This is Caitlin.
In August, Caitlin’s friends at HM Treasury gave her a gift of £250 to invest in the future. Perhaps, she thought, with prudent investment this sum may one day grow enough to fund a term or two at a former polytechnic, or pay for a second-hand Toyota.
But there was a problem. Though Caitlin was only six months old, she could already see that the stock market was not yet fully reflecting the implications of an unravelling credit bubble and the deepening global recession.
So she chose to invest her £250 in the Active Capital Trust from F&C Asset Management. Its website promised to spread risk while still hunting out hidden gems, shaking up underperforming management and tailoring its investment style to reflect the rapidly changing market conditions. This all seemed ideal strategy for the turbulent times.
The fund’s manager, she assumed, would have a similar clarity of view regarding the economy as a six month old. So Caitlin was surprised to see, in a cursory year-end update, that the entrusted manager had not been able to navigate the turbulence terribly successfully.
Caitlin calculated on her Fisher Price calculator that the she had lost 65 per cent of her investment in just over four months. This compared rather unfavourably to declines of 17 per cent and 23 per cent for the FTSE 100 and FTSE Smallcap indices respectively, and left a sizable dent in her dreams of a second hand Toyota.
Browsing the accompanying literature, Caitlin was surprised to find no reference whatsoever to the sorry performance of her investment. There was plenty of encouragement to top up the fund, and the surprise news that she had been opted out of receiving all future annual report and accounts, but no sign whatsoever of an apology.
This, she concluded, showed not much respect for her future dreams, or for the intentions of her friends at HM Treasury. She decided never to trust a fund manager again.
It was a hard lesson for Caitlin, but in the end a valuable one.