I've been in on a meeting with members of Woodford's team. They've confirmed that:-

• The fund is unlikely to open for two to three months at least. It'll take that long to raise the amount required fairly and when they do re-open chances are there will be a dilution levy, i.e. an exit charge for people taking their money out.

• The stocks they've sold so far have been at a profit to the price they bought it for. They're very hopeful that one of the unquoted stocks now held in Patient Capital Trust is going to earn them a handsome profit in the near future.

• They are not going to waive their management fees. They're going to have further internal meetings on this but it's highly unlikely as they don't generate enough income from elsewhere (Patient Capital Trust charges a performance fee rather than a management fee so they've been running it at a loss for a while due to underperformance) and they're already in the middle of cost cutting measures. If they cut off their primary source of revenue for c. three months they'd probably go under.

• When the fund re-opens they're going to hold more FTSE 100 stocks. They doubled down that their view is right to focus on undervalued stocks such as domestic facing housebuilders rather than global facing stocks such as Unilever with ridiculous price-earnings ratios. They're contrarian investors so periods of underperformance should be expected.

• They believe they're the victims of an orchestrated negative media campaign, with negative coverage of them for well over a year. They repeatedly mentioned this largely being the fault of the media - overblowing the issue so that investors would panic and applying pressure so that backers like St James's Place would drop them. They even went a bit tinfoil and said there seems to be a coincidental number of occurrences between negative coverage of Woodford and the stocks they've picked being shorted. They seemed more convinced that Woodford have ran a poor PR campaign rather than running the fund poorly.

>>7601
Cracking work!

Financial Conduct Authority boss Andrew Bailey said fund rules may need amending in the wake of the Woodford fund suspension. In a letter penned for the Financial Times, Bailey said the suspension of the £3.7 billion fund last Monday had raised important questions about the UK’s regulatory approach towards investment in illiquid assets.

Bailey stressed financial markets should support investment in firms that contribute to economic growth and create jobs, which in turn foster innovation. However, he noted that these businesses can often be illiquid and not all will succeed.

‘We need appropriate rules around investments in illiquid securities to protect investors,’ Bailey wrote. ‘I believe there should be limits on the share of illiquid investments held in collective investment schemes whose shares are typically bought and sold freely and frequently.’

https://citywire.co.uk/new-model-adviser/news/fca-indicates-woodford-could-trigger-overhaul-of-fund-rules/a1237891

There already are limits on the number of illiquid assets collective investments can hold. It's reassuring to see the FCA are on the ball, as usual.

>>7602
He's said this week:-

• The fund is highly unlikely to re-open before the October Brexit deadline. This is a) in case everything goes to shit with Brexit and b) he's still convinced his stocks will come good and he sees a Brexit resolution as the inflection point, so he doesn't want to sell stocks right before they shoot up.

• When it re-opens he will never handle institutional money again after being burned by the likes of Kent County Council. His main ire was directed at St James's Place, as they released a research paper saying his hit rate is actually better than ever before phoning him a few days later to say they were dropping him due to negative media coverage.

He also had a little cry and said this is the toughest time of his life.

As expected...

Neil Woodford's flagship equity income fund to stay locked

https://www.bbc.co.uk/news/business-48790585

It's now expected to open in December at the earliest.

>Investors blocked from Neil Woodford's equity income fund will be unable to access their cash until early December, according to the latest update from fund supervisor Link.

>In a letter to investors published on Monday afternoon Link said a December deadline for the fund to re-open gave Mr Woodford a "realistic" amount of time to re-position the portfolio and improve liquidity across the board.

https://www.telegraph.co.uk/business/2019/07/29/woodfords-listed-fund-shops-around-new-manager/

>One of the UK's most high-profile stockpickers

I'm not sure how exactly you become a high-profile stockpicker. Given that stock picking is not held to be a robustly successful investment strategy in the long run, it makes about as much sense as calling somebody a high-profile football results guesser.

Your strategy as a stockpicker, no matter how smart you think you are, is nothing more than educated guesses, which may be more educated than those of the average layman, but it is not a sign of your acumen as an investor that you have, at some point in time, guessed the trajectory of a stock correctly.

As we are now seeing.

>>7673
If you invested with Neil Woodford over the past ~20 years then you'd have made more money than placing it in a FTSE All Share tracker, roughly 25% better off, even with everything going to shit for him recently.

>>7675

So... he got lucky. Some people get improbably lucky. Just like people who win a lottery jackpot. You wouldn't say somebody has special abilities just because they crossed off the right numbers on a lottery ticket.

Doesn't mean anything really. And if, like probably many people, you weren't in from the beginning but only bought into the fund in 2016, you could be sitting on losses of over 60 percent. If you start the above curve in 2016, then the blue graph looks very different and would nose diver under the red graph.

It's the same as all the cryptocurrencies. Few people owned Bitcoin when it started out, most people only got in on the action when it was becoming silly buggers. And a lot of them are still sitting on close to 50 percent losses. Nobody quite could have predicted that Bitcoin was going to take off the way it did.

>>7675
That remains to be seen because when your money is in the possession of somebody else who won't allow you to retrieve it, you haven't made jack shit.

>>7676
>You wouldn't say somebody has special abilities just because they crossed off the right numbers on a lottery ticket.

You would if they'd regularly managed it on a long-term basis since starting out in the late 80s. The cult of the star fund manager is a dangerous thing, but after he announced he was setting up his own fund management firm around £6billion was withdrawn by investors from the Invesco Income and High Income funds that he was managing for them. That isn't luck, otherwise everyone would be doing it.

Anyone investing in his new venture is sitting on a paper loss, without having to cherry pick it to the maximum possible drop, but the just highlights how most individual investors don't have a fucking clue what they're doing and just get swept up in the momentum of what everyone else is doing rather than acting rationally. People tend to invest at all time highs and then sell when the markets fall rather than the other way around.

>>7678

Many fund managers fail though. Just because you've got a billion-dollar investment fund, doesn't mean it's going to be successful. There's some survivor bias at play here. There are probably dozens of other funds that were started around the same time but which eventually went tits up.

The fundamental problem of investing is that you can't foresee the future. You cannot predict which industries and which companies will do well in the long run. You can make educated guesses and do your research, but it's no guarantee that you will do well. Actively managed funds try to take this into account by regularly swapping out poorly performing stocks for more promising ones, but that does not necessarily increase your profitability, because every single decision like that comes with a risk of failure. It's a well known fact that as an amateur investor, your performance tends to be the poorest the more actively you trade. Professional investors and fund managers may not make many of the rookie mistakes of amateur investors, but again, it doesn't always mean they'll succeed.

>>7679
It depends on what you mean by failure. Many fund managers do not consistently outperform the markets, but over the long-term can beat them due to the additional growth achieved during the periods they do actually outperform them (which is then compounded). My money is in trackers but there's undeniably managers out there, albeit a small proportion, who will beat the markets over the long-term.

It's in the news today that the share price of Woodford Equity Income's second largest holding, Burford Capital, has fallen by c. 60% since yesterday after a report was issued stating it was 'egrgegiously misrepresenting' its return on investments and is 'arguably insolvent'. He is seriously, seriously fucked.

>>7680

>Many fund managers do not consistently outperform the markets, but over the long-term can beat them due to the additional growth achieved during the periods they do actually outperform them (which is then compounded).

The "hedge" part of "hedge fund" - they don't promise higher returns than the market, but they do promise consistently positive returns even in a downswing because they take both long and short positions.

>>7681
Hedge funds are more of an American thing. We have absolute return funds over here, but they're not very popular because they're largely shite.

>>7682
>Hedge funds are more of an American thing

Lad. Sort yourself out. We're a fucking tax haven and the centre of the world for the FX market (for a couple more months at least). You just haven't met the right people.

>>7680

I stand by what I said about survivor bias. Funds go tits up all the time, and just because somebody has been improbably lucky for many years in "picking" the right stocks, doesn't mean that that investor's luck can't and won't run out. And it could well be that that's what is happening with Woodford Equity.

And even if you've won the lottery numerous times, it does not mean at all that you've got special abilities. Likewise, Investing in the right stocks over and over again may seem like you've got a gift, but as Nietzsche said, no victor believes in chance.

Speaking of the cult of personality...

Investors in Kevin McCloud's projects told they face huge losses

Small investors who sank millions of pounds into the TV property guru Kevin McCloud’s eco-friendly housing ventures have been told they could face losing up to 97% of their money.

For 20 years the star of Channel 4’s Grand Designs has lectured the nation about how to create their dream home – but his own property empire has turned into a nightmare. Between 2013 and 2017, McCloud wooed investors with a string of fundraising schemes that promised returns of up to 9% a year from his Happiness Architecture Beauty (HAB) homes businesses.

But it now emerges that small investors who put £2.4m into one of the bonds are on course to lose between 74% and 97% of their money in a worst-case scenario.

Another set of investors, who sank £1.9m in one of the HAB companies in 2013 and were told to expect dividends of at least 5% by the end of 2016, say they have not received a penny and have been “fobbed off”.

https://www.theguardian.com/tv-and-radio/2019/aug/22/investors-kevin-mccloud-property-schemes-huge-losses

He's not an architect. He's not a project manager. He's not a builder. He's not an engineer. His background is in designing theatre sets and lighting. Ah, but he's off the telly, hosting a series where almost every build goes considerably over budget and isn't completed on time, he's got the right accent and he's given the scheme a nice cutesy name so we should give him our money without a second thought.

>>7706

>He's not an architect. He's not a project manager. He's not a builder. He's not an engineer. His background is in designing theatre sets and lighting.

One would assume that 20 years of exposure to others projects if he has done any level of analysis at all rather than barked lines into a microphone would give him an idea of he would have a deep understanding of the pit falls and the best contacts in the industry. But apparently it turns out he knew bugger all which explains why i assume he wasn't able to get any professional investors because they would ask basic questions about his business model.

97% loss is quite incredible it raises the question what the fuck he was doing with the money for the last 6 years. Because as someone who doesn't have a clue about building houses I'm sure I could do better than that.

>>7709
It's the Dunning–Kruger effect. I've seen it happen quite a few times at work with relatively inexperienced people; they don't know what they don't know so they end up complacent and believing that certain tasks are easier than they actually are. Once you've had a bit of exposure to something a little bit of knowledge can be a very dangerous thing.

>>7706
I'm suprised he was the "brains" behind the operation. When I saw the headlines I assumed he was just a cheerleader to get people's attention and some actual business bods would be doing the work.

>>7709

He's had 20 years of exposure to rank incompetence. He might have learned something if Grand Designs followed professional housebuilders working on commercial developments, rather than amateurs having a go at building some daft folly.

>>7712

>if Grand Designs followed professional housebuilders working on commercial developments

Bland Designs.

>>7710

Kevin McCloud at least should have recruited capable financial advisors to help with his scheme. You don't have to have a master's degree in business to be able to be the figurehead of a successful business venture. But if you don't have any training and experience in that field, it's of huge importance to surround yourself with the right people who do, and who can help you turn it into a success.

>>7717
Nah, they would definitely have told him not to license his music for free and we'd never have known his name.

Neil Woodford’s stricken equity income fund to be shut down

Neil Woodford has been sacked from his flagship equity income fund which will now be liquidated, a further chapter in the downfall of the UK’s most high profile active fund manager.

Link Fund Solutions, the income fund’s authorised corporate director, said on Tuesday the fund would be wound up by its administrators, which follows its suspension in June. BlackRock and PJT, the investment bank, will be allocated two parcels of the assets to be sold.

Link said it had been unable to reposition the portfolio into sufficiently liquid assets, and that reopening it would risk a fresh suspension.

https://www.ft.com/content/c9bd2a60-ef13-11e9-bfa4-b25f11f42901

Welp.

He's thrown his toys out of the pram about being dismissed from his flagship fund by leaving the other two funds he ran.

https://www.bbc.co.uk/news/business-50061968

Lads what do all your stocks and shares look like?

New to the game, almost certainly going with Vanguard LifeStrategy.

Do I split 60:40 equities/bonds or 80:20?

I thought 60:40 seemed a nice way to get started whilst sleeping easy but everybody seems to think I should be hammering out 80% equities instead.

>>7897
>almost certainly going with Vanguard LifeStrategy.

Why?

>Do I split 60:40 equities/bonds or 80:20?

It depends on the fixed interest securities held, but now is a very bad time to be going into corporate bonds.

>>7898
As in why Vanguard?

I'm a complete beginner, they consistently come up top for what I am looking for, they are well thought of whenever I read reviews, they are slightly UK heavy but still have a good mix which is what I'm looking for and their fees seem low.

Do you have a reason to go against them or can you recommend a better place to think about?

>>7897

The old rule of thumb is to hold the same percentage of bonds as your age - you want to err on the side of growth when you're younger and stability when you're older.

>>7899
It was more why the LifeStrategy funds in particular.

>>7901

Not him, but you get a choice of funds that offer broad diversification and varying levels of risk exposure with exceptionally low management costs. If you just want to lob your money in an ISA and know that it's being invested wisely, I can't think of a better option.

>>7901
Basically what >>7902 said.

>>7900
Great tip, thanks!

>>7902
They're overweight in UK equities, which is noticeable when you compare LS60 with the cheaper and more globally weighted HSBC Global Strategy Balanced Portfolio. I would post a graph which shows how the HSBC fund outperforms it but images are still fucked on this board at the moment.


I'm also a fan of the Legal & General Multi-Index range, but they're more focused on managing risk.

You could always choose a separate global equity fund and a separate bond fund then set it up with automatic rebalancing.

>>7905

Thanks for this insight. In theory there's nothing stopping me opening a Vanguard LS ISA and then transferring it to HSBC next tax year is there?

>>7897
I'm a twat so take what I say with a pinch of salt: Fuck bonds.

As the other lad pointed out, corporate is risky at the moment. Government bonds are equally not worth bothering with because, while being secure, the return isn't much better than leaving it in your bank account.

This will be different if you're about to retire but it's perfectly possible to have a diverse portfolio in equity that doesn't pose greater risk. If the LSE and NYSEs shit the bed then we've frankly got bigger things to worry about.

>>7906
Why wait? It involves paperwork but you can move ISA platform whenever you want. The restriction is you that can't pay into another one.

>>7906
No, you don't even have to wait until next tax year though.

Vanguard LS60 and the HSBC Global Strategy Balanced Portfolio are both classed as a risk 5 out of 10, so you might want to consider something with more risk depending upon your time horizon.

I'm looking at funds on the Vanguard website right now and there's a boggling array to choose from. How exactly do you go about picking the right one? I'm assuming if you've only got around 5k to invest then you're better off on the riskier side of the spectrum?

I see they offer various "LifeStrategy" funds as a no-brainer option, but why would I go with one of those if I see that the US equity index fund is doing consistently better?

>>7930

The LifeStrategy and Target Retirement funds include a mix of bonds and shares - bonds are safer than shares, but have weaker returns.

If you've only got a small amount to invest and you're not yet a homeowner, your best bet is probably a Lifetime ISA - the government will give you a 25% bonus on everything you save if you use the money to buy your first home.

If you're an employee, make sure you're making the most of your workplace pension scheme. You can usually make pension contributions from your pre-tax income, so it's the most effective way to save for retirement.

https://www.moneysavingexpert.com/savings/lifetime-isas/

https://www.moneysavingexpert.com/savings/discount-pensions/

>>7930
It all depends on what your aims are, how long you're going to be investing for and how comfortable you are with risk/how much you are prepared to lose.

The LifeStrategy funds were launched when they tried to break into the UK market and they invest in a number of Vanguard's own funds with different set equity and bond weightings for various levels of risk. They're relatively overweight in UK equities because they had anticipated that UK investors would prefer a bit of a home bias; LS100 is roughly 25% in UK equities whereas they make up roughly 4-5% of global market capitalisation.

If you're young and investing for a while chances are you'd be best off with a global equity fund. You could invest entirely in US equities but most people invest globally because they're trying to manage risk through diversification and there's no guarantee the massive bull run in America will continue; it's propped up heavily by stimulus which they had been starting to unravel and if the £ strengthens against the $ it could wipe out most of your gains.

Neil Woodford: I’m back, like it or not

Disgraced fund manager Neil Woodford is plotting a dramatic comeback with a new fund bearing his name, less than 18 months after his previous venture spectacularly imploded. Alongside close lieutenant Craig Newman, Woodford is planning to launch Woodford Capital Management Partners, a new Jersey-based fund focused on biotech companies.

https://www.thetimes.co.uk/article/neil-woodford-im-back-like-it-or-not-2b0mwrz07

He's still largely unrepentant about what went wrong and is blaming it on Link for deciding to shut the fund down.

>>8476
And jumping on the biotech bandwagon probably a year too late.

>>8477
I've always felt that biotech is a mugs game at the best of times. It's all too common for some new work to show a magical result and then for things go quiet until the company unravels, which is a quick process in that brutal world.

I probably would put money into a fund that said 'we're investing in life-extension companies' because a fool and his money is soon parted but only as my allocated 10% funny money.

>>8477
Taking punts on biotech is one of the main reasons why his last fund failed.

>>8478
>I've always felt that biotech is a mugs game at the best of times. It's all too common for some new work to show a magical result and then for things go quiet until the company unravels, which is a quick process in that brutal world.

Phillip Mirowski has a pretty good take on this, and describes many biotech startups as essentially ponzi schemes:

>>8480

Ponzi scheme implies knowing wrongdoing on the part of the company. As a sciencelad what I would say is that the majority of experiments fail, science is a Darwinian process meaning that its competitive and the massive amounts of failures which occur are necessary to achieve the success that we have (you can't build the penthouse of an apartment complex without first laying foundations and building every floor up until the top one).

In practice this means that some companies may behave in a manner similar to a ponzi scheme for investors who invest blindly without understanding the underlying tech, or knowing what the inner workings of the company look like.

But yeah, it's a punt. $BNGO

Sometimes you have unexplainable successes like Elon Musk with Tesla (this isn't biotech per say but a lot of speculators are looking at this company considering the future potential of Neuralink), other times you have actual fraudulent enterprises like Elizabeth Holmes and Theranos.

The documentary about Theranos is infuriating, because they basically had point of service diagnostics available to consumers from Walgreens which would have revolutionized public health in America and been a sustainable business for them for as long as it would take to develop the machine they were building (but competitors would potentially have been able to replicate their business model), but because they lied to investors they sunk the whole enterprise and set back the mission of consumer diagnostics about a decade. Don't be greedy.

I haven't watched your video because it's an hour long and I am currently rewatching the Curtis stuff, but thanks for sharing. This is the kind of content I subscribe to this subreddit for.

>>8481

I think the distinction that Mirowski is making, though, is that the risky stages of the experimentation is often done on public money, then there's a group of private speculators hyping up technologies as they show promise then bolting on the (overwhelming majority) that don't pan out.

FCA first alerted to concerns over Neil Woodford’s business in 2015

The Financial Conduct Authority was warned about problems within Neil Woodford’s investment business less than a year after it opened in 2014 but did not intervene for almost another two years, according to several people briefed on the process.

...concerns over its investment strategy were raised within the first year of its operation, when two of the company’s founding partners — chief operating officer Nick Hamilton and chief legal and compliance officer Gray Smith — resigned after falling out with Woodford and chief executive Craig Newman. Given their senior roles in such a high-profile business, Smith and Gray were asked to discuss the reasons for their departures in exit interviews with the FCA in January 2015. The FCA did not act on the information they presented, according to those familiar with the regulator’s dealings with the company.

The four founders had clashed openly over the company’s compliance culture and the level of due diligence carried out on Woodford’s investments in private companies, according to former WIM staff members. Hamilton and Smith were especially concerned with the amounts being committed to unlisted companies.

https://www.ft.com/content/0a8eb45d-c45f-4085-83bb-2f17bdfa2c30