by Nick Britton
Nick Britton
As a general election campaign gets under way, could the investment industry finally be moving on from talking about Woodford?
Much as some might wish for a positive answer to that question, my sense is that it’s still too soon. Although the main Equity Income Fund is winding up and the Patient Capital Trust will soon be under new management, the repercussions of the collapse of Woodford Investment Management will be felt for some time.
I think one important reason that we can’t move on from Woodford is that we still haven’t answered one simple question – a blazingly obvious question. How can we stop it happening again? In the absence of any very convincing action by the regulator, the AIC has put forward its solution. Some countries ban open-ended funds from investing in illiquid assets. That’s not our proposal. Instead, we think open-ended funds should offer what we call 'reliable redemption'. You can read more about why we think this in Ian Sayers’ article this month.
Of course, reliable redemption is a proposed regulatory solution. It’s a simpler matter for the individual investor, adviser or asset manager, who can simply choose not to hold illiquid assets in an open-ended structure at all.
It’s a message that wealth managers are already heeding, with the majority of property exposure in DFMs’ model portfolios being via closed-ended funds. Outflows from open-ended funds that invest in UK property in recent months, which have forced asset sales to boost cash buffers, have hammered home the point that daily dealing is not a sensible proposition for these funds. Managers of several closed-ended property funds have been able to pick up assets on the cheap. Depending on the outcome of the election and subsequent political developments, another round of suspensions could be on the cards. We develop these themes in our piece this month on the outlook for UK Property, in which we hear from three managers of property investment companies.
I’m looking forward to seeing some of you in Guildford and Bristol for our seminars on investment trusts in financial planning. You can still book for these, if you haven’t already. Our next big outing will be in January, when we join forces with Intelligent Partnership to support their VCT Showcases in Exeter, Knutsford and London. These are events that allow advisers to compare the offerings of VCT managers in a standardised format, including a three-minute ‘elevator pitch’. You can find out more and book through Intelligent Partnership.
Financial advisers discuss how and why they use investment companies
Finally, do take a moment to watch our video above in which advisers talk about why they use investment companies. They may be preaching to the converted in your case, but they provide a good reminder of why closed-ended funds should be part of every adviser’s tool kit.
Nick Britton, Head of Intermediary Communications, AIC
27 November Investment trusts in financial planning (Guildford) This AIC seminar at the Holiday Inn Guildford explores the ways in which investment trusts are relevant to financial planners today. Speakers include Jacqueline Lockie, the CISI’s head of financial planning. 2.25 hours of CPD. Full details.
28 November Investment trusts in financial planning (Bristol) This AIC seminar at De Vere Tortworth Court explores the ways in which investment trusts are relevant to financial planners today. Speakers include Jacqueline Lockie, the CISI’s head of financial planning. 2.25 hours of CPD. Full details.
7 January 2020 VCT Showcase (Exeter) Organised by Intelligent Partnership, VCT Showcase offers the opportunity to hear from several VCT managers at one event. There’ll be three-minute elevator pitches followed by 15-minute presentations and a panel discussion hosted by Nick Britton of the AIC. Find out more.
15 January 2020 VCT Showcase (London) Organised by Intelligent Partnership, VCT Showcase offers the opportunity to hear from several VCT managers at one event. There’ll be three-minute elevator pitches followed by 15-minute presentations and a panel discussion hosted by Nick Britton of the AIC. Find out more.
21 January 2020 VCT Showcase (Knutsford, Cheshire) Organised by Intelligent Partnership, VCT Showcase offers the opportunity to hear from several VCT managers at one event. There’ll be three-minute elevator pitches followed by 15-minute presentations and a panel discussion hosted by Nick Britton of the AIC. Find out more.