Woodford investment management

Dear Friend

Sorry this is a bit hot on the heels of the last one but Listen-in on Saturday to Money Box on BBC Radio 4 at noon (and repeated Sunday at 9pm and Wednesday at 3pm). Our very own local radio star Mr Felix Milton, Chartered Financial Adviser, is attending the BBC studio to make a guest appearance!  Well done Felix!


The fall-out is continuing following the suspension of his flagship fund.  The Patient Capital Trust has been downgraded by one leading broker which is concerned that the fire-sale of assets in the suspended funds could impact valuations there or indeed that a new manager could be appointed by the Board and thus investment changes effected which realise losses.  I think I have to say that for that beast, the 25% discount to the underlying asset value (valuations taken as read naturally!) are now too much and it represents an opportunity for the brave.  The Trust has several common holdings and also the suspended Fund has a chunk of it too which it might have to dump on the market so another reason to suppress the price short-term.  There is good two-way trading but Black Rock is the first big group to trim its exposure – a little after the event if you ask me.  Woodford IM has already announced it has cut its stake in Kier Group from 20% to 15% at current depressed prices.

Then there are two giant financial advisory firms – St James’s Place which had £3billion managed by Woodford and that mandate has been withdrawn.  Hargreaves Lansdown also had the Funds on its ‘best buys’ list and with over £1.5billion of the suspended fund through its offices and recommendations, there could be some ramifications for the groups and indeed its share price has been falling as well – the value of the Company on the stockmarket falling by £2billion and more than the actual funds its customers hold in that Woodford Fund!  I think investors who have relied upon the mantras by these large groups will realise that as much as a ‘recommendation’ can be made, when you have too much of something it can bite you in the bottom when it all goes wrong and for them, the fallout will be in unexpected ways as they have previously successfully placed themselves in the ‘you can rely upon us’ pot. Investors will begin to wonder upon what basis recommendations were made and then what continuing confidence there was in the management company and that is understandable.  Of course for many advisers and investors, if they had exposure to the Fund then it would have been a reasonable chunk too – not just a small portion of their portfolio.  Very few managers have as much diversity as we have; yes we may miss-out on some big winners but perhaps it is at times like this that small exposures to even the ‘best’ proves a prudent course of action – especially if it doesn’t cost the client any more.  There are lots of ‘good managers’ in most sectors and this lesson will be painful for many people.  It also shows the advantage of Investment Trusts – is Woodford’s problem here one of having to meet redemptions and then the vicious spiral downwards as a consequence of sales, as opposed to disgruntled investors in an Investment Trust having to sell their shares in the Trust on the market and the underlying Trust assets continuing unaffected (even perhaps the Trust being able to buy-in and cancel shares hence making an instant profit for remaining shareholders as it swallows its tale).


Do you need to do something about it (as opposed to ‘nothing’)?  Based on recent data, only 5% of estates paid Inheritance Tax (25,000 in the year in question).  So that is the wealthiest estates and of course there would be a South Eastern/London bias in view of property values there.  Of the 570,000 deaths, 275,000 still had to log reports to HMRC to prove whether some or no IHT was due.  The typical average tax rate on those estates paying tax was 20% of the total estate.  That said, bigger estates tend to secure better reliefs and pay smaller proportions curiously as the deceased have done more to alleviate their liabilities such as holding business assets and managing their investments better.  In other words, those paying smaller sums end-up paying bigger overall proportions of their estates to Inheritance Tax.  The average paying estate paid £60,000.

If you have a liability, remember that every Pound you remove from your estate (through investing in business asset strategies as we offer to clients for example) or gifting, saves 40p of tax, right-off the top of your estate.


Stock market investments can offer income through the payment of dividends and interest and good opportunities for capital appreciation over the longer term. By this, generally we mean periods in excess of five years, preferably much longer. However, we can never promise you particular returns, especially in the short-term. At any point in time but especially in the short term, your capital could be worth less than the original amount invested as some of the selected holdings may fall in value, regardless of expectations at the time of acquisition. We may also invest in funds that hold overseas securities. The value of these investments may increase or decrease as a result of changes in currency exchange rates. Returns achieved in the past cannot be relied upon to be repeated.

To remind you, why do I send out occasional emails? Because everyone can save money. We have no connection with any companies mentioned and you have to make your own contacts and satisfy your own enquiries. What is in it for us? If we can prove that we are knowledgeable and that our service and advice have good value, then you might contact us for professional financial planning and investment help. You don’t have to do that though and there’s no charge for emails. If simply they save you money, then accept them with our compliments! However, you’ll know where we are!

If you have any queries of any form or indeed any subjects you think I could include, please contact me. I also refer you to our website www.miltonpj.net. We celebrated our thirtieth anniversary in 2015 and have been publishing a well-respected independent column in the local Paper for most of that time and free client newsletters as well.

Do not forget however the usual caveats – this is not ‘advice’ and you are encouraged to seek that before embarking upon any financial route involving investments, etc.

My best wishes

Philip J Milton DipFS CFPCM Chartered MCSI FPFS FCIB

Chartered Wealth Manager

Fellow Of The Personal Finance Society, Fellow Of The Chartered Institute Of Bankers