James Coney  

Woodford's problem is dire performance

James Coney

James Coney

How much was the media to blame for the Woodford/Hargreaves Lansdown saga?

That the press was partially, or indeed totally, at fault for this scenario is something that has been vented in my general direction since the Woodford Equity Income fund shut last month.

So it is worth examining.

The argument goes something like this: that the media was responsible for trumpeting Mr Woodford as a star fund manager when he was at Invesco.

For this, on balance, we probably stand guilty as charged.

But was the media alone? Ask any IFA or investment expert for a fund tip at this time and Mr Woodford, as well as Anthony Bolton’s Fidelity Special Situations fund, were the two that tripped off their lips.

Mr Woodford also made his name on the business pages by helping to get a takeover of BAE Systems rejected.

Hargreaves Lansdown was also gaining fame at this time, and though it was a darling of the business pages, and its experts quoted regularly, it was not immune to criticism, not least over the structure of its fees pre-Retail Distribution Review.

In recent years though, it is true Hargreaves has escaped major criticism.

Its presence in the press has grown steadily, not least because the staff in its press team are excellent and readily available.

In general, its customer service is recognised as being good and its innovation almost second to none.

But it has faced some criticism, and its weakness has always been its Wealth lists; in January, when it released the Wealth 50, there was a barrage of negative stories.

What then of Mr Woodford?

It is not true to say there was never a negative word said about his fund until March.

In fact, you can look back for two years to see criticisms of his performance, though much of it balanced by claims he would do well after Brexit.

There was, though, major coverage of his decision to invest in a US tech company targeted by short-sellers.

It is true that outside of the ravings of some bloggers there was not enough scrutiny of what was going on under the bonnet – and perhaps the press were too late to this.

But then so was the Financial Conduct Authority, and where were the industry experts screaming blue murder?

Perhaps where the business press does have some guilt is in the constant “Bad day for Woodford” headlines whenever any of his stocks plunged, even if they represented less than 1 per cent of his portfolio.

Then again, some of these stocks are so opaque, that perhaps he should never have held them in the first place.

Similarly I have heard accusations that the media deliberately did not write about Woodford and Hargreaves because they were big advertisers (in fact, I do not think either has ever run a newspaper advert, and if they have it is so infrequent as to be irrelevant), and that we were all wined and dined regularly at swanky London restaurants by them (sadly, also not true).