Neil Woodford seeks to reassure investors after fund suspension

City heavyweight Neil Woodford has apologised and sought to reassure investors blocked from withdrawing from his multi-billion pound fund after the freeze shocked the Square Mile.

One of Britain’s leading investors, Mr Woodford appeared in a video suggesting his firm faced having to hold a fire sale in order to meet the demand for redemptions from his flagship Woodford Equity Income Fund, which was reported to have hit £10 million a day.

The stock market guru insisted that his firm, Woodford Investment Management, has a strategy in place to stabilise the fund so holders would eventually be able to access their investments.

It has been claimed major investors in the fund were given no prior warning that they would be banned from withdrawing their cash.

Kent County Council, which attempted to withdraw £263 million invested in the Equity Income Fund, said it asked the company for its cash on Monday but within hours bosses suspended all withdrawals.

In the three-minute clip Mr Woodford said he was “extremely sorry that we’ve had to take this decision”, adding: “When it is appropriate we will open the fund so that you can buy and sell as normal.

“As difficult a decision as this is, and clearly frustrating for you, our investors, we felt that this was necessary to protect your interests.

“The situation that we confronted was that we were seeing a lot of outflow in the portfolio. As a result of that increased level of redemptions what we were seeing was the stock market in a way anticipating the fact that we would have to be sellers of stocks to meet those redemptions.

“We felt that the prices that we would have to achieve in order to meet those redemptions would be disadvantageous for our investors.”

He added: “Fundamentally the strategy remains the same; investors’ money is preserved in the assets in which we invested and the portfolio continues to work for our investors.”

Mr Woodford said the suspension would buy the firm “time and space” to execute a plan which “is about reducing the fund’s exposure to illiquids and unquoteds down to zero”.

That capital will be redeployed in “more conventional” stocks on the FTSE 350 and FTSE 100, he explained.

Shares in Mr Woodford’s listed investment trust plunged on Tuesday after it emerged the flagship portfolio had been frozen.

Woodford Patient Capital Trust’s shares were down more than 7% by the close of trading on Tuesday, having fallen as much as 21% at one stage, amid concerns of knock-on effects from the suspension.

Shares of other stocks that count Mr Woodford’s fund among their biggest investors also fell heavily after the move, with construction giant Kier Group down 6% on the FTSE 250.

And fund supermarket Hargreaves Lansdown saw shares drop 5% on the FTSE 100 after it said it could no longer include the Woodford Equity Income Fund or Woodford Income Focus Fund on its “Wealth 50” list, which is used by thousands of customers to decide where to invest.

In the video Mr Woodford said the Focus Fund remained “open as normal” to buying and selling and it had no exposure to the same illiquid and unquoted securities.

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 Woodford Equity Income Fund is the company’s largest, with a reported value of £3.7 billion, but this is down heavily on the £6.8 billion recorded a year ago.

According to the Financial Times, the fund, launched four years ago, was valued at £10.2 billion in May 2017.

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