View more on these topics

Chris Gilchrist: A few suggestions for Neil Woodford


Forget the arguments about whether to sell or hold the Neil Woodford funds. What I want to ask is how you create a fund offering – as it seems Woodford wants to do – that is aimed at long-termism?

There is no need to go into the investment methodology – the record shows Woodford has that well sorted. But how do you package and sell long-term investment to individual investors and advisers? That is a much harder question.

True, there are boutiques such as Lindsell Train, Troy and Baillie Gifford that follow the long-term star, but they do not sell a lot in the retail market. Even M&G – not as resolutely long-termist as it used to be – struggles to persuade advisers to keep the faith with resolutely long-termist Tom Dobell’s Recovery fund.

I have a few suggestions for Woodford to help him refine his proposition:

  • Offer your funds in closed-end form. The industry’s obsession with liquidity is a fantasy. There is no exit from doomsday. Open-ended funds investing in illiquid assets – commercial property and corporate bonds come to mind – are sure to suffer stops in adverse conditions when investors simply cannot sell. The same is true of small-caps in most stock markets. Open-ended funds pretend away a lack of liquidity and hide the bid-ask spread. Grown-up long-termist investors need to see it naked, which is what you get with closed-end.
  • Price all your funds at £10 per share or higher. The kind of investor who thinks 10,000 units at £1 are better than 100 units at £100 is not one you want in your fund at any time.
  • Publish your full portfolio on your website at all times. If you are long-termist, you will not worry about the short traders betting against you. And if the opposite happens and ‘me-too’ investors bid up the price, trust the market to correct the anomalies.
  • Explain everything. Explain your selection methods and metrics. Explain why you like the stocks you hold. Explain why you like what they are doing and not doing, why you do or do not like the management, the products, the sector, the business model. This is how you educate investors to understand what long-termist means. Publish all this on your website.
  • Treat advisers and investors alike. Give them exactly the same information at all times. Publish any presentations for advisers on your website. If advisers bring anything to the party, it is not extra information you have made available only to them, but their genuine understanding of your methods and funds gleaned from their own efforts. That might be worth something to their clients.
  • Walk the talk with investors. Be long-termist with your investors as well as with your investments. The more they trust you with their money, the less you need to charge, so slide your charges downwards as money under management rises. Talk to investors. Most fund advertising is aimed at advisers and assumes they are the gatekeepers. In the post-RDR world, that is less and less true for more and more money.

Many advisers will hate the idea that investors can form opinions without their help, but that is what long-term investors do. Tell it straight. A bit boring is fine as real investors do not need rap.

So do I get my launch discount now?

Chris Gilchrist is director of Fiveways Financial Planning, the author of the Taxbriefs adviser guide The Process of Financial Planning and edits the IRS Report




James Hay recruits Pete Burtonshaw as COO amid restructure

James Hay has appointed former Fidelity head of platform development Pete Burtonshaw as chief operating officer following a restructure of its senior management team. Burtonshaw joins the pension and platform provider from Openwork, where he was interim head of strategic integration. Prior to this he was head of platform development at Fidelity Investment Managers. James […]


Networks push for FCA simplified advice talks

Advice firms are pushing the FCA to revisit the idea of a workable simplified advice model to help close the post-RDR advice gap. Networks say the FCA needs to return to the negotiating table as they have gone as far as they can in developing simplified advice models but cannot commit further investment without regulatory […]


Advisers call on FCA to clarify advice/guidance boundary

Advisers want the FCA to clarify the distinction between advice and guidance, saying they are worried about what constitutes regulated advice and what does not. Speaking at the Money Marketing Business Model Update event in London last week, advisers said having a clearer idea of what the boundary is between advice and guidance would make […]


Suspended EEA fund to restructure

Investors in the EEA Life Settlements fund have voted in favour of restructuring the vehicle to bring its suspension to an end. EEA Life Settlements suspended dealing in December 2011 after receiving a wave of redemption requests in the wake of the FSA’s labelling of traded life settlement products as high risk and “toxic”. In […]


News and expert analysis straight to your inbox

Sign up


There is one comment at the moment, we would love to hear your opinion too.

  1. I’m sure Neil will take on board everything you say Chris, what with you being the oracle of all wisdom in industry matters. In fact, why don’t you start up your own fund management house and show us all how it should really be done?

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm