If You Can’t Touch It, You Don’t Own It

If You Can’t Touch It, You Don’t Own It

The pending Brexit has, not surprisingly, caused a shakeup in the investment world, particularly in the UK. Of particular note is that, r ecently, asset management firms in Britain began refusing their clients the right to cash out of their mutual funds. Of the £ 35B invested in such funds, just under £20B has been affected.

For those readers who live in the UK, or are invested in UK mutual funds, this is cause for conern.

The trouble is that quite a few of them made the request at about the same time. Of course the management firms don’t keep enough money on hand to pay them all off, so, rather than spend all their money paying off as many clients as possible, then going out of business due to a lack of liquidity, they simply announce a freeze on redemptions.

Those who are outraged may read the fine print of their contracts and find that the fund managers have every right to halt redemptions, should “extraordinary circumstances” occur. Who defines “extraordinary circumstances?” – The fund managers.

Take account of all your deposits and investments and determine what percentage of them you do truly own. If you decide that that percentage is too low for you to accept, you may wish to implement some changes… before others do it for you.

Sprott Money

Leave a Comment