Neil Woodford’s back – but sometimes sorry isn’t enough
Neil Woodford’s funds blew up in 2019. Now he is on the comeback trail. But his apologies are unconvincing.


“I’m very sorry for what I did wrong,” former star fund manager Neil Woodford tells The Sunday Telegraph’s Lucy Burton. It’s less than two years since his fund management business collapsed. That happened because a) he was underperforming and b) when investors got fed up with that, and jittery about some of his other holdings, and went to withdraw their money, it turned out that he was too heavily invested in stocks that couldn’t be sold in a hurry. As a result, his funds were frozen. The ensuing firesale of illiquid (defined below) assets compounded the losses investors had already suffered. Many are still waiting for money to be returned. Now he hopes to make a comeback – hence the “tearful and defiant” broadsheet interview.
What does history suggest about penitent fund managers? Investment platform Interactive Investor compiled a list of five UK managers who’ve felt the need to apologise to investors in the past, and looked at what happened next. Anthony Bolton, who was almost as famous as Woodford, retired on a high in 2007 from Fidelity Special Situations. He returned in 2010 to head up Fidelity China Special Situations, but dented his reputation with a weak performance (and unusually high fees). He apologised publicly in 2011, but by the time he re-retired in 2014, performance was still nothing to shout about (though the fund went on to do well – and trimmed its fees).
Sorry, but...
It’s a nice story. But it’s not really relevant here. Woodford is on a very different scale to Bolton, or any other manager on Interactive’s list. All active managers – even the few who seem to beat the market consistently – underperform sometimes. But outside of commercial property funds (where the clear conflict between the daily liquidity of open-ended funds and the illiquid nature of the underlying asset has resulted in regular freezes and belated regulatory attention), Woodford is unique in presiding over this kind of disaster.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Yet that’s not what he’s sorry for. He’s sorry for “two years of underperformance”, but, he tells Burton, “I can’t be sorry for things I didn’t do. I didn’t make the decision to suspend the fund”. That’s pure denial. Regardless of others’ errors, it was literally Woodford’s name over the door. The buck stops with him. It’s not as though he couldn’t have known the risks that go with illiquidity. Yet the only person he sounds genuinely sorry for is himself. “I don’t want to go into details, but retail investors were not the only people who suffered financially,” he says. His new firm, WCM Partners, will work with Acacia Research, which bought stakes in several life sciences firms in the firesale from Woodford’s old funds. If it’s a sector you like, stick to Syncona (LSE: SYNC) instead.
I wish I knew what liquidity was but I’m too embarrassed to ask
Put simply, liquidity refers to how easy it is to buy or sell an asset without moving the price against you. For example, property – both residential and commercial – is an illiquid asset. It takes a long time to buy or sell, trading costs (from stamp duty to surveys) are high, you can never be quite sure of the price you’ll get (or pay) until the deal has closed, and if you want to sell in a hurry, you’ll have to cut your price to well below the theoretical “market value”.
On the other hand, shares in big, listed companies (“blue chips”) on the FTSE 100, for example, are very liquid. They are also “fungible” – ie, one share is the same as another, whereas each property is unique – so millions can change hands every day online. You can get a price almost instantly, and you can almost always find a willing buyer or seller, even in turbulent financial conditions.
The level of liquidity in a market can vary widely – for all but the most liquid assets, it’s wise to assume that it will dry up at the worst possible times. In times of turmoil it may even evaporate altogether. For example, one big problem in the lead up to the 2008 financial crisis was that liquidity in the market for securities backed by subprime mortgages dried up entirely, and the securities were essentially unsellable.
Stocks in smaller companies can also be highly illiquid – when the market is volatile, the “spread” (the gap between the price at which you can sell and the price at which you can buy) might widen sharply, making trading more costly. Indeed, in the very worst panics, only “safe haven” government bonds, such as US Treasuries and UK gilts, may remain as liquid as they usually are.
Illiquidity is not in itself a problem. You usually get paid more to hold illiquid assets. The real problem only arises when you own an asset that turns out to be a lot less liquid than you expected – for example, if you own a fund that promises daily liquidity, yet holds a portfolio full of barely listed stocks.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.
He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.
His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.
-
Why adversity creates opportunity
Discovering the best dividend-paying stocks means digging deep, biding your time and choosing your moment to buy, says Ross Mathison, deputy manager of The Scottish American Investment Company
By MoneyWeek Published
-
Child benefit tax return rules are changing – what is the high income child benefit charge?
High-earning parents will soon be spared the hassle of filing a tax return to pay back child benefit. We explain what’s changing and how the high income child benefit charge (HICBC) works
By Ruth Emery Published
-
Large cap stocks start to struggle – is it time for investors to reassess their focus?
Buying quality large caps worked very well last decade. A more volatile world will be a bigger challenge for these star stocks, says Cris Sholto Heaton
By Cris Sholto Heaton Published
-
How to generate income with fixed-interest investments
Public debt is overvalued, but other fixed-interest investments now look like a bargain, says Max King
By Max King Published
-
Three top-notch Taiwanese companies cashing in on the advent of AI
Opinion Eric Chan, investment director and co-manager of the Aberdeen Asian Income Fund, highlights three potential Taiwanese winners in the technology industry
By Eric Chan Published
-
Weight-loss drugs could revolutionise the economy – the investments to buy now
The new generation of weight-loss drugs are a boon for the overweight, but they also promise to change our relationship with food and revolutionise the economy
By Dr Matthew Partridge Published
-
Find tomorrow’s Asian giants while they are still smaller companies
Opinion Nitin Bajaj, portfolio manager of the Fidelity Asian Values trust, picks three Asian companies to invest in.
By Nitin Bajaj Published
-
AI will maintain Moody’s market lead, says Stephen Connolly
Opinion Veteran data provider Moody's has adapted well to the modern world, and is one of Warren Buffett’s longest-held investments
By Stephen Connolly Published
-
Is BlackRock World Mining gearing for a recovery?
Opinion After a frustrating year, BlackRock World Mining is positioned for growth and to capitalise on the sector's recovery
By Rupert Hargreaves Published
-
Should you limit exposure to US tech stocks?
An end to the AI boom would shake both US funds and global trackers. Here’s one way to trim exposure to US tech stocks
By Cris Sholto Heaton Published