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Woodford Income Focus Fund
Andrew Hirst
Posted: 21 April 2017 08:01:20(UTC)
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I'm curious to know what the experienced investors out there think about this fund. Hargreaves Lansdown were promoting for weeks, it done nothing yet and no holding listed either so an unknown part from the Woodford company name. Even so they placed it straight into their Wealth 150 listing which is obviously a 'recommendation' to investors but seems misplaced to me. It's drawn in a lot of money though which is puzzling. Maybe I am missing something??
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Powerful Pierre on 27/04/2017(UTC)
King Lodos
Posted: 21 April 2017 16:35:04(UTC)
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Woodford's long-term track record is about as consistent as anyone out there.

He's made some astute market calls – been willing to sit out and underperform multi-year rallies, and still come out on top – but generally adds value.

Personally, I'm not overly keen on the Equity Income sector .. For as long as Woodford's been investing, yield assets have been bid up and up .. With bonds perhaps as low as they can go, if the trend in interest rates reverses for the next 30 years (which happened in the 20th century), it might mean income stocks underperforming, and it might mean different investing styles outperforming .. I think the Income sector may be too restrictive for a difficult period in investing, and when in doubt it's always easiest just to buy an index fund and get exposure to everything.
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MJPM on 22/04/2017(UTC), Powerful Pierre on 27/04/2017(UTC)
Andy Bear
Posted: 27 April 2017 16:02:21(UTC)
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I would want to know what it's invested in before I take the plunge. If Mr Woodford is still addicted to 'big tobacco' I'll be giving it a miss.
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jamnor on 30/04/2017(UTC)
Charles William
Posted: 27 April 2017 16:49:28(UTC)
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To jump straight into the 150 list can only be on Woodfords' reputation since no performance data exists. Whilst other good funds have been rejected because they don't as yet have a track record. Doesn't make sense or is it the level of fees paid to the platform that make the decision?🤔
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MJPM on 27/04/2017(UTC), C Blockley on 27/04/2017(UTC), Dennis . on 30/04/2017(UTC)
King Lodos
Posted: 27 April 2017 17:46:06(UTC)
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It's always manager track record .. They've listed quite a few funds at launch on 150 .. Which haven't always done well.

It's not a great way to pick top performing funds – I noticed they listed Neptune European Opps for years when it was underperforming, then dropped it off the list just before it shot to the top of the fund universe.

But I think they do a good job of finding solid, reliable, IFA-favourite funds, with lots of resources behind them .. Their own Multi-Manager funds do a good job – I've never worked out if the fees on those funds are inclusive of the underlying funds btw .. Paying 1.6(?) on top of the 0.6-1% fund fees would be insane, but shows they're doing a good job.
Pensioner
Posted: 27 April 2017 21:06:38(UTC)
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Its as Charles Williams suspects. From what I've read and understand Its a "sweetheart" deal between Woodford and HL. A better commission deal to promote your funds. I prefer to do my own research and make a decision myself on a specific fund in which to invest. So far my best investment with HL has been Fundsmith, but I am open to offers on something better. I will consider any Forum suggestions. Come on KL give us your best alternative?
Alan Selwood
Posted: 27 April 2017 21:38:05(UTC)
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If you want to see the 'merits' of the Wealth 150 v. Fundsmith, watch the video of Fundsmith's latest shareholder meeting 2017 at:
https://www.fundsmith.co.uk/tv

You may not be surprised to see that Fundsmith crushes their 150 list in terms of performance over the last 5 years.
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Dennis . on 30/04/2017(UTC), sarah b on 01/05/2017(UTC)
King Lodos
Posted: 27 April 2017 21:57:39(UTC)
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I've said it before (as someone who was 50% Fundsmith not long ago), but it's basically the US Consumer Staples index, and it's only had a short period of outperforming the plain old US index.

If it's destined just to track Consumer Staples (yes, regardless of MSCI criteria), then a 1% fee is too high, and Consumer Staples perform about the same as every other sector over the long-term.

Smith's comparison with the 150 is silly – there are a lot of conservative and income-focused funds .. I still hold Fundsmith, but you have to be aware that high valuations mean lower future returns .. By some measures L&G's Global Technology Index could be seen as better value than Fundsmith, and I think the sector is the new consumer staples .. But over the really long-term, Value investing is the only thing that's really worked – partly because it doesn't offer the stability or attraction of defensives.
4 users thanked King Lodos for this post.
Mickey on 28/04/2017(UTC), MJPM on 28/04/2017(UTC), sarah b on 01/05/2017(UTC), Lawny on 02/05/2017(UTC)
Alan Selwood
Posted: 27 April 2017 22:04:06(UTC)
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It will be interesting to see how it all pans out!

So far, Fundsmith works for me as a core holding. Most of the 150 would have disappointed me in comparison.



King Lodos
Posted: 27 April 2017 23:49:50(UTC)
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It's certainly easy to recommend Fundsmith – and Quality investing is what I'd do if I didn't want to keep moving money around.

But there's part of me that also thinks: Will we look back on everyone crowding into this fund with average Price/Cash-Flows over 17 as irrational exuberance?

If you take average P/Es just below 25 (4% earnings yield), take away a 1% fee, you should be buying a 3% annual return .. Some think these defensives are likely to get hit hardest when/if bond yields get back in that range.
Laurence O'Brien
Posted: 30 April 2017 08:27:02(UTC)
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King Lodos;46285 wrote:
It's always manager track record .. They've listed quite a few funds at launch on 150 .. Which haven't always done well.



I'm not sticking up for HL at all as I believe like many others that the Wealth 150 is little more than a marketing tool. That said, I prefer to choose funds on the basis of the track record of the manager and if I'm holding a fund where there is a change of management, I always look very carefully at the new manager. The likes of Terry Smith and Nick Train are no brainers for me. I am bothered about Woodford as I just can't make sense of his current approach. His Equity Income fund seems to be two funds in one - the one he ran at IP plus a variety of micro caps and unquoted companies in the tech and healthcare sectors. His track record may be outstanding but I don't hold any of his funds any more.
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Dennis . on 30/04/2017(UTC), Mickey on 01/05/2017(UTC)
Dennis .
Posted: 30 April 2017 09:00:53(UTC)
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Big piece in the Weekend FT about Woodford losing the plot. As for the HL 150 it's just a marketing tool. Ignore it. I used to use it a few years ago but most of my investments went nowhere, then I gave up on it and haven't looked back since.
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S Dobbo on 30/04/2017(UTC)
JohnW
Posted: 30 April 2017 10:47:37(UTC)
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Mr Woodford is a very able fund manager, But when he was manager of Invesco Perpetual Income and High Income he said that he was interested in total returns rather than income. So a question to him, which I've not seen asked, is, "What are your aims, income, or total returns?" For a pensioner the need is for a growing income, which really means income plus a little gain in capital in order to counter inflation.
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Mike Anthony on 30/04/2017(UTC)
King Lodos
Posted: 30 April 2017 16:06:12(UTC)
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Laurence O'Brien;46323 wrote:
King Lodos;46285 wrote:
It's always manager track record .. They've listed quite a few funds at launch on 150 .. Which haven't always done well.



I'm not sticking up for HL at all as I believe like many others that the Wealth 150 is little more than a marketing tool. That said, I prefer to choose funds on the basis of the track record of the manager and if I'm holding a fund where there is a change of management, I always look very carefully at the new manager. The likes of Terry Smith and Nick Train are no brainers for me. I am bothered about Woodford as I just can't make sense of his current approach. His Equity Income fund seems to be two funds in one - the one he ran at IP plus a variety of micro caps and unquoted companies in the tech and healthcare sectors. His track record may be outstanding but I don't hold any of his funds any more.


The only thing I'd say about manager track records is there have been countless star managers who fell off, and who we don't talk about now.

Just going back a decade and reading articles, illuminates a world of different 'no-brainer' mutual funds.

Terry Smith and Nick Train I'd have confidence in over the long-term .. But reading about the 'nifty fifty' stocks of the 70s – like Coca Cola – they've been great long-term investments, but they've also had times when they've been so expensive they've not been good investments over 10-15 years.

What tends to happen is any successful style gets copied, and the no-brainer funds become no-brainer ways for other managers to manage – I think it's why Smith tells everyone his investing style: he's trying to educate other fund managers and push these stocks up further .. And when certain stocks are in demand, pushing up their value simply reduces future returns.

It's why some academics – like Rob Arnott – who've looked at hundreds of investing styles, think they all really come down to Value, and most are little more than fashionable trends in stock picking that have simply risen in the value.

Warren Buffett's interesting in that half his portfolio is Smith/Train-like .. But the other half is quite Value (with lots of Banks) .. and while Smith might not like Banks or Value, Buffett's average stock valuations probably tend to be lower – and that might be why he's got the track record he's got.
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Guest on 01/05/2017(UTC)
HGE
Posted: 01 May 2017 08:23:58(UTC)
#15

Joined: 06/03/2012(UTC)
Posts: 1

King L

I remember your post showing Fundsmith vs the US Consumer Staples index, with strong correlation.

One thing that puzzles me is this is apparently showing the fund measured in UK £, versus the index which I assume aggregates company results in US$ ? Given the large movements in £/$ over the past year, why would this be? (I would expect to see a correlation when measured in the same currency).

I also looked at FEET vs the EM Consumer Staples index with similar results.

What am I missing please?

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