Whilst sipping on my green smoothie this morning for breakfast (ice, two bananas, an orange, some fresh ginger, a handful of kale leaves and a pint of water – delicious) it was interesting to hear star fund manager Neil Woodford on BBC Radio 4.
In what was hyped as his ‘first-ever broadcast interview’, Woodford was given something of an easy ride by a usually sharp and impartial Evan Davis, continuing the regular theme of the press fawning over him since the launch of his new fund.
As a swan-song interview by Evan Davis before he moves to host Newsnight, it lacked the usual substance investors might have expected.
I’m so happy to have interviewed legendary investor Neil Woodford for my last @BBCr4Today programme. He’s coming up in five mins
— Evan Davis (@EvanHD) September 26, 2014
Short-term focus
Woodford did however come up with interesting statements during the interview.
Too many fund managers concentrate on short term results, top fund manager Neil Woodford tells #r4today — BBC Radio 4 Today (@BBCr4today) September 26, 2014
This is a reasonable criticism of many active fund managers, who are more concerned with their short-term performance relative to the benchmark than taking a decisive stance with portfolio positions and attempting to add value.
As a result, investors often end up paying for active fund management when what they receive in practice is more akin to a closet tracker.
When choosing actively managed funds, investors need to ensure they are truly actively managed, or else they might consider paying lower management fees and opting for index trackers instead.
What first attracted you to the millionaire Paul Daniels?
On the subject of charges and fund manager remuneration, Woodford came up with a statement which has left me (and I suspect many others) scratching our collective heads:
Woodford told Evan Davis: “The industry has overcharged in many aspects.
“It’s quite clear, in the banking industry and my own industry, that too often, the industry has been charging active fees for index performance or worse.”
He explained that fund managers are being paid too much. Hmm.
Fund managers being paid too much… says multi-millionaire fund manager Neil Woodford http://t.co/oCjMC6dBXm
— Jason Hollands (@jasonhollands) September 26, 2014
Vaping
One item that was not covered in much depth during the interview was the threat of e-cigarettes to tobacco companies.
Woodford has been a long-term supporter of the tobacco sector, yet other fund managers have started cutting positions due to the threat of ‘vaping’; smokers moving to much cheaper e-cigarettes.
Around 2 million people in the UK already use e-cigarette products and forecasts in the US suggest users will double each year between now and 2018.
There was also no discussion about capacity constraints; Woodford Equity Income is already at £2.7bn of assets after three months and this ignores the institutional mandates that have migrated to the firm.
Listen again to Neil’s interview with @EvanHD on @BBCr4today http://t.co/GVhKqq9fC1 (1hr 32min 45sec) pic.twitter.com/jjNuuYMuVp
— Woodford (@woodfordfunds) September 26, 2014
What would you have asked Neil Woodford if you had been interviewing him for Radio 4?
