Trading of Neil Woodford’s flagship fund suspended after investor exodus
Investment guru Neil Woodford’s multi-billion-pound equity income fund has blocked holders from pulling out after an exodus of investors.
One of Britain’s highest-profile fund managers, Mr Woodford’s firm said the move had been taken to “protect” investors and reposition the portfolio in a bid to preserve liquidity.
In a statement the company said its appointed authorised corporate director, Link Fund Solutions, would decide when dealing of shares may resume.
The city watchdog said it was in contact with Woodford Investment Management “to ensure that actions undertaken are in the best interests of all the fund’s investors”.
The suspension of dealing, which will remain in place for at least four weeks, has seen the fund dropped from Hargreaves Lansdown’s hallmark Wealth 50 list of favourable funds.
“A significant reduction in fund size jeopardises manager Neil Woodford’s ability to run the fund effectively,” the retail investment leaders said, although it stressed the investor’s “multi-decade track record remains compelling”.
The Woodford Equity Income Fund is the company’s largest, with a reported value of £3.7 billion.
According to the Financial Times, the fund, launched four years ago, was valued at £10.2 billion in May 2017.
Redemptions from the fund were reported to have hit an average of £10 million a day, while a county council is said to have requested the return of around £250 million.
Woodford Investment Management said: “After consideration of all relevant circumstances relating to the Fund’s assets, we have… come to the conclusion it is in the best interests of all investors in the Fund to suspend the issue, cancellation, sale, redemption and transfer of shares in the Fund.
“Following an increased level of redemptions, this period of suspension is intended to protect the investors in the fund by allowing Woodford, as previously communicated to investors, time to reposition the element of the fund’s portfolio invested in unquoted and less liquid stocks, in to more liquid investments.”
Emma Wall, head of investment analysis at Hargreaves Lansdown said: “The suspension follows a period of underperformance and outflows for the Woodford Equity Income Fund.
“We are advocates of long-term investing and think Woodford’s multi-decade track record remains compelling – but we don’t underestimate the disappointment investors must feel with Woodford’s recent performance.
“The suspension is understandably frustrating, but it’s important to remember that the value of your investment will be dependent on the share prices of the portfolio’s underlying holdings, which are not directly impacted by the suspension.”
The Financial Conduct Authority said: “The FCA is aware of this situation and in contact with the firms involved to ensure that actions undertaken are in the best interests of all the fund’s investors.”