Sean O'Grady: Fund managers watched in horror as disaster grew

The City

Almost everyone with a pension plan or a typical investment in a broad-based investment trust or unit trust would have been hit hard if BP had collapsed, as some feared.

As one of the most solid of blue chip companies, BP was favoured by many managers as a bedrock for their funds, much like Toyota and big banks such as RBS, which have also had their share of bad luck.

But the long-term effects may be minimal. Only about 1.5 per cent of UK pension funds are invested in BP, and the loss would only be realised if they sold the shares. The loss of dividend income was painful – about £1 in every £7 from UK shares comes from BP – but again most funds have sources of income other than shares (such as the interest on government securities and corporate bonds).

At a time of low rates and returns on investments, the BP saga was certainly unwelcome and something like a 0.5 per cent cut in pension fund valuation would not be insignificant; but it does need to be kept in perspective. Besides, some fund managers will have made money by buying BP at the bottom. It does make one wonder about the nature of a "blue chip investment".