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Neil Woodford’s flagship fund suspends trading

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Written by:
03/06/2019
Dealing in the Woodford Equity Income fund has been suspended with immediate effect and until further notice.

In a statement, Link Fund Solutions, the fund’s authorised corporate director, said the suspension was in the best interests of all investors following “an increased level of redemptions”.

This period of suspension is intended to protect the investors in the fund by allowing [Neil] Woodford, as previously communicated to investors, time to reposition the element of the fund’s portfolio invested in unquoted and less liquid stocks, into more liquid investments.”

During the period that share dealing is suspended no requests to redeem, purchase or transfer shares in the fund will be accepted.

The news follows a long run of dire performance during which the flagship fund was downgraded by analysts Morningstar and rattled investors pulled out billions of pounds.

Ryan Hughes, head of active portfolios at investment platform AJ Bell, said: “The news that the Woodford Equity Income fund has suspended dealing will come as a shock to many people but it shows the sheer scale of redemptions the fund has been suffering in recent months with the fund falling to under £4bn from a high of over £10bn two years ago.

“With an element of the fund in illiquid investments, it is clear that the fund was having to sell the more liquid holdings to fund the redemptions, which in turn can exacerbate the problem. This is not a decision that will have been taken lightly and it is done to protect the interests of remaining investors.”

Hughes added: “Woodford has indicated that they will be looking to reposition the portfolio away from illiquid holdings during the suspension and therefore investors may have to be patient for the fund to reopen.

“Events such as this are rare but it is a reminder to all of the risks that come with investing in illiquid assets while offering daily liquidity to investors.”

Emma Wall, head of investment analysis at Hargreaves Lansdown, said: “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.”

Woodford Investment Management said it will keep all investors informed about the suspension, including its likely duration.

If investors have any questions regarding the suspension they can call 0333 300 038 or email at info@woodfordfunds.com.

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