Jeff PrestridgeJun 12 2019

Odds are against Woodford

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I am always nervous when writing about Neil Woodford, one of the country’s most high-profile fund managers – even when the odds seem stacked against him, as they do now following the closure of his flagship fund, Woodford Equity Income, and the loss of key client St James’s Place. 

For a start, Mr Woodford divides opinion among financial advisers and investment experts like few other fund managers.

Some love him and would never say a bad word about him.

Step forward Hargreaves Lansdown and Alan Steel of financial adviser Alan Steel Asset Management in Linlithgow, an individual who knows a thing or three about investing.

He has been a long-time supporter of Mr Woodford, going back to the manager’s days at Perpetual and Invesco Perpetual in the 1990s and 2000s.

Four square behind Mr Woodford. Commendable. After all, loyalty is a good trait.

In stark contrast, others think Mr Woodford is overhyped and represents everything that is wrong about an investment management industry that pushes and promotes ‘star’ managers, helped by a compliant press.

Step forward those who believe that active investment is the antichrist and that passive investing is the only way.

As a financial journalist you cannot win. If you praise Mr Woodford or attempt to explain his moribund investment performance – you get attacked by critics of active management.

Similarly, if you criticise him, you get an earful from the likes of Mr Steel who point to Mr Woodford’s strong, long-term investment record.

It is just that his value style of investing is very much out of vogue, they say, pushed aside for the time being by so-called momentum investing (for the record, Mr Woodford has also made some big mistakes). 

But there is another reason why I get the jitters when penning anything about Mr Woodford: a fear that I am going to be proven horribly wrong in what I say or report.

This happened in the late 1990s when he was repeatedly being criticised in the financial pages of national newspapers for underperforming his rivals – a result of his refusal to engage in the tech boom (the bubble).

Of course, the bubble burst, Mr Woodford’s investment strategy was proved right, and his income-oriented Invesco Perpetual funds went on to triumph and mushroom quite magically.

I was reminded of all this late last year when I had the opportunity to interview Mr Woodford.

His opening remarks went as follows: “It is interesting we are speaking now.

“We had a conversation some 20 years ago – just before the tech bubble burst, when you criticised me for underperforming at Invesco Perpetual. It is an article I have kept in a drawer ever since.”