities when the fund's regulatory limit was 10%.
I assume that's a passive breach as a result of redemptions being funded by selling the liquid securities but it does suggest the fund should have been suspended earlier than it was.
I read similar and to avoid earlier breaches he’d got some shares listed in the Channel Islands so he could class them as “listed” even though they weren’t trading. I assume that's a passive breach as a result of redemptions being funded by selling the liquid securities but it does suggest the fund should have been suspended earlier than it was.
Edited by LeoSayer on Friday 21st June 09:45
Serious regulatory breach if he’s done that. A real case of someone having too much control and power at an instuition with no checks and balances. Never a good sign when someone puts their name above the door....
DonkeyApple said:
CaptainSlow said:
It may seem like pedantry to the uninformed but it certainly isn't.
Anyone writing the term "spreading risk" beyond the first week of an undergrad course would get their paper torn up and considered a lost cause.
You diversify to reduce risk..."spreading" risk means you end up with the same amount of risk...just spread...which is incorrect.
If we are taking the two words to mean two different actions (which I believe rockin was but rather logically using one of either of the terms to imply the same meaning) It wouldn’t be the same level of risk as you’ve reduced concentration risk. Anyone writing the term "spreading risk" beyond the first week of an undergrad course would get their paper torn up and considered a lost cause.
You diversify to reduce risk..."spreading" risk means you end up with the same amount of risk...just spread...which is incorrect.
When constructing an investment portfolio you begin with setting the level of risk that which to run. You can achieve this by running lower risk investments and diversify with higher risk investments to achieve the overall desired risk profile or you could use multiple investments that match the desired risk profile, limiting the concentration risk with a suitable spread of investments.
In the context of PH I would consider it the norm to use either word to cover either action. And in general I don’t think diversification strictly means spreading the investment pool over a range of differing risk profiles but simply the act of not running concentration risk whether that be a product or market. In other words, the same as ‘spreading’ in this context.
A) Because of risk limits
B) Because they don’t want to have such a large position in any single security that they can’t trade out of it readily. This one is normally self imposed.
In reality that means that most fund managers will know 20 or 30% of there portfolio extremely well and will have done extensive due dilligence and met the company etc. After that it tails off somewhat and the reality is that maybe 20% or 30% are “low beta” names that they don’t really know much about. The latter can properly bite you in the arse.
Of course W Buffet esq is known for his lack of diversity....
Cheib said:
I read similar and to avoid earlier breaches he’d got some shares listed in the Channel Islands so he could class them as “listed” even though they weren’t trading.
Serious regulatory breach if he’s done that. A real case of someone having too much control and power at an instuition with no checks and balances. Never a good sign when someone puts their name above the door....
My jaw hit the floor when I first read that...it was back in March:Serious regulatory breach if he’s done that. A real case of someone having too much control and power at an instuition with no checks and balances. Never a good sign when someone puts their name above the door....
https://citywire.co.uk/funds-insider/news/revealed...
It looks like he created the Guernsey vehicle to work around the checks and balances that were implemented by the (external) manco.
I wonder if that reveal, which will probably throw up other fund managers who have been doing the same, will kill off Urquhart Stewart’s plan for his regional stock exchanges?
Was it called Regionally? He’s been a proponent for years of bringing back regional exchanges but I wonder if a big commercial driver was that it would open up access to very large pools of funds in the manner detailed above?
Was it called Regionally? He’s been a proponent for years of bringing back regional exchanges but I wonder if a big commercial driver was that it would open up access to very large pools of funds in the manner detailed above?
The guys completely lost the plot by the looks of it.
I was quite heavily invested in the fund in the early days but got out after about a year. I'm glad i did now!
"In the worst cases among Woodford's rivals, the research indicated that the Invesco High Income Fund, which Woodford used to manage, would take 19 months to sell off, the M&G Recovery fund 15 months and Woodford's former Invesco Income fund nine and a half months.
Yet that paled in comparison to the astonishing 31 years it would take to sell off Woodford's Equity Income Fund in its entirety.
At the opposite extreme, Fundsmith – a fund managed by rival Terry Smith, who favours larger listed firms – would take just a few hours to sell off."
Is the above is even close to being accurate you have to wonder what he was thinking.
I was quite heavily invested in the fund in the early days but got out after about a year. I'm glad i did now!
"In the worst cases among Woodford's rivals, the research indicated that the Invesco High Income Fund, which Woodford used to manage, would take 19 months to sell off, the M&G Recovery fund 15 months and Woodford's former Invesco Income fund nine and a half months.
Yet that paled in comparison to the astonishing 31 years it would take to sell off Woodford's Equity Income Fund in its entirety.
At the opposite extreme, Fundsmith – a fund managed by rival Terry Smith, who favours larger listed firms – would take just a few hours to sell off."
Is the above is even close to being accurate you have to wonder what he was thinking.
honest_delboy said:
Above link says the next update will be before 29th July, which means today?December then?
The BBC article doesn't even say *which* December!!!
https://www.bbc.co.uk/news/business-49151546
The BBC article doesn't even say *which* December!!!
https://www.bbc.co.uk/news/business-49151546
Skyedriver said:
OK so I don't have a huge sum in Woodford, my sons JISA neither but would it be better if it was just reopened sold for what it was worth, we take the hit and move on. While the money is sat doing nothing it could be working elsewhere.
Not sure you understand why it is suspended.Skyedriver said:
OK so I don't have a huge sum in Woodford, my sons JISA neither but would it be better if it was just reopened sold for what it was worth, we take the hit and move on. While the money is sat doing nothing it could be working elsewhere.
The issue is that in order for you to sell the underlying assets need to be sold. It’s been suspended because that cannot happen in an orderly manner due to the high level of illiquid holdings. They need to convert those illiquid holdings to cash before clients can convert their holdings to cash. I imagine that right now Woodford is being offered pennies on the pound for these holdings as he is a forced seller and is running an open invitation for everyone to have a shot at reaming him a new one.
Just had this from HL. 6 times because I’ve got the fund in my two accounts, my 2 children SIPP and their stocks and funds accounts. 5 figures wrapped up across these 6 accounts
Link Asset Services (the fund’s Authorised Corporate Director) confirmed today that trading in the Woodford Equity Income Fund will likely be suspended for another four months until early December.
It is extending the suspension in the best interests of all investors, to give the fund manager time to reposition the portfolio in a measured and orderly way. While trading remains suspended we will continue to waive our platform charge for the Woodford Equity Income Fund.
In a statement on Monday 29 July, Link said:
“We have considered various alternatives and have decided that the best option in the interests of all investors is for the suspension of dealings to continue. This has been agreed with the Depositary and we have informed the Financial Conduct Authority accordingly.
We anticipate that the suspension of dealing is likely to last until early December while we implement the strategy to re-position the portfolio in order for the Fund to be re-opened at that time, and which is conditional upon achieving the target fund profile.”
Link added that the suspension extension gave the fund manager, Woodford Investment Management, time to address the liquidity of the fund, stating that:
“In our view, this is a realistic amount of time for Woodford to complete a measured and orderly re-positioning of the Fund's portfolio of assets ensuring that there is adequate liquidity whilst preserving or realising the value of the assets.
We have concluded that this approach would represent the best outcome in terms of value, time and equal treatment for all investors. Importantly, it would allow all investors to choose, whether they wish to remain invested in or to withdraw their investments from the Fund.
The work that is underway to re-position the portfolio is designed to ensure that there are liquid assets available for these purposes, while continuing with the objectives and investment strategy of the Fund.”
We were informed on Monday 29 July by Link of their intention to keep the fund closed to trading for another four months.
Link has confirmed that they will continue to monitor the fund’s portfolio, and says progress has been made. Link is consulting with specialist professional advisers so that they can ensure decisions are taken in the best interests of investors. While the guidance suggests the fund will be closed until early December, Link have committed to formally reviewing the suspension every 28 days and will update investors with any progress at those points. We will continue to keep you updated.
Link Asset Services (the fund’s Authorised Corporate Director) confirmed today that trading in the Woodford Equity Income Fund will likely be suspended for another four months until early December.
It is extending the suspension in the best interests of all investors, to give the fund manager time to reposition the portfolio in a measured and orderly way. While trading remains suspended we will continue to waive our platform charge for the Woodford Equity Income Fund.
In a statement on Monday 29 July, Link said:
“We have considered various alternatives and have decided that the best option in the interests of all investors is for the suspension of dealings to continue. This has been agreed with the Depositary and we have informed the Financial Conduct Authority accordingly.
We anticipate that the suspension of dealing is likely to last until early December while we implement the strategy to re-position the portfolio in order for the Fund to be re-opened at that time, and which is conditional upon achieving the target fund profile.”
Link added that the suspension extension gave the fund manager, Woodford Investment Management, time to address the liquidity of the fund, stating that:
“In our view, this is a realistic amount of time for Woodford to complete a measured and orderly re-positioning of the Fund's portfolio of assets ensuring that there is adequate liquidity whilst preserving or realising the value of the assets.
We have concluded that this approach would represent the best outcome in terms of value, time and equal treatment for all investors. Importantly, it would allow all investors to choose, whether they wish to remain invested in or to withdraw their investments from the Fund.
The work that is underway to re-position the portfolio is designed to ensure that there are liquid assets available for these purposes, while continuing with the objectives and investment strategy of the Fund.”
We were informed on Monday 29 July by Link of their intention to keep the fund closed to trading for another four months.
Link has confirmed that they will continue to monitor the fund’s portfolio, and says progress has been made. Link is consulting with specialist professional advisers so that they can ensure decisions are taken in the best interests of investors. While the guidance suggests the fund will be closed until early December, Link have committed to formally reviewing the suspension every 28 days and will update investors with any progress at those points. We will continue to keep you updated.
Edited by oldaudi on Monday 29th July 19:13
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