Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Neil Woodford answers seven awkward client questions

Neil Woodford tackles some of the prickly questions put to him by grumpy unit holders.

Woodford: difficult answers to awkward questions 

Investors have been understandably perturbed by Neil Woodford's recent run of misfortune, and his company has not been afraid to tackle client anxiety by the horns. In a recent series of videos, the UK’s most followed manager put his neck on the line and answered a series of the most awkward questions submitted by unit holders. We watched so you don’t have to.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Woodford: difficult answers to awkward questions 

Investors have been understandably perturbed by Neil Woodford's recent run of misfortune, and his company has not been afraid to tackle client anxiety by the horns. In a recent series of videos, the UK’s most followed manager put his neck on the line and answered a series of the most awkward questions submitted by unit holders. We watched so you don’t have to.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Has Neil Woodford lost it? 

[Cheekily self-deprecating grin, twinkle of the eyes] 

'Umm I have been criticised before in my career, in fact those very same words were used about me in late 1999 and early 2000 as a result of the underperformance I was enduring at that time. I have been here before.

'Clearly our investors are free to believe that I have lost it, but I don’t believe that I have lost it. I believe that I have the right portfolio, the right strategy, to deliver the right returns for our investors over the medium and long term.

'Things have been very difficult in the short term, I'm sure people are disappointed, as I am, about short term performance, but this is a long game.

'I am not going to cut and run and run away from the strategy, and the discipline and the investment principles that I have followed all my life. I don't think I have lost it, I think I have found it, in terms of the right portfolio for the conditions we are likely to see over the next few years, so I completely disagree with that.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Have you changed your approach since you have started at Woodford?

[looks grave] 

'This is a question I have been asked a lot quite recently and it is a manifestation of the fact that the portfolio has changed quite a lot in character in recent months. But it is important for our investors to understand that the question, the approach, if you like, is the same.

'The fundamental focus that I have deployed in the 30 years that I have been doing this, the focus on the economics, and the macro-fundamentals, and the business fundamentals, and valuation, all of that has not changed whatsoever. But of course it is not always the same portfolio that will do the job that we need to do for investors that works in all economic environments.

'Portfolios will change in structure over time in order to achieve the same objective. So the answer to the question is that the approach has not changed but the portfolio that will deliver for investors today is different to the portfolio that would have delivered before.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Do you have a big enough team to keep track? 

[wide eyed] 

'This is a question I have been asked repeatedly, and the answer is that I have the best infrastructure that I have ever had as an investor around me now. I have seven people in my investment team, helping me make better decision and I have an operational infrastructure around me that is also very helpful too.

'I have more support and help now than I have ever had as a fund manager and the short answer is that I absolutely have the resource around me to help me do the job I need to do for my clients.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

You're spending too much time on early-stage companies 

[Serious look] 

'Look I have been investing now on behalf of clients for over 30 years. One of the basics really that I have had to train myself to do over the last 30 years is to avoid becoming too immersed in any one part of your investment universe. So it is absolutely not the case [eyebrow emphasis] - not the case that I spend a disproportionate amount of time on early stage businesses.

'We spend, as a team a lot of time on our early stage portfolio, five of the seven people in my investment team are focused on covering the early stage companies, both quoted and unquoted. So we have a disproportionate amount of the resource that works with me working on early stage companies.

'But I do not spend too much time focused on early stage companies, I have to spend my time looking at our entire investment universe, both the things we are invested in and the things we are not invested in, and I believe I spend my time appropriately across my significant work load.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Will income per unit be higher or lower than 2016?

[Thoughtful look] 

'OK, so we have had a few disappointments recently, pretty significant disappointments, and one in particular has impacted the dividend potential of the income fund, because Provident Financial of course decided to pass on its interim dividend and it is likely that they will not be paying a final dividend for the calendar year '16.

'But despite that the income fund will be paying a dividend increase [sic], it'll be of the order of low to mid-single digits which is what we said we would do at the start of the year. We were somewhere ahead of that budget before the Provident disappointment, so despite that I am very confident that we'll deliver what we said we would deliver in terms of the income growth on the income fund, we are going to deliver a very healthy dividend as well on the income focus fund, and we are absolutely on track to pay the 5p that we committed to in calendar '18.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Do you need to own such large stakes in companies? 

[Jump cut to profile shot, looks unengaged] 

'I have for my entire career owned large stakes in businesses I have invested in, in small businesses and indeed in large ones. That is the natural approach, if you like, of the active fund manager who is doing something different to the index.

'By definition you are going to own a portfolio that does not look like the index. But of course that strategy is called into question when the performance is not good, which it hasn't been for the last really two years. But it is absolutely the case that in optimising the portfolio and in capturing the benefits of economic opportunities in the portfolio, I need to own significant stakes in businesses and have been comfortable owning significant stakes in businesses, both small and large. 

'I suppose this is naturally a product of poor performance. When things are going well I never get asked this question, when things are going badly it crops up all the time. The answer is we are entirely happy and think it is appropriate that we own these significant stakes this is because we are capturing more of the great economics of these businesses.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

As a life-long income investor, why do you think you can spot early-stage companies?  

[Looks momentarily flabbergasted]

'As an investor, this sort of goes to the heart of what I have been paid to do. Clearly it is my responsibility to deliver to investors income in both the Income and the Income Focus fund, but equally as I have said all along in the Income fund, what we are trying to do is to deliver an attractive total return to our investors, an appropriate risk adjusted return. I have over my entire career looked across my investment universe, to deliver the best return for our investors.

[slight rising irritation]

'It is absolutely the case that early stage businesses, both quoted and unquoted, are part of my investment universe, and the reason that I am invested in them is that I believe they will do a fantastic job.

'They are in my view the most undervalued stocks in my entire investment universe so I would respond to this question by asking why wouldn't you want to own the most attractive, the most undervalued assets in your investment universe.

'When you put the question like that I think the answer is that of course you should and would want to invest in them. Now most of my peer group don't, because they don't bother looking at this part of the stock market, and a part that I absolutely have to look at, just like any other.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play French fund CEOs: 'Brexit is a lose-lose situation for all of us'

French fund CEOs: 'Brexit is a lose-lose situation for all of us'

'We'll all lose out - but London is an international city, Paris is not.' Leading French asset management CEOs tell us what they think Brexit will mean for the investment business.

Play Henderson Eurotrust's Stevenson: dealing with European cynicism

Henderson Eurotrust's Stevenson: dealing with European cynicism

Tim Stevenson talks about where he finds his opportunities in the current environment in Europe

Play Mark Barnett - part 2: why I'm not buying Lloyds

Mark Barnett - part 2: why I'm not buying Lloyds

In the second part of our exclusive video interview, Barnett explains why he has no intention of buying Lloyds, and where he sees the greatest income opportunities.

Read More
Wealth Manager on Twitter