Disgraced former fund manager Neil Woodford is currently running rings round the regulator, the Financial Conduct Authority. More than a year has passed since the FCA issued a warning notice against Woodford for failing to manage effectively the liquidity risks associated with his £3.7billion investment fund Woodford Equity Income (WEI) in the run-up to its suspension in June 2019.
The fund’s subsequent break-up crystallised losses for tens of thousands of investors.
Since then, while the FCA has remained schtum, Woodford has gone on the offensive.
He has launched the Woodford Views website, opining on a mix of economics and markets; been interviewed by a couple of investment experts (the latest, conducted by Simon Brewer for The Money Maze Podcast, is actually worth a listen); and announced the launch of a subscription-based service designed to help investors.
This investment service, labelled W4.0, has already attracted interest, and three strategies have initially been marketed, which are designed to help subscribers:
- Generate a mix of dividend income and investment growth – exactly the kind of return that WEI was set up to deliver but failed to do so;
- Obtain high growth – a la Woodford Patient Capital, an investment trust now run by Schroders and in the process of wind up (with a share price a tenth that of its £1 launch price in April 2015); and
- Get a juicy income – 7 per cent plus – which normally only scammers promise.
Back for good? Disgraced Neil Woodford’s fund collapsed in 2019
Am I being too cynical? Maybe (apologies if I offend). What is fact is that 500 enthusiasts have signed up as ‘founding partners’ – and more are waiting in the wings, keen to benefit from Woodford’s investment ‘nous’. How this service goes down with the FCA we will probably never know – as far as the regulator is concerned, silence is golden when it comes to Woodford.
Indeed, it took until last Thursday for the FCA to even clock its planned enforcement action against Woodford’s name on its register which companies and consumers use to check the details of regulated entities. Maybe the FCA will surprise us by finally holding Woodford to account for his disastrous management of WEI. But even accepting the right of Woodford to challenge any action it wants to take against him, we shouldn’t be nearly six years down the road with no finishing post on the horizon.
To use footballing parlance, Woodford 4, FCA 0.
Temple Bar success driven by tried and trusted plan
Fund managers Ian Lance and Nick Purves have done a brilliant job resurrecting the fortunes of investment trust Temple Bar.
Since being appointed to run the fund from the end of October 2020, they have transformed it from one heading towards oblivion into an £800 million all-conquering UK equity income trust.
In terms of performance, not one of its rivals has come anywhere near it, in the process generating returns of about 140 per cent.
Whether the pair, who work for investment house Redwheel, can continue generating such stellar returns for shareholders remains to be seen – the stock market, as Scottish Mortgage investors found out during 2022, has a habit of biting back at some stage.
Yet their investment approach, built around buying unloved UK companies in the expectation (not guarantee) of a turnaround at some stage, makes great sense.
Especially at a time when growth investing – built around the Magnificent Seven ‘tech’ stocks – is threatened by a mix of tariffs imposed by President Trump, a fragile global economy and the cost of the rush towards the widespread adoption of artificial intelligence (an AI version of Jeff Prestridge cannot be ruled out).
Impressive as Lance and Purves have been at Temple Bar, it’s the words that Lance penned for the trust’s latest newsletter that I find even more compelling – and which investors should heed. He says that when stock markets are as volatile as they are now, human instinct drives many investors to go into protection mode and ‘run for cover’ until things calm down.
But he says that bailing out of the market usually results in lower returns than if you keep your nerve. He adds: ‘Volatility can be unsettling but is part and parcel of investing in equity markets – and it is the reason why we believe the asset class delivers premium returns over time.’
As for their particular investment style, investing in sound businesses at a big discount to their economic worth, Lance says it has ‘stood the test of time’ – including the bursting of the technology stock market bubble in 2000, the 2008 financial crisis and more recently the 2020 pandemic.
In a nutshell, dear investing readers, stay the course.
And as I always preach, don’t put all your equity eggs in one basket – diversify.
Don’t hope for better – delay is in UK rail’s DNA
Although we are promised a bright new dawn for our railways with the launch (at some indeterminate time in the future) of Great British Railways, it doesn’t protect passengers from the network’s current creaking infrastructure.
On Easter Monday I was one of tens of thousands of commuters caught up in the chaos at London’s Paddington Station triggered by a points failure just outside Reading.
Commuters travelling into the station from the West Country were also badly affected, with services cancelled or terminating at Reading.
Fast track: Maybe Great British Railways will transform our railways when it finally chugs out of the sidings
It took me more than four hours to get home, as opposed to the normal one hour – and I only managed to do so by cycling to Waterloo to catch an alternative service. Even then it took me two attempts to get home, as a trespasser on the line just outside Clapham Junction caused the first train I got on to be taken out of service, forcing me to go back to London and wait until the offending person was dealt with. Nightmare upon nightmare.
While Network Rail, whose responsibilities Great British Railways will eventually take over, cannot be blamed for trespassers on the tracks, it has patently failed in ensuring the country’s rail network remains fit for purpose.
While I accept that Paddington is an extremely busy station, points failures on the tracks that snake out of it are a regular occurrence for commuters. It’s an infrastructure Achilles heel which Network Rail should have addressed long, long ago.
On Monday I counted myself lucky because I managed to get home – many others travelling further afield were left stranded.
I also got a refund of £20.10 from train operator Great Western Railways, although it didn’t compensate me for the three hours of my life lost as a result of Rail Network’s failure to do its job properly.
Maybe Great British Railways will transform our railways when it finally chugs out of the sidings late next year or in 2027, but I wouldn’t bank on it. Delays are embedded into our rail network’s DNA.
