fund vs sector ce July 2019
idity trustnet . com dropped Fundsmith Equity from its recommended fund list , citing concerns about its size ( it was £ 19bn at the time ). Since then , its assets have grown to £ 27.9bn , buoyed by returns of 40.4 %, compared with 37.2 % from the IA Global sector . This raises an important question : is there a danger that fund selectors are taking an overly cautious approach to liquidity , and therefore risk missing out on opportunities in top-performing strategies ?
fund vs sector ce July 2019
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Apples with pears Nathan Sweeney , deputy chief investment officer of multi-asset at Marlborough , suggests this could well be the case . “ Since the Woodford debacle , the liquidity profile of some equity funds has been called into question . This is unfair , as equities are one of the most liquid asset classes you can find . You rarely hear of any liquidity issues in equity funds ,” he says . In his opinion , there is not necessarily a correlation between fund size and illiquidity : he says it is more important to focus on what the fund invests in . If it holds largeor mega-cap stocks , then investors shouldn ’ t be too concerned . Woodford ran into trouble when he moved away from these areas . “ Yes , it was a big fund , but the illiquidity was caused by its investments in unlisted companies , akin to private equity ,” he adds . Fundsmith is not the only victim of the renewed focus on liquidity . Back in November 2019 , ratings agency Square Mile Investment Consulting & Research downgraded the then £ 6.7bn LF Lindsell Train
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