Written by Shelly Durrant
Neil Woodford, Britain’s most high profile fund manager, was forced to suspend dealing in his flagship Equity Income Fund. The questions many people are asking is, is this the end of the road for him and is this the end of the star fund manager?
Even if he manages to come back from this, is it too little too late or would he be considered a hero in the investment world? One thing that is clear, is that a lot of bridges have now been burnt and his reputation has been heavily tarnished.
It takes a lifetime to build a reputation, Neil Woodford has spent over 30 years as a fund manager initially starting his career at Eagle Star in 1987. He spent much of his career at Invesco Perpetual where he avoided the worst effects of the 1990s dot-com bubble and the 2008 financial crisis. He has spent 30 years building his own brand and identity, gaining the trust and loyalty of stakeholders, outperforming markets, and then in a very short time, appears to have completely lost the trust and in some cases, respect of his peers.
Some of these broken relationships will be incredibly hard to retrieve. For example, St. James’s Place (SJP) was one of the first of his clients to move from Invesco to Woodford Investment Management – a client that only a few weeks ago vowed to stand-by him. Fast forward just one week and the tables very quickly turned with a shock announcement from SJP that they were parting company with Woodford.
Similarly, Hargreaves Lansdown, Britain’s biggest investment broker, is another casualty of the debacle. It remained a faithful backer of Mr Woodford until earlier this month.
In the case of Hargreaves Lansdown, they have come under some pretty tough criticism for having initially remained firm supporters of Woodford, to then calling time on their relationship.
People invested in Woodford for his track record which until recently spoke for itself. His style of investing, value, has been out of favour for some years, however, he has had both good and bad years, which is of course normal over an investment cycle.
He positioned his portfolios for a post-Brexit recovery, which at the time made sense and seemed like a smart move. Unfortunately, the UK economy is in something of a disarray and uncertainty is going to be hanging over the UK for some time, which is currently no good to Woodford who is under immense pressure.
Do I think this is the end for Woodford Investment Management? Initially I thought no but each day that passes it starts to look that bit bleaker for him. Whether you love or hate Woodford, I don’t think any ‘star’ fund manager deserves to go out like this.