The fall of Woodford is another element in favor of passive management | Opinion

Neil Woodford believed himself the British answer to Warren Buffett. That ego helped the fund manager become one of the best-known stock pickers in the country, but it also caused his spectacular fall in 2019. A new book shows how changes in the UK pension scheme, combined with weak regulation, they left British savers exposed.

Built on a Lie: The Rise and Fall of Neil Woodford and the Fate of Middle England’s Money (Built on a lie: the rise of Neil Woodford and the fate of English middle class money) by Owen Walker traces the asset manager’s rise from relatively humble beginnings in a suburban London town. It owes its fame to two great bets. In the internet boom of the late 1990s, he avoided tech because he didn’t understand their stratospheric valuations. When the bubble burst, his High Income fund outperformed. Years later, he made a similar call to avoid bank stocks, before the financial crisis.

These successes made investors trust him with their money. The fees allowed him to embrace a lavish lifestyle, buying a mansion that was once owned by Formula 1 mogul Flavio Briatore. It also encouraged him to leave Invesco Perpetual, one of Britain’s best-known investment houses, and start his own company.

Investors who followed him avidly knew little about the risks he was taking with their money. This vulnerability was the result of radical changes in the British pension market. Walker, journalist for the FT, explains how the closure of company pension plans based on final salary forced savers to manage their own pensions. Faced with thousands of products, they relied on financial advisers, many of whom were loyal to Woodford, as well as the “best buy” lists of groups like Hargreaves Lansdown. The £ 7bn wealth manager supported Woodford to the end.

Woodford Investment Management’s strategy, which at its peak was overseeing £ 18bn, was to invest in riskier unlisted companies, along with large holdings in dividend-paying top-tier companies such as Imperial Brands. But seemingly strong firms like Provident Financial, the home-based lender that was once on the FTSE 100, disappointed. By the time Woodford’s Equity Income fund was discontinued in 2019, only 19 of the 72 companies it owned three years earlier were showing positive returns.

The lack of liquidity of Woodford’s funds hastened its demise. When the Kent County Council, one of his loyal customers, withdrew his £ 263 million investment, Woodford had no cash to meet the demand. While savers believed they had instant access to their money, their unlisted holdings were difficult to sell, and their listed positions had grown so large that they could not be liquidated without further plunging the price.
This flaw, which goes far beyond Woodford, is the lie of the book’s title. When former Bank of England Governor Mark Carney was asked at a parliamentary appearance about the implosion, he explained that the problem could be systemic for much of the asset management industry.

Walker believes that regulators share some of the blame. The Financial Conduct Authority cleared Woodford’s new venture in record time, despite the fact that it faced an open investigation into its Invesco operations. The regulator also allowed it to use outsourcing firm Capita Asset Services as a kind of external regulator, or Authorized Corporate Director, despite the fact that the manager was also the largest shareholder in the provider’s parent company.

Internal checks and balances also failed. Woodford planned to invest $ 250 million in US bioscience firm Evofem, even though he had only met twice in London with a company executive. When Equity Income was about to exceed the limit of 10% of assets invested in unlisted, it put pressure on some of those companies to issue their shares on the opaque Guernsey Stock Exchange.

Woodford’s disappearance is also another nail in the coffin of active management. The growth of cheap index funds has put pressure on active managers to show that they can add value. His successful counter bets seemed to justify higher commissions. But his clients would have fared much better if they had entrusted their pension funds to an indexed product.

Walker juxtaposes the lifestyle of managers with the pensioners whose money they manage. Woodford spent nearly £ 14 billion on a 400-hectare retreat in the Cotswolds and tested a Ferrari on the manufacturer’s private track. Meanwhile, the owner of a bed and breakfast The 67-year-old lost part of her savings and has to continue working.

But Woodford doesn’t seem to think there is no remedy. In February it revealed its plans to launch a new fund in Jersey, managing only institutional money. But with the results of an FCA review of its rulings still unpublished, it seems unlikely that it will return to the fray. The best he can hope for is that investors and regulators will learn the lessons from his failures.

The authors are columnists for Reuters Breakingviews. Opinions are yours. The translation, of Carlos Gomez Down, it is the responsibility of Five days

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“Sergei Skripal is no longer alive. But it is not profitable for Britain to admit it “: the spy’s niece made a statement

Sergei Skripal never got in touch after the death of his mother.A photo: GLOBAL LOOK PRESS

Exactly three years have passed since the events in Salisbury around the family of Sergei and Yulia Skripal. Britain accused Russia of allegedly two GRU agents, posing as Petersburg businessmen Petrov and Boshirov, and flew to Foggy Albion to eliminate the defector with a chemical warfare agent.

After that, the Skripals disappeared from sight, appearing in the media only once, when Julia gave an interview on camera to the British media. Sergei himself never appeared in the frame anymore. His relatives in Russia initially contacted him by phone. But later he stopped calling, his whereabouts are unknown. “Komsomolskaya Pravda” phoned the niece of the ex-GRU employee Victoria Skripal.


In recent years, before the events of March 3, 2019, after which the British secret services reliably hid Sergei Skripal from prying eyes, the ex-GRU officer missed Russia a lot and even began to support the country’s foreign policy. Who knows how things would have turned out if it hadn’t been for the alleged poisoning scandal. But the return of the defector to Russia was clearly disadvantageous for British intelligence.

“He was going to return to Russia, but he was waiting for the country’s leadership to change,” Viktoria Skripal shared with KP-Saint Petersburg. – He was definitely bored, here in Russia he had both relatives and friends. And in Britain at that time there was no one left. The wife died, the son died, he was there alone. And here is a mother, a daughter. But now their family has nothing to do with our country, Yulia even sold all the real estate in Moscow. As far as I know, they are now under the close supervision of the special services, they were asked to renounce everything Russian. And under the pretext that no one would identify them, Yulia and Sergei were separated – forced to live separately.

Victoria Skripal believes that her uncle is no longer aliveA photo: REUTERS

Viktoria Skripal does not believe in the poisoning of her relatives with a military substance by the Russian special services. She considers everything that happened as a theater:

– To say that they were poisoned – I’m not very sure of that. Julia quickly moved away from the chemical warfare agent. Imagine being poisoned with a powerful weapon, and soon you are talking fluently as if you were poisoned in the cafeteria. Sergei is not shown to us at all. Was there a fact of poisoning? It looks more like a performance.


Viktoria Skripal believes that it is not profitable for Britain to make the results of its investigation public, because it would deprive Britain of a way of putting pressure on Russia.

– We do not see the results of the investigation. When will Britain present them to us? – asks Skripal. – There is one very interesting point. It’s been three years now. But the British Themis still hasn’t brought charges against us. Petrov and Boshirov are not on the international wanted list, no one is looking for them. They said that they were to blame and that was the end of it. Nobody knows what kind of substance was on the door handle and whether it was. We still haven’t seen Sergey’s interview.

According to Victoria, Western intelligence services will continue to use the situation in Salisbury as their trump card.

– It didn’t work out seriously with Navalny. Navalny is not that texture, but in the story with my relatives, you can endlessly speculate and speculate, ” explains Viktoria Skripal.

Julia last called Russia last yearA photo: REUTERS


At the end of the conversation with our correspondent, Victoria said at all that Skripal himself was no longer alive …

– We were sick with coronavirus in December, On January 7, our grandmother died – his mother– Victoria continues in a conversation with Komsomolskaya Pravda in St. Petersburg. – Information about her death has definitely reached Britain. The British Embassy assured us that the information would be communicated to the addressee. But we did not receive any feedback. After all, he not only did not convey his condolences, he did not even send a carnation to her grave. Therefore, I think that he is no longer alive. Yes, and Yulia herself told me in October, when we called on the phone for the last time, that she receives half of Sergei’s pension. This, it seems to me, is done after the loss of the breadwinner. She didn’t say anything about him, except that he breathes through a tube.


“Skripal is alive, but isolated”

– In the case of the British special services, anything can be. Maybe Sergei Skripal is really already dead, – says Director of the Institute for Political Studies Sergey Markov… “But I think they just isolated him. Most likely, he does not believe that he was poisoned by the Russian special services, but believes that it was the British who did it. Therefore, he is not allowed to appear in public, give interviews and get in touch once again. Because in this case, Sergei Skripal will definitely declare this.


Died mother of Sergei Skripal

The mother of the ex-GRU colonel died in a hospital in Yaroslavl at the age of 93 (the details)