It’s been quite shocking to read about how trading on the Woodford Equity Income Fund has been suspended, meaning that many people are unable to sell and withdraw their money.
Neil Woodford took this drastic action as millions of pounds began pouring out of his funds as his previously loyal investors tried to leave what appeared to be a sinking ship.
Following the Herd
Back in 2014, I talked about how I was caught up by all the wave of publicity and invested in Woodford’s new fund.
He was like a rock star in the UK investing world, one of the few to become a household name.
A year later, I wrote that I was still happy with my investment as I saw some decent gains.
Fortunately for me, and not due to any kind of special investing foresight or premonition, I sold my entire holding of the fund early 2018 (for a profit) as I was switching the bulk of my actively managed funds into ETFs as part of a portfolio re-balancing exercise.
I pity the folk who have remained invested and who now cannot access their funds, so yes, I dodged a bullet there.
But all is not completely rosy with my own investments as I’m in a situation where I too have some funds which I cannot get access to right now (and I’m not talking pensions).
Back in 2016, I thought I’d go into property crowdfunding. It was something new, investments linked to something tangible, it looked like a good model, though I acknowledged then that there were risks.
So, I invested in Property Moose and all seemed great. I was receiving small regular ‘rental’ amounts for the properties I’d invested in, all looked tickety-boo.
In Feb 2018, the secondary market was suspended. Something was up.
In a nutshell, Property Moose’s business model wasn’t working. The model whereby investors purchased shares in each property and were paid monthly dividends was unsustainable and ultimately discontinued.
The directors decided that the best possible long-term solution was to move all properties into a single PLC portfolio. This solution was voted on by investors and received a 99.48% majority.
All properties have been revalued and sold off to UK Diversified Property plc.
All investors who opted to stay invested will receive allocations of shares within the new company. The share price will be valued against the valuations, costs, and revenues generated by the portfolio of properties.
This company intends to be listed on the London Stock Exchange and will probably be like a REIT (real estate investment trust).
And this is where I’m at now, I can see that I haven’t lost my money (so far), I just can’t cash out and neither am I receiving any of the rental income from the properties.
I knew this was going to be a risk, which is why the money I’d invested came purely from my matched betting profits.
Yes, I was effectively gambling with proceeds from gambling in a way, but it’s still annoying that I can’t just walk away from this investment with my cash.
It’s not a huge amount, just under £2k, which if I lose won’t be massively detrimental to my wealth/portfolio.
Am just massively annoyed at myself if anything.
What’s happened to Property Moose might probably be an exception, other similar types of investment companies have been successful but I won’t be investing in anything like this again.
Live and learn.