Short positions... the Woodford quagmire

⬛ “Market turmoil driven by Russia’s invasion of Ukraine and rising inflation has sharply divided the hedge-fund industry,” says the Financial Times. Macro hedge funds – those that try to profit from big political or economic events – have done very well, while technology and growth focused funds have struggled. The topperforming 10% of hedge funds gained an average of 24.3% in the first quarter of 2022, while the weakest 10% lost 15.4%. Meanwhile, mainstream fund managers running traditional balanced portfolios (60% stocks/40% bonds) have struggled as stocks and bonds fell in tandem. And emerging-market fund managers have seen worsening outflows, especially from debt funds. Ashmore – which made big bets on Russian assets before the invasion and also has sizeable exposure to struggling Chinese property firm Evergrande – is likely to have seen assets under management (AUM) fall by 11%, say analysts at Bank of America.

⬛ A lawsuit against Link, the firm that supervised the failed Woodford Equity Income fund, should come to court in the next couple of months, says The Mail on Sunday. Solicitors claim that Link did not make sure that Neil Woodford (pictured) stuck to Financial Conduct Authority (FCA) rules, and allowed him to invest too much in illiquid stocks. It hasn’t been a fast process – those who lost money have been waiting nearly three years. “But at least the law firms are moving things along, unlike the FCA, whose own investigation into Woodford seems to be stuck in a quagmire.”