Page 4 - DIY Investor Magazine - Issue 23

‘ONE BAD APPLE.......’
Apologies to anyone that has just had a personal trauma reawakened by the memory of Little Jimmy’s ‘Long Haired Lover’ but
as the Woodford saga lurches to an inglorious conclusion, throughout this issue we consider the ‘lessons will be learned’ phase; how the industry and the regulator can rebuild trust and convince
investors that this was a rogue fund manager rather than a symptom of a general malaise.
With Woodford’s eponymous Equity Income Fund now divided between ‘good’ and ‘bad’ assets, it will start to be wound up in January and the company will almost certainly close down; the likelihood is that many that can ill-afford it will lose a potentially significant portion of their investment.
The ripples will spread far and wide – FCA has started a process to protect investors in open-ended funds investing in hard-to-sell assets, which could have far- reaching consequences for the future of daily traded investment funds.
The role of gatekeepers and ‘best-buy’ lists will also be closely scrutinised with far greater transparency demanded.
The steps required of individual investors speaks to
the very heart of DIY Investor; we believe that financial self-reliance will necessarily replace state support and that improved financial literacy and access to timely and accurate information are key to making good investment decisions.
Some of the lessons to be heeded may sound so hackneyed as to set eyes rolling, yet ‘not putting
all your eggs in one basket’, ‘investing for the long term’ ‘understanding what you’re invested in’ and ‘understanding risk’ are fundamental to a successful investment strategy.
However tempting it is to metaphorically throw your investing underwear at a rock-star fund manager, logic dictates that at some point the hose pipe will be removed from the cat suit and the fizz will go flat.
And with Brexit imminent, or not, Trump justifying his ‘betrayal’ of the Kurds because of their lack of support in Normandy (!) and then sticking his chin out at NATO ally Turkey, has there ever been a greater need for solid, reassuring content that confirms your investments are in safe hands?
In this issue Miton tells us about ‘Diversifying for good and growing income opportunities’ and Aberdeen Standard is ‘Building resilience into a portfolio’; Janus Henderson explains ‘Why cash flow keeps you on the straight and narrow’ and Ediston says there’s plenty of life in retail parks.
Gravis heralds the clean energy revolution, JP Morgan brings us ‘Investing in Britain: Beyond the FTSE 100’ and Polar Capital says ‘Cloud computing: A business necessity’.
Elsewhere, as well as much more besides, we sadly bid farewell to the Great British Trade Off, as Humbug taps out and concedes to Fagin; we welcome The Nimble Investor and also hear more from Saltydog Investor and IT Investor.
It is this combination of content from industry professionals, experienced commentators and those at the coal face trading their own money that we believe is key to empowering the ever-growing community of DIY investors.
The battle to convince people to transition from being spenders to savers, and ultimately to become investors is hard won. The benefits of a long term, diversified investment strategy, with dividends reinvested and compounded are clear for all to see; progress is being made to democratise investment, and that momentum must be maintained despite recent ‘events, dear boy’.
Woodford is not the only scandal – LC&F is another – but it is so important that it is well managed in all quarters;
if disillusioned investors simply throw in the towel, the negative impact of a supercilious and profligate ‘bad apple’ could damage the life chances of a very large number of people.
As ever we’d love to hear from you – ask@diyinvestor.net
DIY Investor Magazine | Oct 2019 4