Woodford blocks investor withdrawals after exodus

The country’s best known fund manager has blocked savers from accessing their cash following an apparent exodus of investors.

Neil Woodford, who launched Woodford Investment Management on the back of his reputation for delivering stellar returns while at Invesco Perpetual, announced that withdrawals from his flagship fund had ceased with immediate effect.

At its height in 2017, the Woodford Equity Income Fund had a value of over £10bn but the Financial Times reported it had since shrunk to as low as £3.7bn.

The suspension in dealing would last for at least 28 days, the company said, and the position would be reviewed by its authorised fund management firm Link in consultation with the Financial Conduct Authority (FCA).

It was said that the decision was taken after Kent County Council requested the return of £263m it had invested in the fund. It is widely reported that the pension funds remain tied up in the equity funds.

The council said it had asked the company for its cash on Monday but within hours Woodford bosses had suspended all withdrawals.

A council spokesman said: “KCC is disappointed that, as a major investor in the fund, we did not receive this prior notification.”

Woodford’s statement 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.”

Shares in Woodford’s listed investment trust, Woodford Patient Capital Trust, tumbled by more than 20% at one stage despite assurances from Woodford Investment Management that its other funds would be unaffected by the suspension.

Investment experts believe thousands of individuals and institutional investors are affected by the suspension.

Fund supermarket Hargreaves Lansdown, which had said it could no longer include the Woodford Equity Income Fund or Woodford Income Focus Fund on its ‘Wealth 50’ list, saw its shares fall by more than 6%, regaining slightly to end the day down 4.6%.

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.”

Commenting on the fund suspension the FCA 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.”

(c) Sky News 2019: Woodford blocks investor withdrawals after exodus