Redemption is a powerful force and it is likely to be the driving force behind fallen fund manager Neil Woodford’s unexpected comeback plans revealed this week.
He’s been widely castigated for planning a comeback but I understand where he is coming from. I’m not saying I agree with his plans but it’s worth looking at his motives before dismissing them out of hand.
Before I do, it’s worth remembering that he held god-like status with many in the investment world for many years. He could do no wrong, I was told repeatedly by those who, in hindsight, should have known better.
I was often told, as a mere hack, that I didn’t appreciate his magic. Suffice to say I steered clear of investing in his funds. Not because I wasn’t impressed with the often stellar performance over extended periods but because I’ve always had an issue with ‘star’ fund managers. Something just not right there.
Fund managing should be a team sport, not an exercise in financial super-stardom, I’ve always felt. The cult of the individual in investing has often produced tears.
But back to Mr Woodford and redemption.
So can he redeem himself? I’ll avoid too much focus here on the inability of his investors to redeem their own investments.
Well it’s not impossible. He remains a skilled and adept fund manager if one looks at the long term. He still has his fans and I’m sure some investors would back him, perhaps more on the institutional side but a retail push eventually cannot be ruled out. I believe some would back his bid for a return.
The bigger question is should he give it a go?
Certainly the regulators have not greeted his announcement with bunting and flags. I would call it a cool reception. This may not stop him, of course.
Deep down he believes Link pulled the plug on his funds too early and he deserves a second chance. He may be right but it’s impossible to know if his funds could have recovered as they are now being wound up. Certainly even considering this possibility is only because markets have recovered somewhat since the first Covid slump.
Of more pressing concern is sorting out the mess that still stains the failed Woodford funds. Investors have probably done better from the salvage operation than they expected although many will be nursing losses and it would be hard to find investors who felt in any way impressed with what happened.
Looking after these investors must be Mr Woodford’s number one priority before he has another go and the regulators must force him to clear up this mess before he tries again to rebuild his empire. If all his previous investors claims are satisfied then some will view his comeback more kindly.
The curtain must come down on act one before any talk of an encore can be entertained. There’s also the small issue of the FCA investigation to be considered too and that may well thwart any early plans for redemption.
Redemption will not be easy or quick.
Kevin O’Donnell is editor of Financial Planning Today and a financial journalist with 30 years experience. This topical comment on the Financial Planning news appears most weeks. Follow @FPT_Kevin