Do funds ever lose money over time?

[Deleted User]

coyrls said:

Most people's individual share holdings are worth far less than the companies in which they are invested.  I can't see how the fact that funds are worth far less than the majority of companies in which they are invested has any relevance to anything and certainly no relevance to the relative risk of holding individual shares versus funds.

If you're invested in a fund worth c £10billion -c Woodford at its peak - there is more jeopardy, more risk to the vision of a maverick 

coyrls

ZingPowZing said:

coyrls said:

Most people's individual share holdings are worth far less than the companies in which they are invested.  I can't see how the fact that funds are worth far less than the majority of companies in which they are invested has any relevance to anything and certainly no relevance to the relative risk of holding individual shares versus funds.

If you're invested in a fund worth c £10billion -c Woodford at its peak - there is more jeopardy, more risk to the vision of a maverick 

But what does that have to do with the fund being worth far less than the majority of companies in which it is invested?  In fact, one of the problems with Woodford was the large stakes he took in small companies which, because he was such a large shareholder, were illiquid.

masonic

ZingPowZing said:

coyrls said:

Most people's individual share holdings are worth far less than the companies in which they are invested.  I can't see how the fact that funds are worth far less than the majority of companies in which they are invested has any relevance to anything and certainly no relevance to the relative risk of holding individual shares versus funds.

If you're invested in a fund worth c £10billion -c Woodford at its peak - there is more jeopardy, more risk to the vision of a maverick 

Funds holding a load of unquoted guff can be avoided, and that sort of manager risk can be avoided by going passive.

dunroving

Google Amerindo.

dunroving

dunroving said:

Google Amerindo.

(I'm using Google as a verb, not as an example o an equity that has gone down, BTW).

[Deleted User]

Google Amerindo funds .. Qed..

coyrls

ZingPowZing said:

Google Amerindo funds .. Qed..

Yes, a good example of funds losing value.  I can't see how this is relevant to your suggestion that your money is less safe in funds than in individual shares because "most funds are worth far less than the majority of companies in which they are invested".  The reason funds lose value is because the shares in which they are invested lose value, not because they are worth far less than the majority of companies in which they are invested.

masonic

ZingPowZing said:

Google Amerindo funds .. Qed..

No surprises that a dotcom fund launched just before the dotcom crash did badly. It also contained a load of unquoted guff. Doesn't look quite as bad as Woodford's Trust, although that's only down about 70% now so is faring better so far. It's the investment style rather than the investment vehicle that is the problem.

[Deleted User]

coyrls said:

ZingPowZing said:

Google Amerindo funds .. Qed..

Yes, a good example of funds losing value.  I can't see how this is relevant to your suggestion that your money is less safe in funds than in individual shares because "most funds are worth far less than the majority of companies in which they are invested".  The reason funds lose value is because the shares in which they are invested lose value, not because they are worth far less than the majority of companies in which they are invested.

Because in some cases funds lever their influence on the companies in which they are invested and, because fund oversight is pretty weak, see maverick fund managers such as Neil Woodford (backed by Hargreaves Lansdown) deviate from the proposition the fund offers to blind investors. 

masonic

coyrls said:

ZingPowZing said:

Google Amerindo funds .. Qed..

Yes, a good example of funds losing value.  I can't see how this is relevant to your suggestion that your money is less safe in funds than in individual shares because "most funds are worth far less than the majority of companies in which they are invested".  The reason funds lose value is because the shares in which they are invested lose value, not because they are worth far less than the majority of companies in which they are invested.

Investment trusts often are worth less than the companies they are invested in, as they often trade at a discount to NAV, said discounts can widen significantly when the assets are falling in value or the management team falls out of favour. Funds containing illiquid assets can also trade on stale/unrealistic valuations, so it is something that investors should be aware of. While this can be an issue if you want to sell, it can also be an advantage if you want to buy, or you want to benefit from an income stream for a lower capital investment. Open ended funds and ETFs tend not to suffer from the former problem, but can suffer from the latter if invested in illiquid assets. These are risks that can be avoided by picking mainstream investments with sufficient diversification - it is impractical for most people to directly hold enough shares to replicate such a strategy without funds.