Rushing for the exit: Who is really responsible for redemptions?

LEADER

Two of the biggest news stories last week focused on that most unwanted of events for the investment industry: major client redemptions. The source of those redemptions deserves some scrutiny.

First and foremost is the flight from emerging markets, undoubtedly the big macroeconomic trend of 2014 so far. Second is the ongoing saga of outflows from Neil Woodford’s Invesco Perpetual income funds ahead of his own exit in April. In both cases, retail investors and advisers have been urged not to make rash decisions, often in the kind of hectoring tone which implies these investors are the flightiest, most panicky of them all. So it is perhaps notable that both scenarios have, in fact, seen institutional outflows which are proportionally equal to – or worse – than those of the...