The New Fund Order

The Big W: Bets, Lies and Variable Tips (Debate)

August 22, 2021 JB Beckett/ David Ricketts and Owen Walker Season 1 Episode 16
The New Fund Order
The Big W: Bets, Lies and Variable Tips (Debate)
Show Notes Transcript Chapter Markers

Welcome to the New Fund Order. An Orwellian journey into the Darkside, the Frontier and the Fringe of Finance.

Our first New Fund Order debate, about 'that manager'...

We debate the ins and outs, the ups and downs of that 'Oracle of Oxford' and the whole sad and sorry affair which rocked fund allocators, distributors and the divinity of the star manager.

Helping guide us through the detail are the two prominent writers David Ricketts of 'When the Fund Stops' and Owen Walker 'Built on a Lie'.

When the Fund Stops by David Ricketts | Harriman House (harriman-house.com)
Built on a Lie (penguin.co.uk)

Check out the trailer here: https://youtu.be/M9nhgC64rCI

We explore the collective culpability by the; regulator, the regulations, authorised corporate directors, depositaries, buy list providers, pension schemes, media, even the fund structure and all who had a hand in the rise and fall of the UK's most famous fund manager.

We explore whether there was  a duality of culture, was/is there an inherent flaw in the open-ended fund model? Is the desire to build book ultimately a recipe to create "supertanker funds" and undermine outcomes for investors, how can we stop the worst of investor herding out of funds? Do fund allocators get too close to their fund managers? Was there simply a lack of due diligence by fund allocators? Was it a tale of misogyny, risk raking, and greed? Was there too much hubris? What did the manager get right, what wrong? What could allocators do better? How do we inflect, reflect and reconcile?

Will selectors make the same mistake again? Probably. What lessons can we learn? Hopefully a few...

Credits;

Additional Sound effects by Soundbible.com. Creative Commons Attribution 3.0 and Public Domain 1.0. All additional Music used by Silvermansound.com Attribution 4.0 International (CC BY 4.0). 

Music: Mystery Unsolved by Shane Ivers - https://www.silvermansound.com


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JB Beckett  0:17  
Salutations Dear Citizens as we peer into the new fund order to discover the immutable truth for asset management and wealth managers, the lowdown from the dark side the frontier and the fringe of asset management and fund research.

A podcast for wealth managers fund selectors, distributors and investors bringing to you the People's Republic Podcast of Finance, in association with my sponsor, Allianz Global Investors, capturing the latest market news views and interviews with leading minds in our industry. Allianz Global Investors is one of the world's leading active managers. 

And in these strange pandemic lockdown times, rest assured that all guests are calling in remotely 

Computer  1:22  
Interview

JB Beckett  1:23  
Owen, David, welcome to the new fund order podcast. 

Owen and David  1:29  
Thank you very much. Great, Great to be here. 

JB Beckett  1:30  
This is something of a special episode for a couple of reasons. Firstly, it is my first interview on the short with good journalists like yourself. And secondly,... and of course, authors, we should get that in there as well. And secondly, it's my first podcast debate so welcome both to you, we are here to discuss a certain manager from Oxford. Not necessarily to recount the end days, the how and the who, which you both encapsulate extremely well in your books. And of course, I'll be posting links to both your books on the podcast. 

So no, we are here perhaps to debate the 'why' and also consider the issues in the round, the complicity of others, the negligence or apathy, that all contributed to it... the lessons of course, to learn. He who needs no mention, but for purposes of anonymity, we will call him simply 'Neil' ...and so this whole sorry saga throws up many questions and implications, and I'm sure you will share many observations and possibly you will disagree in some areas. 

So let's dive in. If I can start with you Owen.. Firstly, let's start with this notion of 'vilification' that has occurred. For me it had some echoes, I guess, of Fred Goodwin after the RBS collapse, was the industry right to vilify Neil, and, of course, the few around him?

Owen Walker  2:53  
It's a very good question. And I think, you know, having written a book about Neil Woodford, but but specifically more really about the the industry's failings around him. I think he's very much become the poster child, if you like for literally of industry failings, you know, undoubtedly, his actions as a portfolio manager in terms of, you know, choosing the stocks holding on to the stocks not selling and then some of the, you know, as your listeners will be well aware of some of the chicanery he did in terms of balancing the portfolio, as investors were were leading leaving, you know, there are lots of big question marks about his own performance there, but but really, he would not be able to do half of that stuff were the protections around him, operating as they should have done, and so that really extends from, you know, himself his business. The, you know, various people who funnelled money his way over the years. The, you know, the administrators of depositories, the regulator itself. You know, there's lots of people involved in this and lots of organisations who failed, but Woodford and to a slightly lesser extent, his business partner, Craig Newman, who certainly bore the brunt of that. And, you know, maybe it's because we're used to seeing pictures of his, you know, big house and stables and fancy cars and that sort of thing. And, you know, if that's a very sort of powerful image when you're looking to demonise somebody.

David Ricketts 4:31  
Yeah, I think I just jump in and I'd say I pretty agree with out on a lot of those points. I think, you know, you've clearly got a situation here where you're understandably, there are hundreds of 1000s of investors who are who've lost out or looking for someone to take responsibility. I suppose it's probably, in my view, probably unfair to pin all the blame solely on a good fit. I think you've got kind of two, two issues. I think the first one which which owns touched on is that you know, you've got Neil Woodford as a star fund manager. So he is someone who You achieved great success at Invesco. He avoided the.com bubble bursting. He shunned those tech stocks that other fund managers were piling into at the same time. He held his nerve. And he was rewarded very handsomely for that he did the same as well, when it came to the banking crisis by shunning all the bank stocks, and again, the success story in his own right. 

So I suppose the expectation was, you know, he'd go on and replicate that success at his new outfit. I suppose we now know that obviously, the the flagship fund that he went on to launch was was vastly different to the products that he did manage at Invesco. And I think we'll we'll speak a bit more about the maybe the faders of the fund a bit later on, but Sure, absolutely. He's got some personal responsibility for the way that the fund was managed. I mean, he was the the stock picker, he was choosing the companies in which to invest. And obviously, it was his name above the door. But I think obviously, again, this is probably some of the owners just mentioned, as well, the it comes down to collective responsibility as well and culpability I think, it's also the environment in which you know, Woodford and his business was able to, to operate. I think that's where the other actors in this story come into play as well. 

So yeah, we're probably going to talk a bit about link the authorised corporate director whose their job was to protect the interests of investors in that fund and people forget as well that the link was the entity not Woodford who were answerable to the to the FCA as well. So it was their job as well to keep the regulator informed of what was going on. So, yeah, this is this is a story that has obviously what if it is the store manager, the personality at the centre, but there are a lot of other players and actors on the around the periphery of you like that, that are just as important and also lead as much to the downfall of that fund and the business at the end.

JB Beckett  6:46  
In your book, David, I was especially struck by how I guess you had attempted to humanise Neil in many ways, especially in the in the early chapters. Whilst all in you probably tackled his psyche more in the latter part of your book, especially as the wheels started to come off. For me, it helped both frame him as a personality and in quite a specific fashion. Now, I'm not suggesting for a second Neil was either a sociopath or a scapegoat here. But does the media and the public have this sort of inherent burning desire to create stars and then equally to demonise and create villains, perhaps as a way to your to your point, so job scorn from those wider debates or collective culpability?

Owen Walker  7:29  
And I was asked a similar question. And I was accosted by a journalist who's in the room who said, You know, 'I shouldn't have been blaming the media so, so harshly'. So I'll watch my tongue that we know I think the I mean, my personal view is I you know, I, as a sort of card carrying member of the media, I think the media has a very large role in Neil Woodford's rise and his fall, you know, you look at what happened to Woodford throughout the 90s. And, you know, he started at Perpetual as it was then as a completely unknown investment analyst, he was he was he was barely even a fund manager at the time and, and throughout the 90s he in early 2000s, he just took on this superstar image as David mentioned earlier, you know, his reputation was really made around the issue of the the tech stock bubble bursting and having you know, very much pushed against investing in those those.com companies. 

But a lot of this was fuelled by in the 90s this kind of PEP (Personal Equity Plan) was where he was seen as one of the best fund managers to put your your PEPs ....your precursors to the ISA - your savings in at the end of the tax year. And he was always mentioned in the in the press, personal finance pages being the guy to put your money in. And then as we came into the 2000s, his reputation develops even more like I've kind of thought about why that was and i think you know, as financial journalists we're always you know, we deal in numbers we did deal in big figures billions trillions, whatever it is. And.... but we're always looking for that that kind of 'human story' if you like, and I think Woodford really captured that because you know, he was I think for a lot of a lot of people you could kind of look at him think he's maybe what I do if I if I was a you know multimillionaire successful fund manager I'd spend my money on fast cars I'd you know, I'd get a big pile in the countryside. That's how I would kind of live my life and he was very straight talking. He was very down to earth. He didn't sort of deal in, in technical jargon, people could understand what he was saying. It was also quite honest with things and he you know, he had a temporary geek he was quite human character in an otherwise quite, you know, stayed while of investment managers or certainly how they present themselves to the, to the media. 

So he became very popular. And and I think part of that, you know that the the media helped convince a lot of people to invest with him, certainly when is it perpetual, and then when he started his own business in 2014, and then that same kind of media momentum, followed his downfall, if you like, and then I think help sped it up. So you know, every day there was a story, and kind of mid 2013 onwards, talking about how bad you would lose doing often based on maybe one of his portfolio companies, you know, having pretty bad results. And it would be you know, Woodford backed x y z post, you know, 10%, dip in profits, whatever. And so I think you did get that kind of self perpetuating fall on the way down the hill as as more stories appeared about how badly Woodford is doing more people, more of his investors read those who thought right to take my money out, that took more money out of the funds he was having, which led to the you know, the liquidity crunches is, I'm sure lots of people know all about and just kind of perpetuated that downfall. So I think my perception is that these media, among others played a large role in this story.

David Ricketts 11:21  
Yeah, I think I'd agree with that, as well. I think, also, it's probably fair to say that either staff or managers, they sell, they sell funds. I mean, if you look at even today, we still have this, this kind of staff and magic culture. And in some, in some form, you've got the likes of Terry Smith, Nick train. No, both those guys have delivered very impressive returns for investors. And they've got huge funds as well as huge following. I think in the US, you know, the past example might have been somebody like, like Bill Gross at PIMCO. And obviously, when he left, I probably say, now that us that the most most recent example is Kathy Woods you know, ARC.. runs one of the largest active ETFs in the world, and she's pulled in billions of dollars in investor money. So I think it's, I think that firms themselves, asset managers like to try and get away from this star manager culture, because they can see the risk of key man risk, like if someone leaves, and what happened with Invesco as well, the money walks out the door with them. 

But, but yeah, Woodford certainly was lauded by the press. I mean, he had these these kind of these labels, the man who can't start making money, and also the 'Oracle of Oxford', you know, either kind of Britain's answer to Warren Buffett. I think, a lot of that as well, it was it justified I, perhaps I think, actually, when you look at some of the work that we did, you know, holding CEOs and boardroom executives to account, you know, of their decision making. I mean, you could argue that he was probably one of the first kind of investor view, if you'd like to take it stewardship, which gets talked about non stop these days, bias managers, you know, he was one of the first, you know, really to go in and kind of engage with companies, where he didn't agree with the direction the company was taking he go in and let them know about it. So yeah, he certainly was a force to be reckoned. And he gained this kind of reputation. As a result of that,

JB Beckett  13:00  
Is there, therefore some degree of sadness and a contradiction to be found? Within, as you say, Neil's desire to be part of better corporate governance and better stewardship? Or was it actually just this quite strong sense of duality between those aspirations? And then the way he actually ran his own business that unfortunately, just got in the way of perhaps the more altruistic ambitions that Neil had,

David Ricketts 13:24  
I think he obviously, you know, he left he left Invesco essentially to have more freedom to do what he wanted. So obviously setting up his own business, he is free from the kind of the compliance sort of overbearing compliance function that he had at Invesco, which, obviously, the large us manager would have been quite, quite considerable. I mean, what once he started kind of dipping his toe into some of these unquoted companies during his time at Invesco in governance function kind of kicked in as sort of this committee to kind of keep a check on what he was doing. And I think that's probably, you know, probably the first sign where he thought to himself, you know, I don't really I don't want this, I just want to get out of here and do my own thing. 

But I think it was all the questions about that compliance function, even when he moved into his new his new outfit. I mean, the compliance turnover was was pretty high, there was some very senior people who left the business very early on. And you have old accounts, or people who speak to who work who worked with him. If you if you questioned the compliance at the firm, too much, then then you were kind of given the boot and shutting the door. So I think there's a lot to be said about your rights setting up on your own having this culture that's very different from Invesco, this kind of start-up vibe, the kind of technology that sort of dress down kind of culture, everything else. But I think within the company itself, there was certainly something a little bit toxic about the culture. That's certainly the message that comes through from the people you you speak to who worked with him in those early days.

Owen Walker  14:57  
Yeah, I mean, I think Woodford.. He, I think a lot of people seem to forget that he was the star of the Kay review, John Kay's review of the equity markets and long term, long term capital as far back as 2012 2013. You know, he was one of the key witnesses to that, and was kind of really revered as a fund manager who took this stuff very seriously. And as David said, at a time when it wasn't really front of mind for these people, because, you know, now we get the ESG funds, and they're incredibly warm hearted, but at the time, it was, it was kind of seen as a nice, nice to have, if not essential part of investing. But then I suppose if, you know, I think that kind of that, that almost tragic comedy, you know, that sort of tragic quality to the stories that this guy was regarding that it held in that esteem. And then later on, I think a lot of the practice around his businesses, the business, certainly towards the end, would raise some pretty serious questions around around governance. 

And you know, you... I think JB mentioned the, the example of fairly soon after, starting with investment managers, there was a think we've got a lot of good press, and and his partner, Craig Newman got a lot of good press for things like they're incredibly transparent business model, everything is going to be out there. We want investors to know exactly what they're investing. And we're going to publish the entire list of our holdings, great ideas, and then fairly soon, they scrapped bonuses for staff and this was seen as wonderful. Yeah, what a great thing to do for a fund manager to finally demotivate them their staff purely by, you know, the quarterly bonus and actually start thinking more about, you know, long term sustainability. Well, actually behind the scenes, Woodford and Newman, what they were doing with that was it cut out the sort of volatile nature of of compensation outlay and it meant that there was more money for the two of them to take home in their annual dividend payments. And the two of them got incredibly rich on the back of those and the staff they had dough paid, you know very well, but in most instances, were not handsomely rewarded. And it created this culture within the business where the two at the top Woodford a Newman were the ones who, you know, they were the big stakeholders, they extracted the dividends. They were the really big shows in town where everyone else was kind of just there to support what they did. 

And I think that created a lot of issues around governance in terms of reporting lines. And the issue on report on transparency. Well, I mean, that all fell away very rapidly in the final few months of the business, if understandable reasons, I think, would fi...t felt legitimately that he was being hounded and pursued by hedge funds who are just looking at his portfolio saying, you know, the next company is too short, because he was likely to be a distressed seller. But it did go to show that a lot of those kind of ideals that the businesses launched with either didn't work or impractical or just scrapped. As soon as things got a little bit tough.

JB Beckett  18:27  
I guess my initial reflection of all that was one, I never... I don't think I ever really gave Nick Mustoe enough credit for what he was trying to do at Invesco, which I appreciate was probably seen as part of the problem that precipitated Neil designed to leave to start up his own shop, my daughter gave Nick enough credit for that. And we had Bev show on the show earlier, and she would probably just tell me, where it's a great example of what happens when you combine too much misogyny and testosterone inside a fun person knows what I was going to ask you on on reflection. 

At what point do you think Neil's strategy stopped working? Was the strategy itself flawed? Was it the avalanche of assets that flew in? Was it missing those, you know, expected dividend yields? Was it the change to focus on AIM stocks or the nature of a UCITS? Or even the breakdown of controls? What do you think was the biggest problem? And when do you think it really started to go wrong?

Owen Walker  19:26  
Well, I think all of the above but I think, you know, the seeds for all of this was sown not only at the launch of Woodford investment managers in early 2014, but even going back before then, so when he was still at Invesco, as David said, One, you know, the chief reason he left was because he was getting very frustrated with the constraints being placed upon him by this, you know, US owned Investment Group, but one of the crucial parts in all this is actually even by sort of 2012-2013 he had already started thinking about launching something along the lines of what he would like to do as in as the Patient Capital Investment Trust, he was very interested in investing in AIM stocks in in unquoted or very small Science-based biotech companies. He had a real interest in his real passion in this. And he had tried to convince the guys at Invesco to let him launch something like this, you know, clearly this was a complete departure from anything he'd done before. very much focused on you know, blue chip footsie 100 companies. And, and they push back on it, I think, you know, this is fairly soon after Antony Bolton's ill fated foray into China where, you know, the fidelity fund manager who, you know, it brought kind of a bit of a demo script is find Korea by trying to invest in a Chinese finance,

JB Beckett  20:59  
Arguably Britain's first star manager, Anthony Bolton.. because of IA sector thresholds, a lot of Tony's ''alpha" actually came from his Hong Kong book.

Owen Walker  21:11  
...the guys at Invesco saw the problems that Bolton had had out in China, and thought, you know, we don't want Neil to basically do something similar and have a big fear, because Woodford would expect you know, a big launch for this new product, and for it to fall on its face. And so they push back on him on him doing that. And that was really one of the main reasons he wanted to set up by himself, he actually wanted to go it alone and to maybe do something a bit different and very different, in fact, but in order to set this business up, and to make it profitable, and get it off the ground, they needed to create a fund initially, at least, which is very similar to the fund, he'd been managing it Invesco, which was why the first fund was, was launched. And it very much mimics the Invesco Fund, and the amount of money that's poured in there. 

So quickly, you know, we're talking billions every billions of new assets every month for a start-up, he has a very successful financial start-up ever in Britain. And within a few months, it was, you know, in hindsight, I'm sure they wouldn't, they would have sort of closed, turned the taps off and said, Look, we're kind of doing a soft close for a bit, and we're going to try and allocate this, these funds, then we're going to reopen a few months time, but they just let the money keep pouring in. Which meant that some of the concentrated bets are very heavily concentrated in some companies. And there was a lot of companies, small companies that Woodford started to have, yeah, he had a lot of money. And brokers knew that and they were offering him stuff, and he was investing in them. And that is a lot of the seeds. The seeds is really go back to that period where he's making large commitments to companies, you know, limited due diligence carried out on them. And a lot of these were still there at the end causing significant problems to the portfolio. 

Well, I think it's interesting as well, as obviously, you're absolutely right. I mean, I think the departure from his style of Invesco was, was was stark, I mean, this this was a fund that was was heavily invested in unquoted companies. But actually, when you look at some of the performance headaches that some of his his largest, most liquid holdings, also, cause, I mean, there are some shocking performance stories as well there. So, you know, you look at the likes of product financial, for example, that the doorstep lender, we run into trouble. I think it lost around two thirds of its market value in a single day. But it issued a profit warning, I think a group as well, another one of his large holdings, that sort of share price nosedive as well, and they set their CEO in 2017. 

And then the other one that comes to mind is Imperial brands, one of the cigarette companies with tobacco companies that would fit it invested in for years, they that also started to tank as well. So, you know, you had this kind of this situation where even some of the most sort of liquid and well known companies that Woodford was investing in, were also running into trouble. And it was it was quite remarkable. I remember at the time, you know, covering every time there's a company issuing a profit warning or a share price fall, you'd go and speak to some of the financial advisors or the commentators who are very up on Woodford and the kind of message you get back as well. This is this is a short term blip, you know, Woodford will come back from this. He'll bounce back he always does. As we know, as we know now he did he ever did. And also the way that the Woodford would communicate with investors via his blog, his website, he was always of the of the view that this is just a short term, short term issue. I'll get through this. Nothing to see here. We'll move on. Don't worry about it. So yeah, I think it's interesting. It's not just the the illiquid, the sort of unquoted Companies that really caused in trouble even some of the big names as well also also contributed to him coming on the stock as well.

JB Beckett  25:07  
It left his portfolio effectively fighting two fronts. One, you could see he was on the on the secular wrong side of a Brexit play. In his liquid portfolios, you see in certain industries that were starting to fall out of favour, which has nothing, nothing new for wood for Ray had been he had been here before, but he was also fighting this front about his growing micro stocks aim listed, you know, illiquid stocks. And it felt like it was the pinch between the two. I don't know if it was a pinch, in terms of his intellectual thinking space, or it was it was a pinch between the media coverage. So he was always fighting that war on two fronts, but it was definitely something that sport and others that made me think about, I guess, the title of your book, 'Built on a Lie', which I guess is a soft reference, perhaps to Mark Carney Select Committee testimonial, and I was just thinking about what if Woodford's funds had been an LTAF as as the new proposals that are coming through.... he didn't necessarily face in to some of the same liquidity problems that you had before. What importance do you think the calamity around Neil's funds had on the mindset of the FCA when they started to bring these new fund proposals forward?

Owen Walker  26:24  
I think I think a huge, huge impact on what they were thinking, you know, to your point about Mark Carney's, quote, 'built on a lie', which he said is part of the Treasury select committee hearings. And he was asked about UCITS funds and their their ability to invest in illiquid holdings, you know, up to 10% of the portfolio, whilst still offering daily dealing in terms of investors taking their money out every day. And he said that such a system was built in a lie that that was, you know, you're on one hand telling investors that they can treat it like it's a bank account, essentially, we're actually some of the assets in there are, would take, you know, could take six months a year even longer to actually sell and we're certainly seeing that, obviously, with the fallout from from Woodford equity Income Fund, which closed more than two years ago, and investors are still waiting for their money back. 

So So has that had an impact to the FCA? Yeah, undoubtedly, this I think this has been a bit of a shock for the FCA, you know, coming, I suppose at a at a period where, you know, you're sort of under the new leadership. They're kind of having to answer questions about this. And clearly, there was some very big questions, London Capital and Finance as well, which they've had to face down. That's another scandal around the similar sort of time. And I suppose, you know, if you look at, you know, that time, and I think we were talking about this earlier, JB just before we were recording about some of the previous fund blow ups, Arch Cru, Connaught, both happening to include the same Authorised Corporate Directors...

JB Beckett  28:25  
...the 'FCA Hall of Fame' as I like to call it 

Owen Walker  28:27  
Yes, exactly. And, yeah, this just, it's a bit of a stain, really. And it's not something that that looks particularly good, and that they're just really trying to get to grips with all of these things and start again, but I think would fit just really came at the wrong time for them. I think it has had quite a big influence on their, their alter proposals.

David Ricketts 28:54  
Yeah, I think actually, if I'm not mistaken, I think they actually held back publishing the proposals for those LTAF funds. I think initially, it was it was more focused on the property funds, wasn't it? 

Owen Walker  29:05  
Yeah

David Ricketts 29:05  
And I think we've we've kind of played into this. I think, as you know, clearly something has to be done. I think, as we've seen with the recent property fund, suspensions, you have allowing investors to invest in, in less liquid assets and an offering that promise of daily liquidity just just doesn't work. Obviously, property funds is a whole other area that you can go into is nothing, nothing related to to Woodford, but, you know, I think, you know, quite rightly, I suppose that open ended funds have been thrown into the spotlight now as a result of what we've referred. Yeah, you know, you speak to investors, both of us includes investor stories in our books, where, you know, they were under the impression that investing a fund would be like, depositing money in a bank account, essentially, they'd be able to get that money back and you hear these, these terrible stories, these kind of heart-breaking stories of people putting money into a fund like Woodford's you know, that they're saving for a rainy day or for a wedding or holiday or, you know, their retirement and they're hoping to get the money back and then all Have a sudden they're told, you're sorry, the doors are closed and you can't you can't have that money back. 

Of course, there's nothing wrong with you investing in less liquid assets like infrastructure, everything else that we can kind of offer very attractive returns. But there needs to be an appropriate mechanism to do that. And I suppose one thing I would ask about these these new although proposals is that, as far as I'm aware, these this is a structure that's only really for more professional investors and sophisticated retail investors. I think there's an ambition maybe to move it into the retail sector over time, but I just wonder whether some of the proposals in there you know, the requirement to give 180 days notice when you're looking to redeem, it's only really relevant if you're a large investor, not really, you're kind of, you know, man or woman on the street who has money tied up in a retail fund. So I think it'd be interesting to see how the FCA develops his proposals and makes them more relevant for the retail sector because I think at the moment as they stand yet, clearly something has to be done. But I think these are probably more geared towards kind of the kind of professional or or institutional investor for the time being.

JB Beckett  31:12  
I think it was a great bit of FCA, rebranding, thinking but ESMA the European regulator had been bringing its ELTIF proposals forward since 2014. It was a great piece of rebrand, but I wasn't going I was actually gonna ask you David ..

Owen Walker  31:26  
It was a Welsh Welsh version. The EL..TAF

David Ricketts 31:29  
i don't think i think the ELTIF took off. As far as I'm aware, they still Yes, doesn't really set the world alight for them. 

JB Beckett  31:35  
Yeah, I don't have enough listeners to alienate my Welsh audience. So having just built those bridges with the latest episode with Richard Harris, I was actually gonna ask David therefore, on reflection is the issue not so much as you say investing in illiquid per se, but it's about poor investor matching, or perhaps even a degree of gullibility in the FCA's part, both in giving approval to the new Woodford business and focusing too much on the ACD or relying too much on the ACD's governance. Is that is that when it breaks down, you know, when they're looking at liquidity that the ACD just wasn't looking at liquidity hard enough. As the FCA expected, 

David Ricketts 32:14  
Clearly, yeah, the role of Link was to keep a check on what Woodford was doing and have proper oversight over the fund including what was going on. When it came to the unquoted stuff. And obviously, the big issue, I suppose that the key issue the key story in all of this that gets talked about a lot is when the fund started to do things to make sure it didn't breach that 10% threshold. So moving some of the unquoted assets to the Guernsey exchange which, you know, again, really didn't paint the FCA in a good light because the contact between the Guernsey exchange and FCA the communication between the two was pretty much non existent as we as we found it in the Treasury committee hearings. But I think one of the things that strikes me as well about the whole Woodford issue. I think you touched on this in your question as well was the kind of gullibility you know, I wouldn't want to say that any investor that was in a Woodford fund was gullible but, you know, this was a fund that was very heavily promoted as well. Let's not forget that. 

So Hargreaves Lansdown knew they were Woodford's biggest champion and you know, they launched this this fund on their platform to such fanfare back in in 2014. I mean, the the money they must have spent on marketing this must have been incredible. But when you look at the the amount of money that Hargreaves Lansdown pulled into that fund, via their platform and the promotion behind it, that to me raises more questions as well. I think this whole issue of promoting funds on Best Buy lists the fact that the fund it despite all the issues that were known about the sort of movement towards less liquid holdings performance issues, that fund was still heavily promoted on the Best Buy list on the world 50 list for a very long time right up until you know it was suspended. So to me that that's more of a key question when you have such a high number of retail investors going into a fund it let's not forget the wall 50 list Hargreaves Lansdown has is meant to be formulated or compiled because of their own in depth research. 

So as a retail investor who not doesn't necessarily have the best investment knowledge, you're going to rely on the experts that the people who say they're doing the research to give you an informed view on what's going on in that fund. So I actually think the FCA needs to ask more questions around 'Best Buy lists' and what needs to be what needs to go on there. To make sure funds there on those lists are appropriate for retail investors are actually doing what they say they are doing. Yeah, to me is a key issue.

JB Beckett  34:51  
Certainly things like recommended buy lists and all all forms of media fund punditry, from my point of view... all I always struggled with because we knew that they weren't directly regulated. They were considered to be matters of media and not necessarily of advice. And that was always that's a marquee point where did buy lists sit and of course, we saw something fairly similar in the institutional pension space with investment consultants who were giving advice to pension scheme trustees, but the actual act, the actual function that they were performing was not itself directly regulated. And it feels like we've got a similar situation here with recommended buy lists, and to some degree model portfolios as well. Right?

Owen Walker  35:34  
Yeah, absolutely. And I think you know, these Best Buy lists and clearly they have been looked at the FCA had prior to Woodford said it'll be looking at them and its results have been very 'light touch' up to now. Representatives from all the big fund distributors were beating a path to his door and Craig Newman's door to ensure that his fund was on their, their distribution platforms. But Hargreaves was by far the most aggressive and what Hargreaves wanted over and above everyone else was to say we offer Woodford's new fund the cheapest anywhere in the market, and it negotiated that deal. 

Now, as it happens at the same time Woodford's fund appeared in the other lists of multi manager funds. Was that a coincidence? Who's to say? But these when Hargreaves managed to get that deal. You know, apparently someone in the room said that told me that when that deal was agreed the representative from Hargreaves said to Craig Newman, you know, you you sign this, and we'll do the rest. And they did they marketed this fund, incredibly powerfully through their own newsletter which goes to you it's one of the most the highest distribution rates of any investment publication in the UK. Your direct to consumer, that's what the business is all about. It websites, events, online events, and very much saying you know, this is the cheapest you can get Woodford's product for anywhere in the market. You know, personal representative personal endorsements from the likes of Mark Dampier from Peter Hargreaves saying, you know, I've put my money in this, you know, that would later say about various family members putting their money in Woodford funds. And it was an overload really and I think certainly in Hargreaves his case. It helped them that you know, the footsie 100 company they've they've got over a million clients. And I think it helped them get lots of new clients because people were persuaded to join their platform because they could get the cheapest rate on Woodford's new fund such was the the the noise around this new launch. 

But in the in the time when Woodfords you know fund was haemorrhaging assets and the real downhill period of his business, I think Hargreaves realised they've been caught in this trap. And actually they were too closely connected to Woodford and all that promotion over the years and caught up with them. And that they inclusion inclusion of Woodford funds in the Best Buy list heading into 2019 when it was performing woefully and he had the likes of Terry Smith, who just happened to have one of the best performing funds in in, in Britain at the time, not on the list. And that would be complaining about it. It really seemed very strange. And actually you kind of got to think that within Hargreaves, they realised at that point that were they to take Woodford funds off the Best Buy list and actually, you know, provide an extra discount that year which kept him on whether to have taken him off, then that could very much have sparked the the the the rush to the doors, if you like which will eventually, you know, bring about the end of his fund, I think I agree is very much realised that were they to take any drastic action. Were they to make any negative comments about Woodford were they to withdraw his funds from the multi manager funds or their best buy lists that that really could spark his demise. And they didn't want to be the cause of that. And it's just it's just it just really goes to show how closely they had become intertwined with Woodford.

David Ricketts 39:39  
There's an element as well as a bit of 'saving face' here as well. I mean imagine, given all the promotion that Hargreaves given Woodford, you know to suddenly turn around and say, You know what, we got it wrong. Actually, we've we've made a mistake here. I mean, that would have just been a complete disaster. Now, having spoke to people that worked at Hargreaves at the time when Woodford's fund was being launched. I mean, it seems to me that they again, were expecting Woodford to go on and do great things like he'd done at Invesco, there wasn't the kind of rigorous questioning you'd get if you're a start-up manager going for the first time, I think. I think one one comment I had in the book was the 'belt and braces analysis' just wasn't really wasn't really done. 

So I think the expectation was it Woodford was carry on as normal. Whereas arguably, the clock maybe should have just been reset. And he should have been treated like any new fund manager coming to them with a fund with a track record of zero, and then given time to prove his new fund would take off and would perform. And I think, you know, obviously, the marketing opportunity was was huge for Hargreaves, when it came to Woodford. But I think, you know, in hindsight, maybe, maybe some more probing and rigorous questions should have been asked at the outset.

JB Beckett  40:53  
Yeah, and I think that's what really shocked me at the time. I mean, I was ostensibly an institutional fund gatekeeper, albeit for a large pension brand that also had sizable links into into the Invesco funds, for example, but it really threw me that I was sitting there debating with colleagues and there was a huge pressure to get on board with the, you know, to do to move to the new house, advisors were screaming for investment consultants wanted it. Everybody wanted and it was like this. It's a non entity, you know, okay. There was this there. The murmurings around Oakley.., okay that was one thing, but it's like, as you say, it was a start-up boutique. At a time when we knew there was the the outcomes of an FCA investigation coming down the pike on your pre trade compliance failings, at Invesco, a very large, established house. I just couldn't get my head around it. 

But then as I say, I was coming more from an institutional background where it's, it's much more about the the investment and the operational due diligence rather than necessarily picking the 'name'. And I think if there's one lesson the industry needs to try and take away from this. And my my view is that guided architecture, and recommended funds is about governance. It's not about commerciality and marketing. And we seem to have confused that as an industry, you know, you can offer something super cheap. But if it's not, if it's not up to the task, then you know, you've got a significant problem. Likewise, I think many of those services, it should be much more built on grounds of objectivity, good governance, the ability to, you know, to switch managers, if that's indeed the right thing to do. 

David Ricketts 42:37  
But but I think it's important as well as talk a bit about the kind of the large investors who are also in this fund. I think, if you look at the kind of the the warning signs, if you like, I mean, there were there are a lot of large city institutions who could kind of sense the writing's on the wall. I think, you know, what one that springs to mind and for someone I spoke to for the book was john Chatfield-Roberts at Jupiter. You know, one of the earliest earliest backers, I think, the start a start the funds launch, I think they put in about 660 million into the fund. And then they, they topped it up with another 100 and 50 million A few months later, so they had a sizable holding in that fund. Now, he had concerns very early on about Woodford's approach and started to sell down that holding, you know, even even in 2015, so less than a year after invested started, John Chatfield-Roberts started selling down his holdings, I think offloading the chunks of assets between 5 and 64 million pounds a deal. 

So, not insignificant, but he told me that Yeah, he expected Woodford to up the ante when it came to unquoted, but, but not to the extent that he did. And I think what struck me is that John said that when he invested in the fund initially, Woodford had about six unquoted stocks, and when he, by the time you'd exited, you'd had 45. So I kind of think to myself, well, this is this is a large, a large professional city investor. You know, they're having concerns about the approach that Neil Woodford is taking, and they're able to get out and spot those warning signs, what hope of Retail investors got, who perhaps don't have an understanding about, you know, the companies that this fund is, is investing money into. So yeah, we saw that again with with a V. Rose while they pulled about 300 million from the fund, not long after Jupiter. So I think it's interesting. You've gotten kind of the sort of divided camps between the retail investors and the professional investors. Professional investors, obviously could see what's going on. But yeah, the retail investors were still being being sort of said 'no, come nothing wrong with this fund, put your money in it.

Owen Walker  44:41  
But then, I mean, what what caused the the fund to suspend in the end it was the withdrawal by Kent, you know, Kent county council pension fund, one of the UK is biggest best resource pension funds with, you know, an army of incredibly highly paid consultants and investment consultants and the rest of it, and it was their decision that caused this and a litany of mistakes in that process from the decision at the outset for the investment Woodford not to be put in to a segregated mandate to be put into the the main pot. You know, as my book outlays, the reason for that is because there was a desire within the Kent's investment committee to retain the relationship with Woodford, he had done very well for them. Whilst he was at Invesco, and they wanted to retain that and we're in a segregated mandate, they would have to go out for a tender and potentially another fund manager would win that tender. 

So Woodford was invested in when in the main part, and that was a smooth transition and Woodford kept his client or in fact, can't get their illustrious fund manager on their on their slides of funds that they invested in. And then you see, right the way through that relationship, there were numerous opportunities for Kent to abandon ship and to get out and to you know, so bit face a bit of money. But it was effectively the last one standing. And it was the one that that when when push comes to shove, when they eventually decide to pull their investment in the fund. It was the one that tipped over the edge.

David Ricketts 46:24  
Yeah, I think you raise a good point there about sort of not having the option to have the segregated mandate. And because that's something obviously, St. James's place, we're sort of patting themselves on the back about, you know, they managed to get the fund the money out of the fund, because they had that segregated mandate, which meant they could say to Woodford, we don't want you investing in in unquoted or illiquid companies. So, I mean, they kind of pride themselves on the fact they got out in time or got the money back because they had that mechanism in place. But I guess again, that kind of raises the question, 'should a large investor like county council or any pension fund be lumped into a fund that sold to the mass retail market?' Probably not, 

JB Beckett  47:00  
Which is a good question, because actually, as you rightly alluded, for such a long time, the answer to that would have been 'no' ...you would tend to integrate a seg mandate. So you had control over the mandate, you were able to monitor it, it would also give you as as good as damn it real time.. end of close holdings positions, there was a lot of benefits to it. But also a lot of costs, a lot of operational and admin drag that comes, comes with it. The thing that shocked me when I heard about the Kent redemption, was it kind of broke a very fundamental law in institutional land, which is that you withdraw smoothly, and you withdraw quietly. And that's exactly what the Merlin team at Jupiter got, right. And that's exactly what the current team got wrong. And I've redeemed hundreds of millions out of funds that sometimes has led to fund closures. I'm not proud of that. I'm there to effectively to safeguard the returns for for my clients, not for anyone else that's a philosophical and fundamental flaw, I think of the whole industry. But putting that aside, you would agree, and you would give lots of lead time you'd allow for programme trades, and you would phase out of a very large position.

Owen Walker  48:20  
I mean, interesting with with the Kent situation. Very belatedly, I mean, this is going into late May 2017. When you know, it was very well established by that point, how badly Woodford's fund was. That was the point at which Kent decide to pull the mandate at the end of May. Their quarterly meeting, I think everyone had assumed and certainly Kent had informed Woodford and his team that they were likely to pull out but it wouldn't be until the following meeting. Anyway, so this happened a bit earlier. Kent's liaison with Woodford got in touch with a Friday afternoon and said, look, this is what we're doing. We've decided we're going to take the money out now effectively, but we don't want to harm your business, or certainly lead to it closing. So over that weekend, and on the Friday afternoon, they decided that they would do a staged withdraw as you suggest, and you know, tried to do over a period of a few weeks and Woodford spent the weekend working out a strategy of which assets he could sell now, which ones he could sell in a few weeks just to meet this redemption request and to essentially carry on. Monday morning turns up the guy at Kent who had arranged all this was on holiday. His stand-in for the week was was unaware of these conversations, saw there was an action from the previous week's meeting that the Woodford account will be closed, called up Link said 'withdrawing our money; and Link said yeah, that's fine. Even though Link have been involved in those conversations over the weekend. 

So I think it's it's, you know, who's to say whether Woodford would have survived another month or not. But that is one of the, the kind of the human error, little stories at the centre of all this, which which kind of really brought this story to a head.

JB Beckett  50:07  
One thing I reflected is fund selectors and allocators, we pride ourselves in knowing the gossip, knowing the angles, knowing the information, knowing more than, as you say, the average retail investor. But I think in reading both of your books, what I then reflected is that no one knew everything in that story, and certainly no fund allocator even those incredibly close to Neil Woodford would have known everything that was going on and indeed obviously cover the big stories was coming out is how information was withheld from both Hargreaves and from St James' Place at those critical points. So that that's a sort of that kind of can knocks my own hubris as a professional fund investor that... you have to realise you can't know everything that's going on in that fund business as much as you think you are on the inside. The reality is there are still going to be surprises. 

So if that's my learning lesson, and the learning lesson for our audience in terms of fund allocators, we've talked about some lessons there for distributors in terms of fund launches, the hype and the book building, etc. What are the lessons here for Authorised Corporate Directors - ACDs. And for the FCA in how the regulate ACDs going forward.

Owen Walker  51:24  
I mean, I think we touched on earlier. But you know the circumstances with Link or captures it was then effectively been foisted on to Woodford as his launch by the FCA following their own involvement in in Arch Cru and Connaught, tells you an awful lot really about the way the FCA kind of view this very niche part of the investment industry. And I think, you know, sort of discussing the book how there were conversations at the time within the FCA that, you know, we've just kind of had to fine Capita as it was then Link later, for it's role in and to basically say they were in their involvement in these two pretty bad cases of fund mismanagement. 

And so we'll teach them a lesson and we'll give them... we'll make sure they have to look over this new fund launch, which is going to be one of the biggest in the UK and probably beyond their their means as an ACD provider and partner them with this fund manager Neil Woodford who's just been at Invesco where they have just been fined, you know, record sum for mismanagement of their funds. And hopefully, it'll all turn out brilliantly. And clearly, that completely failed. And that's what we've that's what we're sort of talking about, you know, seven years later, that was those decisions led to the ultimately lots of the problems within with Investment Management over the years. 

So I think it really does show you that the FCA places a lot of faith in these ACDs to do yet essentially outsource its own oversight of these funds. And, but, you know, there is variable quality within that ACD industry, some of whom I'm sure would have been quite other providers have been quite comfortable with that scenario, though, having spoken to become experts in this very small sector. Link, clearly was this was the wrong sort of organisation to work with a manager like Woodford, they are very much process driven, you know, they look at, you know, requests that came in like the one from Kent and say, Yep, that's what we're doing pushing it through without thinking, what are the longer term consequences of this? Is there another solution? Can we find a way of doing it? Also, they are somebody who will take instructions from Woodford directly. And if if you know, they fit the letter of the law, then they will carry them out without perhaps offering a challenge to those and the earth. Certainly the way would for that, you know, he needs somebody to be challenging him. In the way he sort of runs a business in his fund. So, you know, it was just it was a cocktail, bringing those two together, which was was very distasteful and very sort of bad aftertaste. I think.

David Ricketts 54:25  
I suppose one thing we haven't really talked about much is kind of the role of Depositories as well. Obviously, Northern trust is 

JB Beckett  54:30  
Sure.

David Ricketts 54:31  
...you know, is involved in this as well as the depository and as really kind of want to say got off lightly, but they've avoided a lot of the spotlight and the scrutiny, I suppose in this whole story, but they would have had a front row seat in some of this as well. I mean, they would have been involved in those conversations. As I've alluded to over the weekend, before Ken decided to pull their money from the fund and it was it was their job to make sure essentially that that link if you like was doing its job in certain areas, unit pricing and dealing portfolio valuation that kind of thing. 

So I imagine this FCA investigation which is which seems to be taking forever to complete, which is still ongoing and doesn't look like it's going to be wrapped up anytime soon, let's say not before the end of this year, I imagine they'll be looking at the role of depositories as well in northern trust and their role in this whole story. You know, whether they did enough probing around, you know, things like illiquid assets in the portfolio, and the movement of the the unquote, is to currency exchange, etc. So, again, I think that's another another actor or another element to throw into the story as well. The role of the depository in all this.

JB Beckett  55:35  
Before we get on to the the last fun bit of this discussion, I'm going to subject you both to my 10 second 10, question rapid fire round. I guess my last question to you both, is where do you think the saga leaves star manager culture? boutiques? And I guess active management generally, and from that, is there a call to action there for fund selectors?

Owen Walker  56:00  
I think that the issue about star manager culture, you know, as we touched on earlier has, has kind of been dying for, you know, the best part of the decade. And, you know, maybe in 20 years time, we will look back at Neil Woodford as the final big name, stem address. You know, clearly we have the likes of Terry Smith and Nick train at the minute. But you know, that his I think, you know, when he sets his business up, it's called wood for investor management, you know, Smith, you know, FundSmith, you know, Lindsell Train, I think we're coming, we're coming to an end of the times where fund managers launch their new ventures and naming them after themselves. You've seen a couple in recent times, which which certainly haven't taken that route. And I spoken to some James's place in several occasions, about the Woodford affair and, you know, they have said that they would not go with a start-up, again, they would wait for, you know, a new fund manager, they've dealt with to kind of get a couple of years track record running money by themselves, even if they've been working with them for several years of their previous venture. 

And so I think that makes it harder for for boutiques for start-ups to to to get off the ground. Because, you know, after would for the fair, I think there's going to be much harder hurdles, if you like for people to trust you and handover money effectively to get your business off the ground. I mean, don't forget, Woodford was really only allowed to get going because he was able to manage it, you know, a 3 billion plus mandate from St. James's place from day one. That's not going to be happening again, for any, you know, would be sort of fund management start-ups. I think the the road to becoming successful and successful boutique has got an awful lot harder. And a lot of that can be blamed for on the the fallout from the Woodford case.

David Ricketts 58:00  
Yeah, I agree with that. And they're the kind of star culture, if you like, is certainly waning and has been for the for the last few years. And I think that this, this whole saga came at a unfortunate time for active managers as well, because obviously they've been battered, you know, sort of battling competition from you know, cheaper passive funds and active managers have been, you know, pulled up for performance issues, the fees they charge, you know, are the fees justified for the kind of performance they deliver. So it can be very, very unfortunate time for the active industry who's looking, you know, to really kind of demonstrate their worth, if you like, I think the point about boutiques is interesting, because you've probably also seen the story about Mark Barnett, who was, you know, Neil Woodford, his protégé at Invesco, again, very much seen as somebody who followed in his footsteps seen as a bit of a star manager at Invesco. He, he left the firm, fairly recently, and now he's, he's starting at a new boutique or established boutique hotel worth, which to be, to be honest, I've never really heard of until they announced that he was joining. 

But I think it'd be very interesting to see what they do with Mark Barnett and whether he'll be sort of, you know, put in position as their store manager. And the money will come to that business because they've got to buy on their, on their, on their, on their books, but I think he's absolutely right, the days where you've got sort of an individual name over the door. You know, all the money has been run by one person. I think there are a lot of firms who are trying to get away from that. And you speak to a lot of asset managers, large asset managers now who say, it's all about the team. It's not about the individual. So, yeah, I think, I think the kind of days of handing money to one individual person are probably over Unless, you know, they can demonstrate they are delivering strong returns and also having having that sort of loyal following as well. So we've mentioned Terry Smith and Nick Trent a couple of times on this this debate, but, I mean, yeah, I mean, they continue To put in huge sums of money, and they have a very loyal fan base as well,

JB Beckett  1:00:04  
You know, I still remain quite pro boutique. But when I reflect the inherent flaw in the open ended structure and this is, this is very much enshrined in regulation is both incredibly hard to stop money coming in the door on an open ended structure. And yes, you can soft close, you can stop marketing, and when someone still picks up the phone use, your generally still obliged to take the trade. But also the way the distribution model, the business model is still built around growing the asset base, I think, would these problems still have persisted if Woodford Capital had stopped at 3 billion say and just run 3 billion worth of assets, I suspect the answer is 'Probably not'. More More often what I see with liquidity, the problem is, when you're forced to become a net seller in the market, that's when the size of positions becomes particularly problematic. No one seems to worry about liquidity on the way up. 

So I think that's maybe why one reflection for for fund selectors is to be wary, not so much of the persona. And and also when I was reading the books, and I think when you hear a lot of the heat and the noise in the market about Woodford there's a lot that's attached to it, he's also he drove fast cars, and he was he was a bit of a bully and he was very aggressive. You know, there's there's that again, that aspect to say, it's easier to hate him if he's an unlikable person, which, frankly, has nothing to do with whether he's effective at running your money or not. If they are effective to running your money then five, they don't have you don't have to like that. You don't have to invite them around for dinner with your granny. It's about do they actually manage risk well do they take good positions, etc, etc.

David Ricketts 1:01:44  
I think interesting we haven't talked about which is that, you know, the fund was was obviously suspended in June 2019, and then never reopened again, it was wound up in October that year. But let's not forget, not everyone in that fund wanted it to be wound up completely, there would have been investors in there who wanted Neal Woodford to carry on, or given the opportunity to reopen that fund at some stage. Because let's not forget, you know, during the the period, the fund was suspended, he was working in the background, you know, getting selling down those or selling the most illiquid companies and repositioning the portfolio into Yes, blue chip companies or more liquid holdings. So his ambition was to reopen that fund. Towards the end of the year, I think it was around December time. 

Obviously, a lot of money would have flown out of that fund straight away. But there would have been, I think there are estimates that I've included in my book, about 600 million or so would have stayed in that fund. There probably are a cohort of investors out there who are probably banging their heads against the wall thinking, Well, you know, we've got our money stuck in this fund it what if, what if he had been given the chance to reopen that fund? And things might have been different. But again, that's all hindsight. And that's a great thing that we don't we don't have when it comes to investment. But yeah, it's, that's an interesting part of stories in there as well,

JB Beckett  1:03:02  
Owen, any final thoughts before we jump on to that rapid fire round?

Owen Walker  1:03:06  
It's quite interesting point that, you know, we are seeing this, you know, use of kind of US style class action litigation being used here. You know, I'm also doing a lot of work at the minute on Credit Suisse in the various problems, they've been having it around the supply chain, finance funds, Greensil funds, which were suspended and, and close. And there are, again, several class action litigations, kind of swarming around that crisis as well. So I think what we're seeing here is something like the beginning of more of this activity happening, when, you know, there are these big fund failures. So I think it does put much more emphasis on the legal position of ACDs. And whether, you know, many would like to continue in this business and continue taking on the same sort of companies. So I think that's that's one of the longer term implications of this. So it Woodford story which I'm sure will be sort of fairly permanent feature of the fund industry.

JB Beckett  1:04:12  
Rapid fire round with the rapid fire round I'm going to do this slightly differently because this is the first time I've had two guests on the same show. And what I'm going to do is ask you five questions each David I'm gonna pick on you first. The first question is bull or bear?

David Ricketts 1:04:26  
I'm going to go on Bull 

JB Beckett  1:04:27  
Question two for you Owen is Bogle or buffet? B

Owen Walker  1:04:31  
Buffet 

JB Beckett  1:04:31  
Question three back to David is profit or planet?

David Ricketts 1:04:35  
I should probably say planet?

Owen Walker  1:04:37  
As someone with three kids David hopefully will be saying yes, 

David Ricketts 1:04:43  
That's a good point, for the sake of my three kids very young kids. Planet. But I need profits to pay for them. 

Owen Walker  1:04:50  
Well Exactly. Yeah, 

JB Beckett  1:04:51  
It's a toughie. Question four back to you Owen is divest or engage? 

Owen Walker  1:04:55  
Engage. 

JB Beckett  1:04:56  
Question five, David lower cost or better value?

David Ricketts 1:05:00  
Better value

JB Beckett  1:05:01  
Owen supertankers or boutiques? 

Owen Walker  1:05:03  
Umm Boutiques? 

JB Beckett  1:05:07  
David? Oh, here's the fun one star managers or team players? 

David Ricketts 1:05:10  
Oh it's gonna be team players isn't it? 

JB Beckett  1:05:11  
Easier question Owen public or private in terms of markets? 

Owen Walker  1:05:15  
Public 

JB Beckett  1:05:15  
and David, question nine, high growth or stable income?

David Ricketts 1:05:21  
High growth 

JB Beckett  1:05:22  
Owen the possibly the toughest question but my favourites as listeners to the show will know is socialism or free markets? 

Owen Walker  1:05:32  
Eh socialism. 

JB Beckett  1:05:40  
I'll what I'll do is I'll let you both pick a bonus question, a number between 11 and 40. David's we'd like to go first 

David Ricketts 1:05:49  
11

JB Beckett  1:05:49  
It is humans or robots are humans? 

David Ricketts 1:05:52  
Humans. 

JB Beckett  1:05:53  
Owen if you try the Russian Roulette as well as a number between 11 and 14, I'll let you know what numbers are still available. That might be easier. 16...

Owen Walker  1:06:02  
16. 

JB Beckett  1:06:03  
Okay. Question 16 is space travel or time travel 

Owen Walker  1:06:10  
Time travel? 

JB Beckett  1:06:11  
Ahhh Go back and fix a few things. Naming naming no names. Yeah. That's great. And that marks the end of the interview and the debate. You have, you'll be glad to hear you havre both arrived the new fund order I just want to say David Ricketts and Owen Walker. Thank you very much. 

Owen Walker  1:06:30  
Thank you very much. It's been a pleasure to join you both today. 

David Ricketts 1:06:33  
Thanks JB's really enjoyed it. Thank you. 

JB Beckett  1:06:34  
Please don't forget to like and share and subscribe you know, click the subscribe button. A new podcast every two weeks with a new guest. Stay tuned. 

Big thanks to you, dear listener for tuning in. Brought to you by my sponsor, Allianz Global Investors and a warm thanks to today's guest. Legally, I am compelled to remind everyone that all views of this podcast are of course independent and do not belong to any affiliation or organisation. Just in case that was in any doubt. Tune in for the next podcast every two weeks from

Computer  1:07:11  
 ...the new fund order. 

JB Beckett  1:07:13  
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Transcribed by https://otter.ai

Introduction to Panel
Owen Walker
David Ricketts
Role of the Media
Key Person Risk
Cultural Duality?
A Strategic Flaw?
Built on a Lie?
Liquidity Flaw?
Buy Lists and Distributors
Lessons for Allocators
Size, Stars & Supertankers
Litigation, ACDs and Duty of Care
Rapid Fire Round