Like many around the UK, we were somewhat surprised to read yesterday’s report in the Sunday Telegraph that Neil Woodford plans a return to asset management. With thousands of private investors still waiting for the last of their money back from his failed Woodford Equity Income Fund, how will his reputation fare with institutional and high net worth investors?
Ryan Hughes, head of active portfolios at AJ Bell, comments on Neil Woodford’s reported return to investment management:
“The news that Neil Woodford is looking to make a comeback will come as a surprise to many, especially those thousands of embattled investors who are still waiting to get the last of their money back. With around £200m of money still stuck in his previous fund and original investors back in 2014 sitting on losses of over 25% and many thousands who invested later suffering much bigger losses, there will be little sympathy for Woodford and the comments he made in his recent interview. While some investors may well agree with Woodford’s view that investors would have been better off if his fund was not forced to suspend and liquidate, others will simply be glad that they have got some of their money back after being stuck for many months and will want to finally move on from this sorry saga.
“The potential new investment vehicle looks like it will be aimed at professional investors only with the investment approach once again focused on niche, higher risk, potentially illiquid investments that Woodford had such conviction in for his previous fund. While he may well be right that there are some great companies to invest in, his track record showed that it is very hard to identify them and many need years of funding before they become successful, with plenty falling by the wayside along the way.
“Ultimately, it looks as if Woodford is looking for vindication that his original investment strategy was correct all along. While he has acknowledged that a fund for retail investors would look very different today to the one he previously ran, by focusing on professional investors, he clearly hopes that much of the emotion and fury that he has faced over the past two years will disappear. However, given the broader damage in trust and confidence that this whole affair has caused to the investment industry, it looks unlikely that investors of any kind will find it so easy to forget.”