Neil Woodford – update

Before we start let me make this clear. I like Neil Woodford. I admire his track record and his conviction. I also hate investing in funds because they can be quite opaque. I don’t invest in Woodford Funds, but I still believe Neil is very good at choosing more winners than losers and left to his own devices both he and his customers would undoubtedly prosper. But that hasn’t happened as I’m sure you have heard by now.

What happened?

Neil Woodford has just pulled up the draw-bridge, locking investors in. He isn’t the first and he won’t be the last to temporarily withhold withdrawals and redemptions from a fund to protect those investors who wish to stay. However he should never have put any of his investors in the position where a suspension became necessary, after all, most shares are tradable every single day. Currently he just can’t sell the fund’s smaller, unlisted shareholdings quickly enough, to meet the requirement of the money flooding out, without reducing the returns of those investors who wish to stay invested in the fund. In my career I have had to deal with both “With (Un)Profits funds” and “Commercial Property funds” suspending or limiting redemptions from time to time. This last resort is never appreciated by those who need their life savings back. It’s the reason I don’t invest any of my savings nor my clients savings into those types of funds anymore.

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April 2019 Investment Review

As we reach the end of another tax year, it’s time once again to look back and see how our expectations of investment growth have faired against the brutal reality of the past year’s economic turmoil. In my last blog, “You’ve been framed”, I explained there is little point in basing lifetime decisions on the previous 90 days gains or losses. Shortly you will receive your next 90 day statement, it will reflect a much healthier period, but please continue to ignore short-term performance when we are all investing over lifetimes.

Whats happened over the last 12 months?

It’s been a challenge to say the least. We sold down risk assets across our portfolios twice in the year to reduce the effects of an increasingly un-certain economic outlook. Only recently have we re-committed to use that cash to purchase further investments.

Last year will generally be measured by how much was lost.

As investors we are rewarded for our resilience. We need to be able to take it on the chin once in a while. My rule of thumb is that we will only make money 3 years out of 4. We measure three of those years based on how much we made. We measure the fourth on how little we lost.

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You’ve Been Framed

It’s many years since I completed a jigsaw, but recently I came across a partly completed puzzle of a Spitfire flying into the sunset.  It struck me that we vary hugely as individuals and yet we approach many problems in exactly the same way. 

Most people, maybe all people, start with the corner pieces of a jigsaw. Then all the edges are completed to create the overall size of the puzzle. Then the detail and finally the undifferentiated areas like the sky. Pretty standard stuff. 

We don’t just approach jigsaws in this way, but pretty much any problems or questions we have generally. 

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Pruning & Sowing

It seems like we have had to wait an age, but there is finally some positive movement in the markets. It’s about time too. 

We have all received our quarterly statements from Nucleus and it has not made for comfortable reading. The markets fell dramatically in the last quarter and the statement reflects the value at the beginning of January. That was just about the nadir of the recent slump.

22nd June rebalance and January low valuation point!
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It’s Personal

Happy New Year!

2018 was a year to forget for us as investors. It was about damage limitation after the year’s earlier peaks. However I hope 2018 was a year to remember for you as an individual.  Let me take this opportunity of wishing you and your family all the best for 2019. 

As 2018 closed, like the All World Index shown above, we found ourselves counting our losses. The synchronised global growth I described last year has turned into a synchronised global slump. In the same blog I went on to say;

Although the primary trend is for a long term rise in share values, make no mistake there will be more hiccups along the way. A short term downturn or two is common within a long term uptrend. We have not witnessed a non-political hiccup for almost 2 years.


If we view our investment lifetimes as a war, then we lost a battle in 2018.  Similar to those we lost in 2011, 2008 & 2000.

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