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Mark Gilbert

Sometimes Investors Should Just Run for the Hills

Some believe that patience is a virtue when dealing with a failing active fund manager. The data suggest the opposite.

Patience please.

Patience please.

Photographer: Troika / Alamy Stock Photo/https://www.alamy.com

If you’re an investor whose money is with a benchmark-lagging active fund manager (and that’s the most likely performance scenario in this area of money management) should you hold or fold? Often the answer is to bail out as fast as you can, as customers of Neil Woodford have learned to their cost.

Unsurprisingly Cambridge Associates LLC, a company that earns its crust managing funds and advising investors, warns that hasty withdrawals may mean their clients missing out on potential profits. Less predictably, Cambridge’s own data demolishes its arguments for sticking with faltering stock-pickers.