Interactive Investor

Neil Woodford fund collapse: the financial and emotional impact

13th October 2021 13:40

Jemma Jackson from interactive investor

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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.”

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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