The Daily Telegraph - Saturday - Money
‘After Woodford, dford, I’ll pick my own stocks’
A breach of trust or just a hazard of investing? Sam Benstead hears savers’ differing views of the Woodford implosion
Eight months after the suspension of Neil Woodford’s £2.9bn Equity Income fund, investors are finally getting some of their money back. On top of losses suffered while the fund was open, many face further write-downs of around 50pc.
Some will be relieved to be reunited with their savings. But the human toll of Mr Woodford’s failure will continue to haunt his once-loyal supporters.
Georgina Bakes, a 29-year-old business consultant from London, invested £5,500 in the Woodford Equity Income fund around three years ago. Her initial stake was reduced to £3,700 when the fund was suspended in June last year. She now expects to get back just £2,700.
Ms Bakes was about to withdraw her entire stake to contribute to buying a house when the fund was suspended. She had to rely on her parents for a loan to stop the house purchase falling through.
“I recognise that there’s always a risk when investing, but I didn’t expect my savings to be frozen. I am still suffering. I need the money to pay for my wedding and have just been hit by another loss,” she said.
The experience has changed her mind about investing with fund
‘I made a mistake and was naive. Now it’s unlikely I can leave money to my grandkids’
managers. “I have been burnt. I have experience in finance and I’d rather pick my own stocks,” she said. “This has been a breach of trust.”
Ms Bakes said the communication from the fund shop she used, Hargreaves Lansdown, had been appalling and she relied on the media for the latest updates. “I am angry at everything that has happened and how it’s been handled,” she said. “The biggest loss is, of course, the money, as it was put aside for other things.”
Hargreaves said it had contacted investors 18 times since the suspension.
‘IT WAS OUR RETIREMENT MONEY’
Fred Hiscock, 71 and retired, and his partner, Pauline Snelson, 67, who works in hospitality, invested nearly £50,000 across Mr Woodford’s funds.
They were drawn to the manager by his exposure to healthcare names that promised to solve medical problems, as well as his strong track record. Ms Snelson was directed to Mr Woodford by a financial adviser.
“We liked the idea that businesses could do good but didn’t realise how many private companies were in the fund,” Mr Hiscock said.
The couple have lost half their initial stake and expect more losses once the money is returned.
“This is a huge loss for us. We had planned to retire on this money and now it’s gone. It’s a disgrace that he has continued to pay himself during this mess while the man on the street has been hammered,” Mr Hiscock added.
The couple live in Salcombe, Devon, where Mr Woodford owns a property. “While we have been suffering we can see Woodford building his £6m house,” said Mr Hiscock. “He owns one of the largest boats in the estuary. If I see him around town, I will tell him how I feel about him.”
He said he would never invest in stock markets again but acknowledged that he had made a mistake by not more being diversified. “I know I’ve made a mistake and I have to live with that. I was naive. Now it’s unlikely I can leave money to my grandkids,” he said.
‘I WOULD INVEST AGAIN’
Simon de Laat invested £10,000 in the Woodford Equity Income fund. His holding is now worth £4,500, but he said he did not feel angry.
“I invested for a five-to-10-year period and only put a small part of my portfolio in the fund,” he said. “Diversification is one of the most important things when it comes to investing. No one should ever put their life savings into one investment.”
Mr de Laat, from Suffolk, was drawn to Mr Woodford’s impressive longterm track record and the fact that he often took a different approach from other fund managers and the markets.
He said he still liked this approach and considered Mr Woodford unfortunate to have had his fund suspended by the administrator, Link. Mr de Laat said Link had acted too hastily and should have given the manager more time to solve the fund’s problem. “If Mr Woodford opened a new fund I might consider investing with him again,” he added. Link has always said it only acted in the best interest of investors
Mr de Laat said he believed that Mr Woodford had been unlucky and that the fund had been suspended only because one large investor, the Kent County Council pension fund, had asked for its £240m investment back. He said the City watchdog had been too slow to step in to protect investors.
“Once I get my money out of the fund I am going to reinvest it. This experience has not put me off investing,” he said.