Woodford and Hargreaves Lansdown

My sympathies. Technically the fund's investment policies say (in the KIID):

"To seek to invest at least 70% in shares of UK listed companies. It may also invest in unlisted companies, overseas entities and derivatives. It is not anticipated that the use of derivatives will have a significant adverse effect on the risk profile of the fund."

So only when it goes above 30% unlisted companies (or 30% non-UK) would this be a justification for calling them out for mismanagement. (there may be other reasons, of course)

No, you sold XXX units of a HL-MM fund. The HL manager is forced to fund that somehow. Since Woodford cannot currently be sold, they would have to fund that by selling other investments the fund holds.

In practice, that means everyone remaining now holds a higher proportion of Woodford than they did before.

This was precisely the problem Woodford Equity Income had when there was substantial selling - they were forced to sell the easy to liquidate holdings, leaving everyone holding more and more unlisted stocks, which caused the performance to become worse (the market expects people will soon want to unload those stocks hence their price falls), which caused more people to sell, etc.

This is a hazard of open-ended funds. If it was a closed-ended structure (like the Woodford Patient Capital investment trust) then the price would fall but there wouldn't be this kind of selling death spiral, because there would never be a need to sell underlying holdings to meet redemptions.

There are certainly questions to answer about the close relationship between HL and Woodford...

Theo

Theo, Thanks for your excellent reply.

KIID:

I expect that was violated.

That sounds like the Woodford Fund experience being repeated in the HL-MM funds. A selfish response is I hope that was true, but it's Woodford and HL that I want in the dock. (I am aware that if all bank depositors form a line and demand cash out, a bank cannot pay.)

There is something particularly dodgy here. As the demand for Patient Capital dried up, he loaded it into the main fund to shore up the PC price (and hence also the HL-MM funds).

Interesting selling of HL stock a few months ago by HL's Dampier and Guardhouse.. They knew this was coming, yet only days ago removed Woodford from the Wealth Top 50 list.

Do you believe the guilty will be punished, and their fines allocated to the affected?

Fred

A bit reminiscent of the way they (HL) pushed Anthony Bolton's China Special Sits in which I (and Bolton) got "burnt". Well it's recovered somewhat since but lesson learnt and I ignored everything being thrown at me regarding Woodford. There's investing and there's gambling and he seems to have got caught up with too much of the latter.

What's he getting? I think I heard ?100,000/day.

The Woodford situation is not improving. The selling suspension has been extended, maybe indefinately per "thisismoney".

The arrogance of this guy knows no limits. He is still taking a maintenace fee! Further, he says he will be proved right! He is still trading - just bought £10m in Atom Bank which duly fell. This has all the hallmarks of a gambler who has lost a series of bets, and thinks he can trade his way out of trouble. It never works.

As Woodford's biggest promoter, Hargeaves Lansdown come out very badly. I think they need to be dipping into their reserves. The Woodord Income and Growth fund was set up with mega-cap, high divi stocks (tobacco, oil, booze, etc). I never received any notification that the style was changing to small unlisted, illiquid companies. The Hargeaves Multi-Manager Funds will be dead until they get out of Woodford.

I think the FSA and Financial Ombudsman need to be involved.

Any thoughts?

Fred

Given this fund is the lion's share of Woodford's operation, and WPCT has a fee structure that at present pays them nothing, if they stopped taking fees they would eventually run out of cash to pay salaries and thus the company would fold. I'm not sure trying to get your money out of a bankruptcy would be easier than getting out of a suspended fund.

To get out of the mess he's in, he has to trade - swapping unlisted stocks for listed ones. I don't think the fund has a remit to hold a significant portion in cash, so he has to buy more stocks. I can't comment on the particular choices he's made to buy, though.

The kinds of funds he's allowed to buy is set out in the prospectus. It is:

"To seek to invest at least 70% in shares of UK listed companies. It may also invest in unlisted companies, overseas entities and derivatives. It is not anticipated that the use of derivatives will have a significant adverse effect on the risk profile of the fund."

'Mega-cap, high divi' are not stipulated. Past performance is not a guide... etc.

I agree there should be scrutiny about the unlisted funds and whether he's breached any limits.

The FSA no longer exists. The FCA is involved:

It's possible to complain to the FOS about your particular case, but you have to go through the Woodford complaints process first: Theo