Why Woodford's woes remind us we're all human

Back in the 1990s and early noughties, there were many - think of Anthony Bolton making Fidelity the behemoth it was before 2008, for example. 

But while the US still has Soros and Buffett and Bill Gross, the UK does not really have a stand-out man, except for Neil Woodford. Perhaps that's why there was so much excitement abounding when he and Invesco Perpetual parted ways and he set up Woodford Investment Management back in April 2014.

His fund launches were met with similar levels of anticipation to a Guns 'n' Roses reunion concert, with tickets sold out well in advance. You had to be in at the start, so the marketing literature from various fund buyers and execution-only firms told us. 

And many of us bought into this story. This is the man who remained resolute on cigarettes when the Western World was turning against them.

Has he gone from a staid manager to one that puts French knickers on the portfolio and shows a bit too much leg?

British American Tobacco would continue to pay its dividends, he told us, because the Chinese really enjoyed smoking and were prepared to pay more money for good quality fags. 

Leaving aside ethical qualms, his value-oriented, long-term, patient dividend growth strategy paid off. But when it comes to recent ventures, investors are starting to get nervous. 

"Has Woodford bitten off more than he can chew?", one portfolio manager asked me last night. This is the sort of dinner-table conversation you expect when you're a financial journalist. "Has he become too racy? 

"Has he gone from a staid manager to one that puts French knickers on the portfolio and shows a bit too much leg?"

(Yep, this is the sort of analogy the industry indulges in over calamari and fine wine).

There have been several headline-grabbing stories in recent weeks, not least the latest fun and games with doorstep lender Provident Financial, which tumbled 65 per cent on Tuesday (August 22).

This was the company's second profit warning in two months, which was accompanied by the news of a cancelled interim dividend, an FCA investigation into its practices, and the departure of its chief executive. All big red flags, one might suppose.

As sister newspaper Investment Adviser reported, Mr Woodford's signature Income portfolio had 4 per cent invested in this company - that's a sizeable sum, considering Woodford Equity Income has £9.8bn in assets under management.

Then there's Patient Capital, his investment trust. Now I bought into this. I know, I know, it's completely different to what he's always done and I should have known better but I thought it was an interesting proposition, it diversified my holdings in my Isa and - and - it was Woodford.

Many years ago I got 'blacklisted' by a fund management chief executive because I had the audacity to question whether a 26-year-old fund manager who'd only ever run UK equity funds was able to run a deep-value African equities fund. 

Neither the company nor the fund lasted very long, so perhaps my reticence was justified. 

But here I am, knowing Mr Woodford has rightfully made a name for himself in strong long-term value, high-quality, dividend-growing investment strategies.

Was I wrong? The investment trust has always been in the red in my portfolio whenever I check on it, which is a couple of times a month. I've never seen it in the blue. It's currently down 5.98 per cent.

Will I sell? Are all these recent portfolio hiccups being experienced by Mr Woodford in his flagship fund something to be concerned about? Maybe they are, maybe they aren't.

The fact is, I'm not going to sell. Firstly, if I have learned anything from watching fund managers over the past 20 years, is that long-term investment does not mean flip and switch every time the proverbial hits the other proverbial.

Secondly, I trust Mr Woodford. He's the investment guru, not me. He's been doing what he does for decades while I've been watching on the sidelines.

To suppose he is making mistakes because he does not know what to do is like me watching the tennis on TV and telling Andy Murray what to do from the comfort of my sofa, based on my wasted youth spent watching Sampras ace his way into seven Wimbledon wins.

So I'm going to be like the name of the investment trust, as "racy" as it might seem to some, and I'm going to be patient. I have a 20-year timeframe for my Isa, so I'm not going to dance around like a panicked Bonobo whenever something startles me.

Whether I'm right or wrong, only time will tell. But for now, I am going to trust the experts that they know what they are doing. After all, we're all allowed to make some mistakes.

Also, that's the point of being diversified - I've only got 5 per cent of my portfolio in that Trust. I can sleep tonight without worrying about that.

The only thing that might disturb my sleep is the weird analogies that portfolio managers keep using to describe funds...