Demise of a superstar

If Neil Woodford had spent a little more time reading classical Greek tragedies and a little less time reading balance sheets he might have spotted that whenever hubris appeared, his old chum nemesis was doing his vocal exercises off-stage and preparing for the big entrance.

Woodford’s big moment was when he left Invesco Perpetual, his home for 26 years of successful stock-picking that established his name as one of the City’s superstars, and struck out to set up shop with his name above the door.

Its Equity Income Fund had a strong first year and the loot rolled in, with assets under management peaking at over £15bn, including £3.5bn from St James’s Place and a following among retail punters.

However, performance fell off a cliff in the back end of 2017, prompting a tide of redemption requests which has gone out, revealing Woodford to be without the requisite resources.

In order to meet all the redemptions, Woodford was forced to sell off the liquid parts of his portfolio, which is now uncomfortably dominated by illiquid small caps and unlisted investments. To avoid a breach of the 10% maximum the fund could hold in unlisteds, Woodford sold a portfolio into an investment trust that he also happened to manage, while listing a bunch of others in that wellknown and heavily regulated market Guernsey. Money continued to fly out of the door until Woodford was forced to lock in the remaining, unhappy investors.