See, I told you the 10% drop notes would be going out. I’m like the seer of seers; the prognosticator of prognosticators. And I never drive angry.

(10 house points if you get the reference).

Anyway, everything is unimaginably unpleasant and even Scotland’s win at the weekend gave only temporary respite. So I think we should talk about something nice instead. I can’t think of anything nice, so we’ll have to settle for interesting, on the understanding that we’re using that term loosely.

Terry Smith, the not-Neil-Woodford Fundsmith star manager, has had a pop at platforms for ‘fuelling the illusion of fund liquidity. His contention is that it’s perfectly fine for open-ended funds to hold illiquid assets, as long as no-one expects to be able to access their money on demand. Platforms, in Terry’s view, give clients unrealistic expectations on liquidity to the extent that it’s hard to get a fund listed if it’s not daily dealing.

So a fund manager has a moan about not being able to do what he wants when he wants it; what else is new? But in fact he may have a point.

The strike against open-ended funds for holding illiquid assets like property or early-stage biotech firms is that the fund manager can’t control subscriptions and redemptions, so is forced to ramp up cash or sell assets at potentially inopportune moments. Meanwhile, her cousin over at the closed-ended shop is happily chilling and playing a little Nintendo while shareholders in her investment trust sell shares to each other. She may or may not be a bit unhappy about discounts, but that’s a different story.

That sounds fair, and something that retail investors who most likely depend on their investments should consider (or the advisers who serve them should). There is also a further issue around liquidity – the pooled nominee nature of platform assets means the fund manager has little idea who owns or controls the flows. As a result, her line of sight on liquidity requirements is reduced heavily, which makes it hard to plan and can lead to tricky situations from time to time. So Terry isn’t wrong that there is something to think about here.

But if an investor is fully apprised of the investment strategy of a fund and is happy that it may only trade (say) once a month, then maybe the open ended vehicle isn’t so bad after all.

Platforms in this case are simply amplifiers of retail investor demand – that is to say for daily-dealing, liquid, transparent investments. Terry, Nick, Neil and all the rest are perfectly capable of doing those. They’re also perfectly capable of doing the other thing. There are plenty of platforms who can cope with non-daily dealing funds with variable liquidity. They’re used by non-retail investors and are perfectly suited to their task.

The issue here is – PROD alert – target market suitability. The mechanisms to match a vehicle to an investor target market profile exist already, and the regulation is in place to enable – and actually to demand – that that matching takes place. Whether that matches what a particular fund manager wants to do on a particular day – and whether it gives them the profile and the retail flow they desire – is neither here nor there.


  • It does look like remote working and working from home are going to be more of a thing for the next wee while. If you’re thinking about doing so, Richard Allum of The Paraplanners is talking all kinds of sense here.
  • We launched our annual guides to direct investing in ISAs yesterday. We do this once a year, and we don’t make any money from them; they’re just there to help in their own wee way. We don’t even ask for email addresses – but if anyone finds them useful and is moved to show appreciation our Soundcloud is here. No, that’s not true. We would like donations to our house charity, Samaritans. There’s a getting started one and an ISA pricing one, both right here.
  • Aberdeen Standard is trialling its online advice capability; this is one of the hybrid offerings where people who fall out the journey can speak to a real adviser on the phone. Interestingly it’s targeting at-retirement – an area which relatively few existing digital advice propositions have gone near.
  • You absolutely should read this truly remarkable piece from Natalie Holt about being the first female editor of Money Marketing.
  • A platform highheidyin with impressive facial hair suggested to me that we should offer up slots for the music choice on a sponsored basis, at £50 a shot with that money donated to Samaritans. I quite like that idea. Let me know if you’d be up for it. I’d be polite about your choice. Unless it’s Coldplay. Or Sheeran. Or Mumford.
  • But until then, we all need something to believe in. So here’s Something To Believe In by King Creosote, which is part of the From Scotland With Love soundtrack. I saw him and his band do this live on Saturday night, and it was spine-tingling. Headphones on for this one.

See you next week, when I suppose we’ll have to cover the Budget.

Remember, Happy Birthday twice and don’t touch the door handle on the way out.