PA ANALYSIS: Rivals under pressure as Woodford reveals all (again)

Added 18th May 2017

As Neil Woodford reveals the 50 companies held in his newly launched Income Focus portfolio, it once again throws into the spotlight the rarity with which this level of transparency occurs.

PA ANALYSIS: Rivals under pressure as Woodford reveals all (again)

Notwithstanding the Mifid II call for a quarterly full statement of holdings from next January, the general consensus – from fund buyer and seller sides of the fence – is seemingly that regular disclosure is only a good thing.

So why are we not seeing more groups following suit?

Quite an onerous task, I’m sure and until anything seen as difficult becomes mandatory, it is rarely done. Such is human nature.

As Richard Romer-Lee, managing director at Square Mile Investment Consulting & Research, said: “All regulation is driving towards greater transparency and greater accountability and with transparency comes greater understanding – which is a good thing, surely?”

Currently, regulations require UK funds to disclose their entire portfolios at least twice a year, in the interim and annual reports.

"Fear of peers learning their magic formula, or of clients realising they don’t have one?"

A spokesperson from the Investment Association said: “Investment funds are intended to be long-term investments, with holding periods of at least several years.

“The current regulation achieves a suitable balance between meeting the legitimate expectation of transparency by investors and discouraging short-termism.”

The decision by Woodford though, appears to have been taken irrespective of regulatory pressure, arguably almost a moral position.

When the firm first launched three years ago, with a blank piece of paper, it was a strategic decision to offer full disclosure – in line with the requirements on closed-ended funds as listed entities.

As Craig Newman, chief executive at Woodford Investment Management, said: “We want our clients to understand how their investments are being managed – after all, it’s investors’ money, not ours.

“We took the decision, when we launched three years ago, to publicly disclose our fund portfolios’ entire holdings because it is the right thing to do.”

At the time, it was deemed almost unprecedented in the open-ended space, and yet other groups – both large and small – are keeping their cards close to their chests.


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