For­mer City dar­ling’s down­fall should act as a cau­tion­ary tale

So-called ‘su­per­star’ fund man­agers have lost their sparkle af­ter the Wood­ford fi­asco, says Keith Find­lay

The Press and Journal (Aberdeen and Aberdeenshire) - - MONEY -

“Un­til re­cently it seemed Mr Wood­ford could do no wrong”

The woes of for­mer City dar­ling Neil Wood­ford un­der­line how those who gain a Mi­das-like rep­u­ta­tion for pick­ing the best stocks to in­vest in can quickly fall from grace.

Un­til re­cently, it seemed Mr Wood­ford, the found­ing part­ner of Wood­ford In­vest­ment Man­age­ment (Wim), could do no wrong.

He built an en­vi­able track record for choos­ing stock mar­ket win­ners, while funds un­der his con­trol de­liv­ered hand­some re­turns for in­vestors.

But things turned sour for him ear­lier this year fol­low­ing two years of poor per­for­mance.

In June, trad­ing in the largest of his Wim funds – the near £3 bil­lion Wood­ford Eq­uity In­come Fund (Weif) – was sus­pended af­ter large with­drawals by many in­vestors.

Trad­ing in the as­so­ci­ated Wood­ford Eq­uity In­come Feeder Fund was also sus­pended.

St James’s Place ended

Mr Wood­ford’s con­tract to man­age three of its funds, val­ued at £3.5bn, as the Fi­nan­cial Con­duct Author­ity, which reg­u­lates the sec­tor, launched a for­mal probe into the sus­pen­sions and the events lead­ing up to them.

Wim quickly gave as­sur­ances its other funds would be un­af­fected, but these were not enough to stop a slump in the share price of Wood­ford Pa­tient Cap­i­tal Trust amid con­cerns of knock-on ef­fects.

Shares of a raft of stocks count­ing Mr Wood­ford’s fund among their big­gest in­vestors also fell heav­ily.

Dis­pos­als aimed at rais­ing cash for the Weif have brought in hun­dreds of mil­lions of pounds.

These in­clude the sale of a near-16% stake in ac­tivist in­vestor Crys­tal Am­ber, whose port­fo­lio in­cludes a large stake in North Sea oil com­pany Hur­ri­cane En­ergy.

Last week, the su­per­vi­sor be­hind Mr Wood­ford’s funds, Link Fund So­lu­tions, un­veiled plans to wind up the Weif.

Mr Wood­ford, 59, was also forced to step down as man­ager of the fund.

Link is now seek­ing a new man­ager to take on the £258 mil­lion Wood­ford In­come Fo­cus Fund, but has warned it may be forced to sell off more as­sets and close it in­stead.

Mr Wood­ford, who was made a CBE in the Queen’s birthday hon­ours in June 2013 and sub­se­quently re­ceived an hon­orary fel­low­ship from Lon­don Busi­ness School, has been crit­i­cised for putting too much money into as­sets that were dif­fi­cult to re­deem for cash.

When Weif in­vestors started with­draw­ing too much, this made it im­pos­si­ble for the fund to meet their de­mands.

Sev­eral law firms are in­ves­ti­gat­ing the po­ten­tial for com­pen­sa­tion claims on be­half of savers who in­vested in the sus­pended Wim funds through in­ter­me­di­aries.

TROU­BLED: Neil Wood­ford, the found­ing part­ner of Wood­ford In­vest­ment Man­age­ment

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