When to Give Up On An Underperforming Fund

Investors often have to put up with periods of underperformance, but how long do you wait for a fund manager to turn the ship around?

Cherry Reynard 9 July, 2019 | 3:37PM

Warning signs

The very essence of active investing is that market sometimes gets it wrong. The active investor spots the anomaly and waits until the market catches up, revaluing the shares at a higher price. But how long should investors wait for that to happen?

The question is pertinent today in the wake of the problems at Woodford Investment Management. Neil Woodford has long defended the holdings in his portfolio: “Throughout financial market history, there have been occasions in which markets have become completely detached from valuation reality. We believe we are in one of these periods right now, with bubble-like characteristics increasingly evident and adding considerable risk to the investment backdrop,” he says.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
SVS Albion Olim UK Equity Inc133.10 GBP-0.22

About Author

Cherry Reynard

Cherry Reynard  is a financial journalist writing for Morningstar.co.uk.

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