InvestmentsJun 12 2019

Your Shout: Letters to the editor

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Your Shout: Letters to the editor
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Dealing with CMC tactics

It seems that claims management companies are suffering the type of forensic scrutiny that advisers have been asking for since the Ministry of Justice found itself unable to deal with their antics.

I trust the Financial Conduct Authority will also look at the pushing practice whereby a [subject access] request for the client’s file is used as a means of searching out matters to complain about. 

Similarly, the FCA needs to look at tactics such as newspaper advertising for complaints from people invested with certain, now defunct, insurers and the vile process of suggesting that any investment that has fallen in value is indicative of mis-selling.

Alan Lakey
Highclere Financial Services

Woodford sell-off

I do not gloat that Mr Woodford has been forced to suspend withdrawals from his leading unit trust. 

While we never had any exposure to it, for other reasons, we do have some limited exposure to some of the direct stocks that he owns too and those have been sold off in sympathy as holders anticipate these will be the sorts of shares that the funds will need to realise to meet the requests for redemptions, thus making the outcome even poorer for his holders. 

It must be very stressful for the fund managers and especially so when they are forced to sell things that really they do not want to sell too – at this moment in time.

There comes a point, however, when if a company’s share price hits such a low level that the whole company becomes a worthwhile target for a predator or indeed for the company itself to ‘do something about it’. 

It would help Mr Woodford if some good news arose, though sadly with the ongoing procrastination over Brexit, UK-centric shares have fewer followers as prospective investors sit on the sidelines waiting till they perceive they know how the future is looking so they can make better informed decisions.

As for us, as independent discretionary investment managers too, we may well now add Woodford Patient Capital Trust shares to clients’ holdings. 

The discount to the underlying net asset value is now extreme and the trust does not suffer the same pressure as those wanting their money out but who have to sell their shares to another buyer. 

Perhaps Mr Woodford should look to convert his Equity Income fund into an investment trust to take on all the underlying investments – that would also create an instant uplift in value as those major shareholdings would not have to be dumped on the market after all and there would be an instant recovery from this point. 

Woodford Investment Management is presently quite small in the run of things compared to some other popular investment managers and index funds. 

When, or if, their time in the sun comes to an end, the carnage could be immense and especially as so many of the recent stars have all followed the same principles and bought the same sort of tech stuff. 

They could all then find they are holding all the sort of shares that suddenly no one wants any more and they are selling to a market that does not want it. 

The sums involved then would be significant and the possible market moves considerable and you would want to be holding the sorts of smaller stocks that Mr Woodford favours, as typically they have a traditional value bent. 

Maybe Mr Woodford’s unfortunate clarion call is a good reason to sell some of this ‘growth’ stuff to buy Mr Woodford and his types of stocks after all.

Philip Milton
Philip J Milton & Company 

New management needed

The NHS doctors’ pension fiasco is a sad but obvious result of the chancellor’s ham-fisted attempts to limit and penalise the build-up of benefits, on the pretext of reducing tax advantages for high-earners.  

In practice, I believe he sees it as yet another way of raiding pensions (Gordon Brown mark II) without any regard for the casualties; and there may be many. I say this with sadness as I have usually found that Tory chancellors practise financial acumen with common sense.

I believe the only answer is to bring in a new independent pension tsar such as Sir Steve Webb, who has a much clearer understanding of what is required; this is in preference to the short-term bottom line political accountant currently destroying pension funding and possibly lives.

There are always solutions, but there has to be a will to find them. Unfortunately the current occupant of 11 Downing Street does not seem concerned about casualties.

Clive Fox
Jade IFA

Helping first-time buyers

I believe that there are structural problems that stand in the way of first-time buyers getting on the ladder:

1) Financial inclusion and awareness – despite massive advances in information technology we have not successfully changed the way in which we help people discover what they can achieve.

The fact that 40 per cent of people do not know where to begin and, based on recent Aldermore research, almost half of first-time buyers have not heard of the Lifetime Isa shows we need to rethink the current approach to education and engagement. 

2) Shifting sands – part of the issue first-time buyers face is that the knowledge needed to buy a home keeps changing.

Many people still ask their parents for help, yet with so many new schemes and products their help is often out-dated.

In fact our research into the bank of mum and dad shows they want to learn about homebuying to be able to talk to their kids.

Closing schemes and opening new ones clearly does not help this; what we need is a period of stability and more effort to help navigation.

Ben Leonard
Life Moments