Neil Woodford’s press has been awful recently. Once an investing Midas, now having to suspend his fund to stop 100’s of millions from exiting.
So it suddenly transpires that you can’t play the market forever…
I wouldn’t want to be a council tax payer in Kent right now.
Kent County Council also wanted to withdraw its £263m investment, but was unable to do so before trading halted.
I am a council tax payer in Kent.
As far as I can tell that’s basically what triggered the whole suspension. £250m represents almost 10% of the funds total value which would have wiped out the entire cash holding and then some in the fund. No one else could have traded and the company would have no operating capital.
Not long ago that fund was worth over 10bn, never mind 3bn
I’m in Kent, but my parents pay the council tax
Which council has 250m to invest
I wish mine did
It’s pension money, I believe.
Not any more!
Most councils have a local authority reserve fund.
In accordance with CIPFA guidance, earmarked reserves are held for a number of
- Sums set aside for major schemes such as capital developments or asset
- Insurance reserves.
- Reserves of trading and business units.
- Reserves retained for service department use.
- Reserves for unspent revenue grants.
The nature and purposes of these reserves means that from year to year funds will flow
in and out as projects progress, grants are received, insurance costs are incurred and
on the other hand capital receipts are set aside for future capital investment, insurance
funds are topped up to prudent level or authorities seek to set aside funds which will
allow them to invest to generate future revenue savings. Some authorities will have
accumulated reserves as part of a plan to ease future budget reductions and to allow
longer term savings to come to fruition. However, it is not a proper use of reserves to
just draw down to support revenue budgets with no clear plan for how the gap will be
bridged in future years when reserves are no longer available.
It appears to be getting worse for Woodford, now that Keir seems to be in a spot of bother:
The company’s woes are having ramifications beyond the construction world. The share price fall has affected its largest investor, Woodford Investment Management, which had to suspend its flagship fund after some of its investments lost value and investors withdrew their cash.
Had a client today asking what would happen if Woodford went under. It’s not likely, but this is just another nail in the preverbal coffin.
Almost time to buy then!
It was the only sensible thing, as soon as that fund opened there would have been a massive pull to take more money from it.
If you’re interested, there’s a BBC Panorama investigation into Woodford and fund managers in general. Going to have a look at this tonight hopefully.
An interesting investigation. I think the upshot is, stay away from actively managed funds, stick with index funds as the fees are lower and active managers rarely beat the market anyway.
Only issue I have with the episode is that it doesn’t actually give you that advice. It kinda leaves you thinking that investing is dangerous and scary; that fund managers like Woodford are the norm. I don’t think that is true at all, but may be more risky with hotshot fund managers who are lucky enough to be on a winning streak --rather like giving your savings to someone at a poker table, just because they’ve won a couple of hands.