Will Neil Woodford’s woes challenge the iconography of the ‘star’ fund manager?

There is an inevitable question about Woodford: was he really brilliant, or was he, for most of his career, just lucky?

If you are likely to need cash fast, then make sure that your investments can be cashed in quickly. That goes for Woodford, but it also goes for the rest of us (Rex)

Beware star fund managers. That is the first lesson from the freezing of Neil Woodford’s flagship investment fund. The second is that liquidity matters in investment, and that some holdings – typically in smaller companies – cannot be turned into cash in a hurry. And the third is that all investors should spread their risks.

What has happened is simply that some months of poor performance have encouraged investors to take their money out of his fund, and Woodford has not been able to sell its holdings fast enough to let them have their cash. Result: the underlying investments are still there and may go up or down, but meanwhile you cannot put money into the fund and you can’t take it out.

Woodford is one of the big names in London investment. He worked for Invesco for many years, produced very good returns for investors, and then set up on his own. Money flooded in: at its peak the flagship LF Woodford Equity Income Fund held more than £10bn of assets; it now checks in at about £4bn.