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When the Fund Stops: The untold story behind the downfall of Neil Woodford, Britain’s most successful fund manager
Neil Woodford was the UK’s most celebrated fund manager. Savers who invested £1,000 with him in 1988 saw their money increase to £25,000 over 25 years. At the peak of his career he was managing £33 billion for hundreds of thousands of investors.
When he started his own fund management company in 2014, within just a few weeks it had attracted £5bn from his loyal fan base, including some of the City of London’s biggest hitters. Life was good. Away from work he was collecting high-performance supercars and chunky designer watches; he was rarely out of the saddle of his favourite horse. The BBC called him the “man who can’t stop making money”.
And then it all came to a sudden stop.
This book tells the dramatic untold story behind Woodford’s stunning rise and fall, and reveals why his multi-billion-pound investment empire really collapsed in such an abrupt and catastrophic manner.
In a fast-moving and compelling narrative, reporter David Ricketts takes readers inside the rooms where extraordinary sums of other people’s money were wagered, trapped and, ultimately, lost, in a scandal still sending shockwaves through the world of finance.
Thanks to unique and unprecedented access to the most important players, we meet an eccentric cast of characters and go inside the institutions involved, from Woodford’s own firm to those that made huge sums endorsing him – as well as those who failed to raise the alarm before it was too late.
When he started his own fund management company in 2014, within just a few weeks it had attracted £5bn from his loyal fan base, including some of the City of London’s biggest hitters. Life was good. Away from work he was collecting high-performance supercars and chunky designer watches; he was rarely out of the saddle of his favourite horse. The BBC called him the “man who can’t stop making money”.
And then it all came to a sudden stop.
This book tells the dramatic untold story behind Woodford’s stunning rise and fall, and reveals why his multi-billion-pound investment empire really collapsed in such an abrupt and catastrophic manner.
In a fast-moving and compelling narrative, reporter David Ricketts takes readers inside the rooms where extraordinary sums of other people’s money were wagered, trapped and, ultimately, lost, in a scandal still sending shockwaves through the world of finance.
Thanks to unique and unprecedented access to the most important players, we meet an eccentric cast of characters and go inside the institutions involved, from Woodford’s own firm to those that made huge sums endorsing him – as well as those who failed to raise the alarm before it was too late.
208 pages, Paperback
Published January 26, 2021
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About the author
David Ricketts
18 booksThis is the disambiguation profile for otherwise unseparated authors publishing as David Ricketts.
For the author on Dentistry see David Ricketts
For the author on Dentistry see David Ricketts
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Displaying 1 - 11 of 11 reviews
February 12, 2021
There's no doubt that the Woodford affair has been a sorry saga for those invested in the Woodford funds. Investors trapped in the Equity Income fund still haven't got all their money back over 18 months after the fund was suspended and probably won't until the end of 2021.
This book shines a light on how we got to this point; it contains quotes from people who worked with Woodford and looks at how the meltdown of the funds was allowed to happen by a variety of organisations that should have known better.
What I found interesting about the narrative was how it painted a good picture of how Woodford changed his investing style over the last decade of his career. This change in style coincided with, and partially was a consequence of, Woodford's departure from Invesco Perpetual in 2013 and the setting up of his own company.
There's some cause and effect there. We learn from this book that the very oversight and governance that Woodford felt had straitjacketed him at Invesco and inspired him to branch out on his own were the very things could have helped avoid the calamity that befell his funds as the combination of poor stock selection, lack of liquidity, and stubbornness saw the fund first suspended, and then liquidated (although that process is still going on).
I found this book interesting from a personal level as I was working in the industry at the time. When I joined Fidelity in 2013 Woodford had just announced his departure from Invesco. This was big news to Fidelity's customers and the reaction of our market commentators was in big demand. But I, like most of the population, had never heard of him.
I certainly got to know him over the next few years (not, like, personally) as the launch of first the Equity Income Fund, then the Patient Capital Trust, garnered unprecedented interest from investors.
Fidelity, though, did not put Woodford's funds either on a Select List of about 160 funds, nor on the streamlined version of around 50 funds that launched around 2016. This was despite the huge popularity Woodford commanded amongst investors and the performance he was able to achieve in his first few years flying solo.
Several of Fidelity's competitors are mentioned as having Woodford's funds on their own select lists, with Hargreaves Lansdown having the highest profile. They managed to have the reputation-destroying distinction of continuing to recommend the fund right up until the day it was suspended, despite appearing to be forewarned of the problems at the fund manager. Suffice to say there can't have been many times in history where a product has been recommended by a specialist retailer at quite such an inappropriate time.
This book delves into the relationship between Hargreaves and Woodford and asks some uncomfortable questions that no doubt will be asked again (with presumably some expectation of an answer) by the law firms launching various class actions against Hargreaves.
What isn't really answered is why Woodford used the Equity Income fund as a vehicle for investing in those unlisted, early-ish stage illiquid companies that were to prove so troublesome when performance dipped and redemptions needed funding.
As he himself said at the time of the launch of Patient Capital, the closed-ended structure of an investment trust was the ideal vehicle for doing this. By extension, the open-ended nature of the mutual fund that was Equity Income was not the ideal structure for doing this.
He must have known that Equity Income would be a multi-billion fund, so why use it to invest in those unlisted companies? Was it because he needed the fees to finance Woodford Investment Management from the beginning? It doesn't really make sense; it would have been good if someone had offered just an opinion on what thought processes had been involved that allowed that to happen. Yes, there is some background given into Woodford's last few years at Perpetual that indicated his direction of travel, but no-one appeared willing or capable to flag the risks of this strategy. The investment objective of Patient Capital even today is attractive, but the trust's biggest threat turned out to be its own open-ended stable mate.
David Ricketts writes at the end of the book that his "ultimate goal was to present a fair, balanced representation of events", and I think it's fair to say he achieved that. If you followed this saga at all, you will enjoy this book; if you didn't, you probably aren't still reading this.
This book shines a light on how we got to this point; it contains quotes from people who worked with Woodford and looks at how the meltdown of the funds was allowed to happen by a variety of organisations that should have known better.
What I found interesting about the narrative was how it painted a good picture of how Woodford changed his investing style over the last decade of his career. This change in style coincided with, and partially was a consequence of, Woodford's departure from Invesco Perpetual in 2013 and the setting up of his own company.
There's some cause and effect there. We learn from this book that the very oversight and governance that Woodford felt had straitjacketed him at Invesco and inspired him to branch out on his own were the very things could have helped avoid the calamity that befell his funds as the combination of poor stock selection, lack of liquidity, and stubbornness saw the fund first suspended, and then liquidated (although that process is still going on).
I found this book interesting from a personal level as I was working in the industry at the time. When I joined Fidelity in 2013 Woodford had just announced his departure from Invesco. This was big news to Fidelity's customers and the reaction of our market commentators was in big demand. But I, like most of the population, had never heard of him.
I certainly got to know him over the next few years (not, like, personally) as the launch of first the Equity Income Fund, then the Patient Capital Trust, garnered unprecedented interest from investors.
Fidelity, though, did not put Woodford's funds either on a Select List of about 160 funds, nor on the streamlined version of around 50 funds that launched around 2016. This was despite the huge popularity Woodford commanded amongst investors and the performance he was able to achieve in his first few years flying solo.
Several of Fidelity's competitors are mentioned as having Woodford's funds on their own select lists, with Hargreaves Lansdown having the highest profile. They managed to have the reputation-destroying distinction of continuing to recommend the fund right up until the day it was suspended, despite appearing to be forewarned of the problems at the fund manager. Suffice to say there can't have been many times in history where a product has been recommended by a specialist retailer at quite such an inappropriate time.
This book delves into the relationship between Hargreaves and Woodford and asks some uncomfortable questions that no doubt will be asked again (with presumably some expectation of an answer) by the law firms launching various class actions against Hargreaves.
What isn't really answered is why Woodford used the Equity Income fund as a vehicle for investing in those unlisted, early-ish stage illiquid companies that were to prove so troublesome when performance dipped and redemptions needed funding.
As he himself said at the time of the launch of Patient Capital, the closed-ended structure of an investment trust was the ideal vehicle for doing this. By extension, the open-ended nature of the mutual fund that was Equity Income was not the ideal structure for doing this.
He must have known that Equity Income would be a multi-billion fund, so why use it to invest in those unlisted companies? Was it because he needed the fees to finance Woodford Investment Management from the beginning? It doesn't really make sense; it would have been good if someone had offered just an opinion on what thought processes had been involved that allowed that to happen. Yes, there is some background given into Woodford's last few years at Perpetual that indicated his direction of travel, but no-one appeared willing or capable to flag the risks of this strategy. The investment objective of Patient Capital even today is attractive, but the trust's biggest threat turned out to be its own open-ended stable mate.
David Ricketts writes at the end of the book that his "ultimate goal was to present a fair, balanced representation of events", and I think it's fair to say he achieved that. If you followed this saga at all, you will enjoy this book; if you didn't, you probably aren't still reading this.
January 11, 2024
Books pulls on interviews with staff which is useful and credible. Balanced account is put forward.
Insight into how Hargreaves worked around the scandal. I don’t think they acted evil but do think they could have done more. Again probably got caught in the hype and endowment bias. Complacency also.
I do think what Woodford did with moving the illiquids to Gurnsey & still taking fees is close to the moral line.
He got paid a lot considering this business failed?
In terms of investing mistakes I think he possibly got lazy with his research? Maybe hubris led him to lower his research efforts? Or tried to apply his methods to a different investment style that didn't quite fit.
Certain element of bad luck to the whole thing and I don't think the downfall was entirely unscrupulous.
Insight into how Hargreaves worked around the scandal. I don’t think they acted evil but do think they could have done more. Again probably got caught in the hype and endowment bias. Complacency also.
I do think what Woodford did with moving the illiquids to Gurnsey & still taking fees is close to the moral line.
He got paid a lot considering this business failed?
In terms of investing mistakes I think he possibly got lazy with his research? Maybe hubris led him to lower his research efforts? Or tried to apply his methods to a different investment style that didn't quite fit.
Certain element of bad luck to the whole thing and I don't think the downfall was entirely unscrupulous.
April 7, 2021
This book is a short version of any successful fund manager meltdown story. The narrative sounds more like a Wikipedia article with no emotions attached to any participants of the story. No brainer that Woodford is a talented fund manager that for some reason decided to change an investment approach. The new approach either wasn't balanced or it wasn't enough time/investors’ patience to see actual results. The story is still not over and it is interesting how it will end.
February 25, 2021
When the Fund Stops: An analysis of how an investing genius of yesteryear can get it so wrong.
This book tells the story of Neil Woodford and the demise of Woodford Investment Management. It's a fantastic read, leaving no stone unturned and teaching many lessons to investing novices such as myself.
Warren Buffett once stated "It takes 20 years to build a reputation and five minutes to ruin it." 2019 was Woodford's ruining but it seems from this account that the motions began almost from the start of his new venture. Exploiting many loopholes and straying from his philosophy from Invesco.
I would recommend this book to anyone interested in investing.
It teaches the best lessons to learn:
Don't blindly follow;
Diversify;
Don't believe your own hype.
This book tells the story of Neil Woodford and the demise of Woodford Investment Management. It's a fantastic read, leaving no stone unturned and teaching many lessons to investing novices such as myself.
Warren Buffett once stated "It takes 20 years to build a reputation and five minutes to ruin it." 2019 was Woodford's ruining but it seems from this account that the motions began almost from the start of his new venture. Exploiting many loopholes and straying from his philosophy from Invesco.
I would recommend this book to anyone interested in investing.
It teaches the best lessons to learn:
Don't blindly follow;
Diversify;
Don't believe your own hype.
January 28, 2021
Fascinating insight to the events and the failings leading to the downfall of a man with too much power and not enough oversight.
Having worked in the industry through the 2008 financial crash, this book makes clear that so many years on, measures are still not in place - internally with risk and compliance departments, and externally through regulatory scrutiny - to ensure that investors are not still let down in such spectacular fashion.
A highly enjoyable and informative read, I look forward to buying a second book from this author.
Having worked in the industry through the 2008 financial crash, this book makes clear that so many years on, measures are still not in place - internally with risk and compliance departments, and externally through regulatory scrutiny - to ensure that investors are not still let down in such spectacular fashion.
A highly enjoyable and informative read, I look forward to buying a second book from this author.
March 7, 2021
Neil Woodford was a superstar among fund managers and when he left Invesco in 2014 to set up his own fund many investors followed him based on the track record he'd established. Then in 2019 everything went wrong and the fund collapsed, leaving large numbers out of pocket.
This is a very readable account of Woodford's rise and fall. If you were an investor in one of his funds it will come as no consolation, but it will at least give you a clear understanding of what went wrong.
This is a very readable account of Woodford's rise and fall. If you were an investor in one of his funds it will come as no consolation, but it will at least give you a clear understanding of what went wrong.
November 14, 2022
Meh. The saving grace was this was short. The book was poorly written and extremely repetitive. The story wasn't all that interesting - a public fund investing in illiquid assets blew up. All the interesting aspects were omitted. Why did Woodford find value in VC? Why did he change his stripes so dramatically? Why did he think he would win there? Did his process change? That is the more interesting story that wasn't told. A guy who makes all his money on tobacco and healthcare stocks goes into VC... Also you don't get a good sense for the man or the other players. I would have put the book down had it not been so short.
May 14, 2021
Solid overview of the woodford saga although to me a bit dramatized in terms of the degree of inevitability. Learned more about his earlier life and career before the blow up but no major new insights having seen it all happen while working in the industry.
December 17, 2022
Classic duration mismatch leading to a fund blow up. Many such cases these days.
March 16, 2025
花了几个小时翻完这本小书，让匪夷所思的是一个资深的基金经理的投资风格这么轻易的就改变了嘛。
February 13, 2021
An insight into how the investment world works but can fail spectacularly!
Extremely well written account of the Neil Woodford rise and fall and the subsequent fallout for all the players. It's s good read even for those who are not City watchers. It's an eye opener for how our respected institutions and those we trust and pay to regulate affairs can sleepwalk repeatedly into disastrous situations. This forensically researched story weaved seamlessly together for the first time the interaction of various events and the main players in the drama. The theme of the book echos what the public has seen in recent years with scandals such as Bearings bank, Rochdale, Lehman Brothers and Grenfell, wher hands have been taken off the wheel and apparently it's nobody's fault! Incorporated throughout the book is enough well documented evidence to allow readers to make up their own minds as to who or what's to blame. As with so many similar scandals the book points out so much in the Woodford case is still unresolved. And the effect this is still having on people's lives. Meanwhile the blame game continues.
Extremely well written account of the Neil Woodford rise and fall and the subsequent fallout for all the players. It's s good read even for those who are not City watchers. It's an eye opener for how our respected institutions and those we trust and pay to regulate affairs can sleepwalk repeatedly into disastrous situations. This forensically researched story weaved seamlessly together for the first time the interaction of various events and the main players in the drama. The theme of the book echos what the public has seen in recent years with scandals such as Bearings bank, Rochdale, Lehman Brothers and Grenfell, wher hands have been taken off the wheel and apparently it's nobody's fault! Incorporated throughout the book is enough well documented evidence to allow readers to make up their own minds as to who or what's to blame. As with so many similar scandals the book points out so much in the Woodford case is still unresolved. And the effect this is still having on people's lives. Meanwhile the blame game continues.
Displaying 1 - 11 of 11 reviews