There are no prizes on offer today for any reader guessing the main topic under the microscope of financial journalists this weekend. Yes, it’s still Woodfordgate. However, across the board in the money pages, journalists’ analysis has now moved to a different level beyond the much reported coverage of the fund suspending trading a few weeks ago. The relationship with platforms and best buy lists as well as regulatory scrutiny, conflicts of interest and the stance on illiquid assets within an open ended fund structure are all on the agenda as well as is the question of whether Woodford should be continuing to charge management fees.
The Financial Mail on Sunday is just one of the money sections which have detailed analysis on the Woodford situation and what changes it might signal for the fund management sector in the months and years ahead. Jeff Prestridge has written a long piece in which he reveals his “…battle plan to fix broken investment industry for customers not fat cats”. Yep, you’ve got the gist of it! In the article he looks at some of the issues and comes up with five of elements to his ‘plan’ which are that funds must be honestly named, that the regulator should intervene, there should be a clampdown on illiquid assets, best buy lists should be made watertight and finally that Woodford should waive management fees now.
In a separate article in the FMoS but on the same subject, it is the potential for conflicts of interest in this situation which is under the microscope. The article reports links between some of the stocks that Woodford has in his funds and certain individuals who sit of the board of one of his funds as independent directors. It also reports on ‘close ties’ with city firms that have advised him or brokered deals that involved his funds. However this situation eventually pans out, the alarm bells are certainly ringing out loud.
Over at the Sunday Times, in total there are seven different articles all relating to the Woodford situations or implications of it within the business and money sections. It starts with a front page article on the Business section about how Patient Capital Trust sacked Duff and Phelps last year, which was the adviser in charge of pricing what the article calls its ‘risker investments’, in a row over fees for valuations, raising some questions about the valuation process for the trust’s holding.
Flick through to page six and it’s governance issues in the spotlight – as was the case in the Financial Mail on Sunday, with conflicts of interest highlighted in the article as well as questions over stock selection.
As you’d probably expect, the ST Money section is dominated by articles on the subject. The lead article shows a case study of a couple who had invested via Hargreaves Landsdown and are feeling let down. The article also reports on an investigation the ST has carried out which suggests that Lee Gardhouse, HL’s CIO, had sold a significant number of units in the Woodford fund very shortly before the suspension was announced.
Then there’s the question of regulation and governance. ST Money reports that it has “submitted evidence” to the Treasury Select Committee about fund managers failing to make their full list of underlying investments easily available as well as on fees charged and how those fees are in some cases discounted.
But what about the wider investment fund sector? Ali Hussein’s article looks at other fund management groups which have some exposure to unlisted securities. These include Invesco, Blackrock, Fidelity but the exposure levels which the article suggests are nothing like those seen in the Woodford Equity Income fund. Clearly, the issue of transparency is now at the fore.
On a more positive note, the ST Money section then asks whether investors’ money is ‘safer’ with other managers Terry Smith, Nick Train and Giles Hargreave. It highlights how Train and Smith operate a different strategy to Woodford, utilising a buy and hold approach with a focus on investing in ‘quality businesses’. It also highlights Hargreave’s excellent long term track record of performance but also his approach of investing in ‘undervalued companies’ and smaller companies although this is not reported as an alarm bell.
Ian Cowie is explaining his recent purchase of shares in packaging company Mondi within his forever fund. He also encourages readers to keep buying in Europe even if and when the UK leaves the EU.
Over at the Telegraph Money, it’s the state pension under debate and discussion. The article reminds readers of what age they will be entitled to claim their state pension, based on the current legislation. They then proceed to encourage readers to use other means to plan for retirement – using private pension savings in order to fill some or all of the gap left by the increases in state pension age.