Investors dealt blow as Woodford fund remains gated
Hundreds of thousands of investors in Neil Woodford’s blocked equity income fund will have to wait at least another month to access their money after the suspension was extended.
Link Fund Solutions – an independent firm which governs the fund – announced it would keep the suspension in place indefinitely as part of a mandatory 28-day review.
The Financial Conduct Authority (FCA) has also been informed of the decision to keep the fund gated, but the suspension will need to be reviewed in another 28 days.
It deals a blow to the army of retail investors who have seen their cash trapped in the fund after it was suspended on June 3 in what has become the biggest fund management scandal for a decade.
The fund was gated after an investor exodus following a run of poor results.
Link said in a message to investors it “remains in the best interests of all investors” to maintain the suspension.
It said: “The Fund’s investment manager, Woodford Investment Management Limited, has been taking
steps to reposition the Fund’s portfolio to realise the unquoted and less liquid stocks and invest in more liquid investments.
“This has continued since dealings in the Fund were suspended and Woodford continues to invest in opportunities in order to meet the fund’s investment objectives.”
It added it was monitoring the situation on a daily basis and hopes to offer “further clarity to the situation as soon as possible”, but gave no end date for the suspension.
The next update on the fund will be by July 29.
In a video statement to investors, Mr Woodford said there was no “prescribed limit” to the suspension.
He said: “Of course, we understand that people want access to their money, they are very frustrated by not being able to deal in the fund. But we are using the time… to ensure that we get the right outcomes for our investors.”
Due to many of the investments in the Woodford fund being made into unlisted companies, selling the assets to repay the cash has proved difficult and the suspension has been put in place to avoid a fire-sale on the cheap.
The fund was worth around £10 billion at its peak in 2017, but has fallen to £3.7 billion.
The FCA has launched an enforcement investigation into the Woodford saga.
While the regulators have supported the ability for managers to suspend funds to prevent fire sales, there are concerns over Mr Woodford’s controversial decision to list unquoted shares in Guernsey.
Andrew Bailey, chief executive of the FCA, last week accused Woodford Investment Management of “sailing close to the wind” and potentially exploiting loopholes in “flawed” EU rules by listing illiquid shares in Guernsey.
Online fund supermarket and broker Hargreaves Lansdown is also among those caught up in the saga, due to the heavy promotion and commission received from Mr Woodford’s business.
Hargreaves Lansdown boss Chris Hill has said he would not take a bonus until investors are able to access their money in the Woodford fund.
Mr Woodford’s listed fund – the Woodford Patient Capital Trust – has likewise been impacted by its sister fund’s suspension, with shares having tumbled over the past month.
The investment trust said last week it plans to cut its debts and shake up its board after talks with shareholders.