Woodford collapse still confounds investors
A decade ago, before any problems set in, Neil Woodford had near-deity status. The then much-feted fund manager only worked miracles, with investors clamouring to entrust their capital to a man once referred to as the UK’s answer to Warren Buffett.
Today, many of those same investors still seek answers as to how their money disappeared so quickly following the extraordinary collapse of Woodford’s flagship fund in 2019, writes Chris Newlands.
“He is an arrogant, egotistical man who has never properly taken responsibility for his misbehaviour,” says Ian Duffield, who lost more than £100,000 after the closure of the Woodford Equity Income Fund, which once held a staggering £10bn of assets.
Blame has been apportioned, however. A year ago this month the financial regulator fined Woodford and his former investment company, Woodford Investment Management, a combined £46mn, concluding that he held a “defective and narrow understanding of his responsibilities”.
Many reasons have been cited for the fund’s failure, from a succession of badly performing stock choices, most significantly in online estate agency Purplebricks and construction company Kier, to the withdrawal of a £250mn investment mandate from Kent county council.
But perhaps the trigger for the downfall, as flagged by Duffield, was Woodford’s over-reliance on large, illiquid assets: investments that could not be sold when investors started demanding their money back.
Woodford, meanwhile, got rich. According to figures filed with Companies House, Woodford and his business partner Craig Newman took £111.5mn out of Woodford Investment Management as dividends in the five years to March 2019.
Gina Miller, a campaigner and investment manager, says: “Woodford was fined £5.9mn personally by the FCA and yet he and his business partner paid themselves £20mn in dividends in the 12 months to March 2019 alone, while the fund was heading for the rocks. The fine was far too lenient.”
Woodford declined to comment for this article.