What Neil Woodford’s debacle can teach us about liquidity

Star fund manager Neil Woodford got into trouble with small, illiquid assets. Scott Longley explains what investors should look out for when sizing up smaller companies.

Patisserie Valerie shop © Dan Kitwood/Getty Images

Patisserie Valerie is Aim's latest unexpected blow-up
(Image credit: Patisserie Valerie shop © Dan Kitwood/Getty Images)

Of all the issues highlighted by the implosion of the Woodford Equity Income Fund, liquidity is perhaps the most worrying. No one likes to feel they have been trapped by events outside their control. In the Neil Woodford saga there are two conflated issues. Firstly, the liquidity of the fund; secondly, the liquidity of some of the underlying firms. It is in the latter respect that some clarification of terms would be a good idea.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Explore More