The closure of Sanditon, the fund management business, is unfortunate but no surprise. Value v growth? Surely both methods of ‘active’ fund management are long past their sell-by dates?
Isn’t it just about buying great companies andholding them for thelong term?
In my opinion, too many have their snouts in the trough. The Woodford debacle will hopefully trigger a much needed clear-out.
Simon Torry
SRC Wealth Management
Questions should be asked
Your article that the Financial Conduct Authority will not investigate its own handling of the [Woodford] matter is interesting, though disturbing.
Perhaps that is acceptable as these things can happen even to the most reputable of funds or groups.
The engagement of unlisted securities within a maximum percentage holding range is not awry, but if the overall asset value of the fund drops this can place a disproportionate impact upon the fund as the manager will struggle to sell those holdings to preserve the cap.
That’s fair enough and ‘gating’ the fund is possible (meaning that withdrawals are stopped to protect all holders).
However, when Woodford Investment Management listed some of these companies on the Guernsey Stock Exchange to circumvent the ‘unlisted’ criteria, alarm bells should have been ringing. That did not make them any more saleable than before. If we knew this because we read the news… why did the FCA not see it too?
When the unitised holdings wrapped up the unlisted assets and sold them to the quoted closed-end vehicle, Woodford Patient Capital, for £73m at the time, in reality that too was fine because it dealt with the issue of unlisted securities.
However, what was not so fine was that the price was at 96.67p – the then quoted asset value of the quoted trust and comprising just under 10 per cent of that vehicle’s total shares in issue.
This was 81.6m shares and a loss of two-thirds (£49m) has ensued, despite most of those assets not having lost anything like that in value.
Yes, I know that there are ‘rules’ about issuing new shares, but the deal could have been orchestrated through the market and if the level was so awry, that may have suggested it should not have proceeded at all.
Now the enforced sale of this chunk of stock has and will suppress the price at which Woodford Patient Capital shares will trade. Maybe [the unitholders] should be allotted those shares as part of the liquidation process to make their own decisions later.
Finally, it has been announced the unitised holdings they are going to be wound up. This is still a potentially £3.5bn pot.
Should not the regulator be involved to decide if that is indeed the best route for unitholders?
Yes, commercial decisions are involved, but the financial security and losses of the unitholders are paramount and the forced sale of known assets on a fire-sale basis is unlikely to be the best thing to do and has also caused the implosion of the management company.
Perhaps there were many holders who would have been happy to have remained with the Woodford rump to see if it recovered and without the forced sales. Should they not have been given the option?
These are regulatory questions of intervention and questions could easily have been asked of unitholders, with a tightened regulatory regime imposed upon the regulated entity – Woodford Investment Management.
Philip Milton
Philip J Milton and Company
Gender inequality
I don’t think the 1950s women were sensible about trying to get their state pension age set back to 60.
What they should have done was concentrate on bringing forward equalisation from 2020 to 2018 as introduced in the 2011 Pension Act.
I don’t know if they were written to individually about the change from 2020 to 2018 or not, but if they were, then how much notice were they given? Bringing forward the state pension age to 66 also affects men.
Have the men been given individual notice and how much? I think their best chance is to go to the Parliamentary Ombudsman to get a case of maladministration about lack of notice or no notice as they can’t complain about the change in the law.
Christopher Thompson
Open letter to the FCA
I wish to formally complain of the disenfranchisement from my chosen manager of the Woodford Equity Income fund, which I held in my self-invested personal pension.
I chose to invest in this fund due to Neil Woodford’s contrarian and value style. While some investors wishedto exit I did not, nor did Iwant the fund to be removed from Woodford.
The suspension should have been allowed to run its course in an orderly fashion, allowing long-term investors to remain.
Link’s decision here smacks of ‘covering their backside’ and bending to the hysteria of the press. In no way is this decision going to protect investors’ interests. I, as an investor, should have been allowed a say in such an arbitrary decision.
While there has been a very noisy segment of the investor community whipped up by the cynical press, there are many investors such as myself who use this fund for the clear strategy laid out by Woodford Investment Management.
If other investors did not read this material, their laziness or that of their advisers should not be allowed to affect my rational investment decisions.
I urge the FCA to look into the conduct of Link in making this irrational and ill-judged decision, which appears driven to suit them and their headache and not investors.
Martyn Parfect
The Independent Financial Consultancy (Services)
