This is a shock for many investors. A star of the sector is having what has been described as a “dark and terrible moment”. Some will point to this case as proof that paying charges to a “star” fund manager to try beat the market is a waste of time and that, instead, people should invest in a passive tracker fund.
Warren Buffett, the world’s richest investor, in a letter he wrote to his wife advising her how to invest after his death, suggested putting almost everything into “a very low-cost S&P 500 index fund”. Others, however, argue that active investment can be successful, but everyone needs to do their homework. That means not investing in one company or one type of investment, nor with one individual – however diversified their fund might be.
“It all goes back to the old age of having your eggs in different baskets,” he says.