Neil Woodford fund collapse: the financial and emotional impact

interactive investor comments on research by the AIC.

Moira O’Neill, Head of Personal Finance, interactive investor, says: “Investing is emotional – and never more so than when it goes wrong. While huge gains can encourage animal spirits, huge losses can put people off investing for life – a double blow for good long-term financial outcomes.

“It’s refreshing to see a trade organisation commissioning bold research on the extent of broken trust following the collapse of the Woodford Equity Income fund, although it would be more refreshing still if it was coming from the open-ended industry.

“Instead, the industry ploughs ahead with the much-mooted Long Term Assets Fund. In a lower-for-longer environment, it makes sense to look to alternative assets, and the investment trust sector doesn’t have all the answers. But we still have reservations about illiquid assets going into an open-ended structure. You can have all the checks and balances, but with the model untested, there is currently more to worry about than get excited about.

“Today’s research is another reminder of the importance of well-governed investment platform rated lists, and the enormous duty of care that investment platforms have to their customers. We continue to believe that flagship rated lists ought to include the entire collective investment universe – from funds, ETFs, through to investment trusts. No structure is perfect, nor has all the answers. Each need to be looked at on their own merits.”