Brian’s Brainstorm

The perils of D-I-Y investing..

The debacle of the Woodford Equity Income fund is a harsh lesson for d-i-y private investors who buy funds on reputation and follow platform recommendations. When Neil Woodford quit Invesco Perpetual and set up his own fund, investors flocked to his new venture on the basis of his performance at Invesco. Although investors are told repeatedly that past performance tells us little about future prospects, it’s all D-I-Y investors have to go on.

However it only makes sense to take into account past performance if the star fund manager is investing in the same instruments as before. One former celebrated manager Anthony Bolton was extremely successful in investing in UK and European equities but when he turned his hand to investment opportunities in China he was noticeably less successful.

Neil Woodford’s change of approach was less obvious. This was somewhat masked by his funds continued appearance in Hargreaves Lansdown “best buy” list known as the Wealth 50. The Woodford Equity Income fund was indeed different from the investment vehicles he managed at Invesco. Woodford invested in unlisted securities to almost the fullest extent allowable under the fund’s regulations. When some of his liquid share picks crashed, the value of the unlisted holdings flirted with the maximum allowed. As the fund struggled, Woodford could only deal with redemption’s by selling further liquid blue chip stocks which further increased the fund’s relative exposure to unlisted securities. This vicious spiral ended in tears.

Private investors who look solely at the best buy lists might not have been aware of the difficulties experienced at the Woodford Equity Income fund. At Conçerva, we operate as your eyes and ears, constantly monitoring all of the funds on our panel closely. Regular meetings of our Investment Committee provide opportunities to probe more deeply into the inner workings of each fund. This approach allows our team to stay alerted to any potential problems, such as those of Woodford, and advise our clients to take action in a timely fashion

Brian Durrant

Staff Matters

  • Our former apprentice, Lauren Emmett, has moved to a trainee Paraplanning role where she will gain further knowledge and insights into the financial services industry.
  • This has left a gap on our valuation team which we have filled with a new member of staff. Luke Kearslake will be starting his role in August and we look forward to welcoming him to Conçerva.
  • Mark’s daughter, Ella, is representing Great Britain in The Junior Underwater Hockey World Championships from 11th to 24th August. Ella is the youngest member of the Under 19’s team, at just 15. Everyone at Conçerva would like to congratulate her on this achievement and wish her all the best for the tournament. We are sure she’ll do herself proud.

Statistical Information

Last Month This Month Change
CPI 2.0% 2.0% +0.0%
RPI 3.0% 2.9% -0.1%

UK Consumer Price Inflation

June 2019 July 2019 Change
Base Rate 0.75% 0.75% +0.00%

MPC Meeting – Summary and Minutes