Bloomberg Businessweek - USA (2019-06-24)

F I N A N C E

Personal

33

FINN

TAYLOR Pat Regnier and Edited by^
Madeleine Lim

Bloomberg Businessweek June 24, 2019

● The crisis at a popular British

stock fund holds lessons for

investors everywhere

Itpointstothepotentialhazardsoffundsthat

investinobscure,hard-to-sellassets,andtothe

needfora healthyskepticismaboutcelebrated

moneymanagers.

“Investorsarepronetolatchingontostar

managers,believingthey’ve got the individ-

ualasthesecretsauce,andthatonlytheycan

potentiallyoutperformthemarket,”saysTodd

Rosenbluth,directorofexchange-tradedfund

researchatCFRAResearch.“Peoplearefallible.

Investmentsmoveinandoutoffavor.Youshould

bebuyinga fund,notputtingmoneytoworkfor

a specificmanager.”

Woodford,throughanexternalspokesman,

declinedtocomment.TheOxford-basedstock-

pickerhasbeenmanagingmoneysinceatleast

1987.Hemadehisnameatinvestmentmanager

InvescoPerpetual,wherehehelpedbuildup

about£33billion($42billion)inassetsoveralmost

26 yearsandwasamongthebiggestinvestorsin

U.K.stocks.

Hewassowell-regardedthatonthedayin 2013

thatheannouncedhewasmovingon,Invesco

sharesslumpedmorethan7%.St.James’sPlace,

a U.K.wealthmanager,took£3.7billion of its

Neil Woodford is a famous fund manager in the

United Kingdom. At a time when individual inves-

tors are pouring money into anonymously run

index funds, there aren’t many of those left any-

where in the world. He now faces a crisis after he

froze investors’ redemptions in his flagship U.K.

fund, LF Woodford Equity Income, which has

fallen about 22% in the past year. The freeze—a

rare step for a fund aimed at ordinary investors—

is supposed to buy him time to offload a bunch of

“unquoted and less liquid” stocks in the fund’s

portfolio, according to his firm’s website.

It’s a dramatic reversal of fortune for

Woodford,a WarrenBuffettdevoteewhobuiltup

a cultfollowingbycorrectlycallingmajorswings

intechnology, tobacco, and other stocks over

decades.Andfundinvestorseverywhere,includ-

ingintheU.S.,cantakeawayseveralimportant

lessons from his flameout, financial advisers say.

The

Star

Who

Fell

To

Earth