Magazine
Latest Issue

Economics and investment: the new liquidity trap

Why are open-ended investment funds allowed to promise daily dealing, when the assets they own can’t be sold this quickly?

Liquidity. It’s a fancy word for investors’ most basic instinct: to pull their money out when they like. It was this desire—and the inability of Woodford Investment Management (WIM) to satisfy it—that shattered the reputation of Neil Woodford, once the top name among Britain’s private investors.

Faced with an avalanche of requests to withdraw funds, on 3rd June WIM was forced to suspend redemptions, notably from its flagship Equity Income fund. This left £3.7bn stranded, with no indication how long the lock-up might last. Woodford had put a lot of…

Register today to continue reading

You’ve hit your limit of three articles in the last 30 days. To get seven more, simply enter your email address below.

You’ll also receive our free e-book Prospect’s Top Thinkers 2020 and our newsletter with the best new writing on politics, economics, literature and the arts.

Prospect may process your personal information for our legitimate business purposes, to provide you with newsletters, subscription offers and other relevant information.

Click here to learn more about these purposes and how we use your data. You will be able to opt-out of further contact on the next page and in all our communications.

We want to hear what you think about this article. Submit a letter to letters@prospect-magazine.co.uk

More From Prospect