Henderson duo hit as HMV falls into administration

Why has a 'cautious managed' fund invested in HMV. It has been obvious that its end was near for a long time. I feel for the staff but the firm was hopelessly uncompetitive.

@ Keith Cobby > +1 Agree > It is rather like investing in carbon paper or typewriter ribbon manufacturers years ago because their price looked cheap.

Fund managers have a duty to think to the future before they rush to invest just because the share price is at a historic low. Some companies adapt, some don't. HMV were too late. The internet will cause more casualties yet in the High Street. Any retailer is not a low risk investment now.

C Mgd indeed.....do I hear the FSA telling investors to complain then, as this was clearly High Risk!, even tho part of a diversified portfolio!!!!!!

Surely it is not as simple as seeing HMV failing and question why it was part of a cautious managed fund. There are many other aspects to consider, which includes price paid and dividends received into the fund. Then there is the reasoning behind their decision, such as the perception that HMRC would be going after HMV's cheap online rivals, which may have made HMV more competitive.

A number of years ago, I remember M&S were in dire straits and the share price was incredibly cheap. I, like many, thought it was the end... But look where they are now! Does that mean I would have bought into HMV, No, but I don't have millions of pounds of others money with which to make that gamble...

I recently spotted an album in our local discount music store, priced at what seemed to be a very reasonable £4. I then found the same item online for 1p which, I think, tells us pretty loud and clear just what high street retailers are up against and have been for years. Much the younger generation doesn't even buy CD's any more.

A managed fund historically invested in funds within the same investment house. I always felt there was a tendancy for firms to use their managed funds to prop up some of their individual funds that were experiencing large redemptions. If this is the case with this Hendersons cautious fund, then it is unsurprising that some holding in their fledgling fund was made. Cautious means different things to different people, however if a cautious fund is invested in 60%+ loan stock, to comply with a peer group classification, then it will need to find some more exciting stock for the remaining 40% in order to try to get itself up the quartile rankings.

I do my upmost to avoid all managed funds for my clients as I cannot look at the overall diversification of their portfolio, as this type of investment is supposed to diversify internally. They are not a one stop shop typically sold to clients with small sums to invest as their longer term performance against diversified portfolios that alter the geographic and asset class allocations occasionally, but always remaining personal to the client's needs.

So am I surprised that the Hendersons Cautious Managed fund had 0.7% invested in HMV? No. It rather looks like the Cautious Managed fund had a 10% holding in the Fledgling fund. so much for speculation, onwards and upwards!

@ Hickky

Whereas that used to be my approach too, the FOS didn't agree when they found for a client who l had invested for on a similar basis. It was the only claim against me, and it overturned the FSA's decision.

It wasn't helped by the adjudicator only having English as a second or third language and the fact that the client had been approached by an FSA who worked for a firm of ambulance chasers who re-wrote the claim for her even though of course they weren't there..

Whereas your reasoning is sound, it cost me plenty.

Don't risk it

What's a CD?

Claealy too much time on yr hands now yr not an RI anymore!

See http://en.wikipedia.org/wiki/Compact_Disc

@wildbill

What's an RI?