info@whinneyinsurance.co.uk     0208 659 5038
Whinney Insurance Brokers
  • Get a quote
  • Commercial
    • Commercial Insurance
    • Commercial Crime Insurance
    • Cyber Insurance
    • Medical Indemnity
    • Medical Malpractice
    • Private Medical
    • Professional Indemnity
    • Start Up Businesses
    • Landlords Insurance
  • Financial Services
    • Asset Managers
    • Financial Institutions
    • Financial Technology (FinTech)
    • Fund Managers
    • IFAs and Financial Advisors
    • Mortgage Brokers
  • IT & Technology
    • IT Companies
    • Computer Programmers
    • Cyber Insurance
    • Games Developers
    • IT Analysts
    • IT Contractors
    • Software Companies
    • Software Developers
    • Web Design
  • Marketing & Media
    • Marketing Companies
    • Advertising Agencies
    • Broadcasters
    • Copywriters
    • Digital Marketing
    • Marketing Consultants
    • Publishers
    • Public Relations
    • Sales Promotion
  • Photography & Film
    • BAPLA members
    • Commercial Film Producers
    • Film Makers
    • Photographers
    • Picture Libraries
    • Production Companies
    • Production Indemnity Insurance
    • Production Insurance
    • Production Studio Insurance
    • Stills Producers
    • Videographers
  • News
  • About
  • Contact

Fund Managers & Insurance: More risks facing fund managers

  • Home
  • Blog
  • Fund Managers & Insurance: More risks facing fund managers
Fund Managers & Insurance: More risks facing fund managers

Fund Managers & Insurance: More risks facing fund managers

What happens when you haven’t invested as promised 

When a fund manager doesn’t invest money in line with the investment strategy published or the agreed investment mandate, there could be a claim. These are certainly less frequent than those involving administrative errors but can still result in an unhappy client. 

The truth is, fund managers are usually very good at doing what they say they will do and following the investment prospectus. While we haven’t seen many of these claims, there have been occasions where rogue employees in fund management teams have taken it upon themselves to increase a fund’s portfolio allocation in a foreign exchange, and the volatility of the market has caused a short-term loss and drop in a fund’s value. 

As with administrative mistakes, market volatility can compound a situation and work against fund managers.

Insurance for fund managers is harder to obtain now than it has been in recent years.  Underwriters are all too willing to increase premiums as a result of a number of factors such as:  

  1. Market volatility 
  2. Economic instability 
  3. Horror stories of claims, and the willingness of claims management companies to pursue fund managers

One of the examples often quoted is the fallout from the Woodford fund collapse.

Was this a case of funds not being invested in line with the investment prospectus? Perhaps not, but there are certainly allegations regarding the liquidity of the fund and its ultimate level of risk. Fund managers undoubtedly have their own opinions on the handling of the liquidation of the Woodford flagship fund but from an insurance perspective, there must have been claims (mainly against financial advisors, rather than fund managers). Woodford’s own insurers, whoever they may be, must have had to deal with a huge number of enquiries and claims.  Presumably a total loss for the insurers in question and huge compensation paid to the administrators. 

The power of the press and media on the value of investments and funds cannot be understated. In the Woodford fund case the ‘press effect’ which started with the withdrawal of Kent Council’s support caused a very quick domino effect ultimately resulting in its swift failure.  We have seen the same with unregulated investments such as cryptocurrency. When the media and press blow in one direction the value of such investments can swing more than Jimmy Anderson’s red ball on an overcast morning at Trent Bridge.

The types of funds that suffered greatest losses from Woodford type claims are those that had invested heavily in property. Those property focussed funds have been hit particularly hard during covid, with commercial rents dropping. Such funds naturally have fewer liquid assets, which can create a ‘run’ when lots of investors wish to exit quickly. 

To make matters worse, there is no shortage of vultures circling, rightly or wrongly. With lawyers and claims management companies advertising to previous Woodford investors and encouraging claims to be made against anyone in the investment chain, including advisors. 

Although we continue to see failed funds, they are the exception; 99% of fund managers are very successful. The good news is that claims are avoidable, as long as fund managers follow the agreed investment strategy, learn lessons from past mistakes and of course – remain adequately insured. 


Whinney Insurance are industry experts, we can help protect your business from risk. Fund managers discover how you can stay safe here. Contact us now.


Tags:

Fund management investment Risk

Share This Post

Recent Posts

  • US & Canadian clients and Professional Indemnity March 8, 2022
  • Why financial institutions should consider cyber insurance above all else February 25, 2022
  • Fund Managers & Insurance: More risks facing fund managers February 22, 2022
  • Fund Managers & Insurance: What are the greatest risks facing fund managers?  February 16, 2022
  • Real risk facing software companies (part 1) December 30, 2021

Contact Us

info@whinneyinsurance.co.uk

London
New Derwent House, 69-73 Theobalds Road, London, England, WC1X 8TA

Essex
c/o Haines Watts Colchester, Town Wall House, 4 Balkerne Hill, Colchester CO3 3AD

Legal Statement

Whinney Insurance Brokers is a trading name of Williamson Carson & Co Ltd, which is authorised and regulated by the Financial Conduct Authority. Register Number 146295.

Services

  • Commercial Insurance Products
  • Professional Indemnity
  • Financial Services
  • IT & Technology
  • Marketing & Media
  • Photography & Film Insurance
Whinney Insurance Brokers is a trading name of Williamson Carson & Co Ltd, which is authorised and regulated by the Financial Conduct Authority.Register Number 146295.
  • Privacy Policy
  • Terms of Use
  • Terms of Business
This website uses cookies that provide necessary site functionality and improve your online experience. By continuing to use this website, you agree to the use of cookies.

Our Privacy Statement provides more information about what cookies we use and how you can change them. Accept Reject Read More
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT