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What was in the weekend’s papers? (29/03/2021)

Category: News

Neil Woodford scandal: What fund bosses knew but never told us

The Woodford scandal continues to unfold. The latest comes from The Sunday Timeswhich says the firm overseeing the fund, Link Fund Solutions, knew of its risky holdings but did not warn investors of such risks.

Several requests of information were sent by Hargreaves Lansdown, who reportedly raised questions about the shares held in Woodford’s failed fund. These were turned down or met with reassurance from the man himself, telling the platform company the risks were being overblown.

Both Link and Woodford say they abided by all rules and had no legal obligation to pass on this information. Of the 291,500 HL customers who had £1.7bn invested in Woodford, 133,769 were invested directly in the main fund and held an average of £8,152.

This once again shows the value in looking under the bonnet when investing.

New breed of young investors are taking big risks, warns FCA

The Guardian covers how a new breed of thrill-seeking young investors are taking big financial risks when investing in cryptocurrencies, foreign exchange trading and other high-risk products. This is according to a warning from the City regulator.

These younger and more diverse DIY investors were making riskier choices because they liked the challenge and the status it gave them. They were often swayed by social media.

The regulator’s findings come against a backdrop of high-profile investment dramas and scandals, such as the rise and fall of GameStop to the recent high-profile collapse of Football Index, the sports gambling platform.

Sheldon Mills, the executive director of consumer and competition at the FCA, said: “We are worried that some investors are being tempted … into buying higher-risk products that are very unlikely to be suitable for them.”

The report uncovered a “striking” lack of awareness or genuine belief in the hazards associated with investing. 45% of those questioned did not view “losing some money” as a potential risk.

You can find masses of information on the internet when going it alone when investing. This shows some sources of information are no better than a tip from someone in the pub and expert advice is key.

Want to know if a fund is ethical? Behind the virtuous labels there’s a Wild West world

In this article, the Mail On Sunday explores ESG fund research conducted exclusively for it by SCM Direct. It notes the success of ESG-labelled funds in recent years while criticising their holdings.

However, when the article picks an example to assess the “sustainability” of funds, it says that many different factors affect the ESG rating of a fund, from its environmental impact to supplier ethics and boardroom diversity. The article goes on to explain how some companies get favourable ESG ratings even though some investors would “baulk” at their inclusion in portfolios.

Well-known drinks suppliers Diageo and Heineken are judged low and medium risk by ESG researcher Sustainalytics, the Mail on Sunday adds. SCM Direct’s Alan Miller says it’s “baffling”.

This once again shows the value in looking under the bonnet when investing.

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