Just who do you choose for your investments?

by Stuart Barrett

I have been reading and listening with interest to both market commentators and investor reactions to the troubles that Neil Woodford has encountered in recent weeks.

In case you haven’t been following this story, Neil Woodford (with the support of others) has made investment decisions within his flagship fund “Woodford Equity Income” that, to give you the abbreviated version, has led to him having to suspend the Fund.

This means that any investor at this point in time, and until the suspension is lifted, is unable to buy into or sell out of the fund while the suspension is in place.

It is rare that these situations arise, but it does highlight how important it is to understand where your money is being invested and to fully appreciate the inherent risks to that investment.

Historically, Mr Woodford has been a well-respected Investment Fund Manager who has achieved outstanding results in investment performance and just maybe this has then translated into an over confidence by investors and key Industry influencers alike.

Unfortunately, some investors have made personal selections without seeking advice and are led by suggestions placed before them to consider. Further and in some instances, they have also chosen to ignore the fundamentals of investments:

  • Understanding investment risk.
  • Not overexposing to one specific “asset class”. For example: UK Equity Income
  • Not lacking a rounded diversification within their investment portfolio.
  • Maintaining adequate liquidity, so that when the extraordinary happens, they are not being faced with hard decisions and have the ability to ride out the storm.

As clients of Prosperity and as part of our fact-finding meetings with you, the solutions we present and recommend to you will always incorporate these fundamentals. There is of course no guarantee that investments will always increase as the value of investments can go up or down. However, the essence of what is important is about having the right strategy in place to accommodate the unforeseen either within your own circumstances, or from outside of your control. So, going back to the original question “Who do you choose for your investments?” The answer to this is about seeking independent advice that understands investment fundamentals while still firmly placing the clients at the very heart of everything they do.