A challenge to ‘consensus thinking’? Neil Woodford has returned with a new blog and newsletter
‘You may remember me as the fund manager who avoided the dot-com bubble and the banking crisis…. or perhaps as the “disgraced” fund manager who presided over Woodford Investment Management’s collapse in 2019.’
Those are the words of Neil Woodford, who has re-emerged with a newsletter and blog – claiming to offer readers an alternative to ‘consensus thinking’ – just a week after the City watchdog blasted the former fund manager’s grasp of risk management.
And while there may be many investors reluctant to follow the advice of the man who famously crashed his giant equity income fund, his Woodford Views blog has instantly become the talk of the investment world.
Woodford Investment Management imploded in 2019 after its once-£3.7billion fund collapsed when investors rushed to the exit in droves amid a sustained period of underperformance.
The collapse of Woodford Equity Income left some 300,000 investors stranded and left to wait five years to be compensated with a fraction of the capital they had entrusted with the fund manager.
Now Mr Woodford has taken to Instagram, X and a newly-launched website to help readers ‘navigate the complexities of financial markets’.
Last week the Financial Conduct Authority, which is yet to take any formal sanctions against Mr Woodford, said he had a ‘defective and unreasonably narrow understanding’ of his responsibility for managing ‘liquidity risks’ – the need to be able to turn assets into cash.
It is not clear how or if Mr Woodford intends to profit from his latest venture, which follows the failure of a new fund business, WCM Partners, in 2021.
In his first Woodford Views post, he said: ‘You may remember me as the fund manager who avoided the dot-com bubble and the banking crisis and delivered index-beating performance for over 25 years, or perhaps as the “disgraced” fund manager who presided over Woodford Investment Management’s collapse in 2019.
‘Others may not have heard of me at all. Whatever your perspective, you may be curious about what I have to say about a wide range of economic, social, and political issues that impact our everyday lives.’
He added that much UK economic commentary ‘is long on opinion but critically short on data’, suggesting this is ‘because established narratives are too willingly accepted’.
Mr Woodford said: ‘The economic analysis and commentary in Woodford Views will focus on relevant facts and data without censorship from editors, pressure to toe a particular line or consensus thinking.’
Why did Woodford Investment Management collapse?
Neil Woodford had a successful 25-year career when employed by Invesco, where his funds racked up billions of pounds of investment from retail investors and institutions alike on the back of bumper returns.
When he struck out on his own in 2014 investors naturally followed into the Woodford Patient Capital Trust, the Woodford Income Focus fund and – crucially – the Woodford Equity Income Fund (WEIF).
WEIF’s initial good run was followed by two years of poor performance, exacerbated by exposure to smaller – sometimes unprofitable – companies and unlisted stocks.
Eventually larger investors, such as the Kent County Council Pension Scheme, started pulling out large amounts of money.
Others followed suit and the fund’s large exposure to illiquid assets meant it was unable to sell assets quick enough to meet outflows, leading to administrator Link forcing its suspension.
St. James’s Place then terminated Woodford’s contract to manage three of its funds.
The decision to close WEIF entirely in October 2019 left many investors out of pocket and ultimately led to the demise of Woodford Investment Management.
Investors are only now receiving compensation for the Woodford collapse.
