Lifting the lid on Woodford's controversial Zimbabwe fund holding

My guess (and my opinion) is that Neil Woodford will have done his homework very professionally and exhaustively as he always seems to do.

And further to that, my opinion is that I certainly could not claim to be able to do "due diligence" on such an investment. And I very much doubt whether any IFA could.

Therefore any comments on this issue (including mine) can surely only be much more speculative and much less valuable than Neil Woodford's actions.

In addition, this represents only a fraction of the total value of funds under Neil Woodford's management and therefore will not greatly affect the weighted volatility of the whole fund - even if it fails spectacularly and is liquidated.

In conclusion I would trust Neil Woodford's work and his opinions, and I am still of the opinion that Invesco Perpetual's market commentaries and their advisers' seminars are excellent and uncannily accurate.

Due diligence or not, I believe many of my clients would be horrified if they thought their funds were being invested in Zimbabwe. There is a difference between an ethical fund and a moral one and I believe Mr Woodford has crossed a line in the pursuit of performance.

Presumably, Chris F, investing in China is just fine then and you have no problems with Neil's penchant for tobacco stocks?

Zimbabwean would have enonmous growth prospects if they could revive even half the industry and commerce and agriculture that it inherited from Rhodesia. I fear however that this is wishfull thinking with or without Mugabe.in power. Zimbabweans are great people, but whoever is in power there will feather their own nests first, their power base next, the people after that and investors will be lucky to see their capital bac,k let alone profits. I would be happy to be proved wrong.but fear I won't..

Tobacco is legal, harmful or not. I'm probably just being naive.

If you want a fund that is at all ethical don't invest in this one.

I do however fail to see why he is taking such a punt. As someone pointed out it is a small part of the total fund and therefore is not likely to have a big impact.

Perhaps it is an accepted risk and if it gives him a voice in the shares of which he might be able to leverage some degree of control. If it works out it could be followed with further funds. We wait with bated breath!

One has to wonder why Woodford was attracted to investing in Africa, particularly a country ruled by a fascist tyrant such as Mugabe.

I have a couple of Zimbabwean clients who told me that they couldn't wait to get out of the country (apparently Zimbabwe's principal export is Virginia tobacco).

Consider South Africa ~ rich in gold and diamonds yet look at the mess it's in. Consider Nigeria ~ rich in black gold, yet much the same. I'm sure there are lots of lovely people of all ethnicities throughout Africa, but the sad fact is that virtually all African countries seem to be social and economic basket cases.

As an investment proposition, I wouldn't go near any of them.

My goodness there seems to be some with a love affair with Mr Woodford. His figures over the last couple of years don’t really seem to bear out this enthusiasm. Maybe it’s just a ‘comfort play’ for some.

Anyway do you really believe in the cult of the Star? Even with terrific performance do you really think that a large fund group would let a fund performance ‘tank’ if the hyped ‘star’ got run over by the No.9 bus?

As to investing in Africa, the only motive I can think of is one of desperation.

The performance of his Income fund 17-Aug-07 to 17-Aug-10 has been +1.54%. Compare this to Jupiter Merlin Income over the same period +15.65% (Shock, horror – one of those high charging Multi Manager Funds).

As far as Africa is concerned anyone investing there must either be desperate or plain nuts. (Jon Maguire?) Just look at the corruption Index – the majority of the African States take up all the lowest places (with the exception of Botswana) and Zimbabwe isn’t even listed!

Africa has absorbed £500 billion in aid over the last 50 yrs and this has resulted in Zero growth. 50 years ago 1 in 10 of the World’s poorest were from Africa; today it is 1:2.

Each year $140 billion exits Africa. That is almost 4 times what is received in development aid. And you want to invest there?

I am sorry about the username but I live here and I certainly fear retribution from our system as I intend to be truthful.

What is overlooked by Mr. Woodford is the 51% bill that is very clear on the intention for any company operating here 51% of the shareholding must be held by black Zimbabweans as approved by the Minister. Those approved may well be competent to run your undertaking but they are chosen primarily on the basis of their political reliability. The Companies Act gives a great deal of power to the majority shareholder and whilst minorities have some protection it is very expensive to realize it.

The recent saga in the Meikles/Kingdom affair has been damaging to both companies and the individuals involved. That's what happens when the politicians get involved, no real winners. Look at Chiadzwa and the ACR story, no protection at all.

My point is that if you invest here you will have no control whatsoever. Not managerial and not legal. You could almost believe that the GNU simply doesn't want investment at the moment, hell they refused to sell our steel company to Arcelor/ Mittel because they were "too big " according to my president.

Some of you may feel that doing it all the "African way" would be viable but for anything more lasting than a quick ram raid it would be folly as there is a notable lack of loyalty along the food chain and you will find yourself paying much more than you anticipate.

Certainly we have good natural resources and they can earn good money for Zimbabwe and the investor but right now it is a very uncertain and ambiguous place to invest and the entire membership of the GNU are of one mind on this. They are collectively extreme resource nationalists.

Keitho

There speaks an honest man. Would that there were many many more like you throughout Africa - then we really would have an emerging market of which to take note. Meanwhile what now of Mr Woodford's foray?

Could we blogging with a potential future African leader?

Africa has seen some encouraging growth in the telecomunication, agriculture, banking and natural resource industries and this has attracted many foreing investors in this region despite their many faults.

Most of these regions are known to have had some bad political turmoil history but they still attract forein Investors. Such countries Include - Angola, Sudan, Nigeria and DRC

Zimbabwe is a country rich in natural resources and has good soil and favourable climatic conditions fit for agriculture. Its only undoing is the breed of leaders running the show. If Zimbabwe was to have good leadership then things would turn around and in turn the country would slowly return to its lost Glory.

Neil Woodford has made a bet on an investment oppotunity where if the odds favor him, the oppotunity to return profits will be very high. But as is with every risky investment the, flipside would be bad for Neil Woodford books......

All in all i think its a good bet.........