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Woodford: industry is failing on corporate engagement
by Emma Dunkley on Mar 05, 2013 at 14:00
The manager said his average holding period has typically been 16 years, although this has recently reduced to 12-13. ‘With that sort of relationship with a business, you probably see three CEOs during that time come and go, and the board change…we are long-term shareholders, we engage with a company, with their strategy.’
When asked whether Woodford talks to all his investors about these issues, the manager replied: ‘I have hundreds of thousands of clients. It’s not possible to engage with them to evaluate what they would like, but I make a point of expressing to intermediaries and IFAs how important I think corporate engagement is. I think my track record speaks for itself.'
He added: ‘We don’t know who our clients are often. We don’t own customer relations, it’s owned by the intermediary. A lot aren’t interested in asking you about corporate engagement.’
Woodford was also questioned on whether investors are able to influence how he engages with companies. ‘There is an opportunity for them to express their wish to engage with companies we invest in…but there is very little attention paid to this. Sometimes we’re offering up the whole subject of corporate engagement to our clients.’
With regards to a question on how he invests, Woodford said: ‘It is about value discovery – my job – I am a value hunter. Undervalued situations in the market – they are by definition the best investment.’
He added: ‘The track record of fund managers speaks for itself. The average fund manager doesn’t beat the index.
‘There are examples of fund managers consistently beating average returns and you’ve got to measure those returns over a very long period of time. It is possible to deliver superior long-term returns.
‘You’ve got to be focused on value discovery, rather than obsession with price over value. It is possible to beat the market… justify your existence. But the industry is not set up sufficiently to deliver that outcome.’
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