Woodford apologises for fund suspension in YouTube video

Daniel Fowler
June 11, 2019

In a rare event, British fund manager Neil Woodford suspended trading late on Monday in his 3.7 billion pound ($4.70 billion) flagship Equity Income Fund after an increase in demand by clients to take back their money.

Hargreaves removed the main Woodford fund, and another that his firm oversees, from its Wealth 50 list of favorites.

The Woodford Equity Income Fund is the company's largest, with a reported value of £3.7 billion.

"We anticipate there will be more redemptions in the future, and he's getting the fund in a position in the future to meet those in an orderly way to protect the existing investors". And as the fund's publicly traded investments lost value, the share of the portfolio made up by stakes in non-public companies went up, compounding its liquidity woes.

Mr Woodford - one of Britain's highest-profile fund managers - said on Monday that the suspension had been taken to "protect" investors.

An average of £10m a day had been reportedly leaching from the fund over the past four weeks.

"The suspension of trading has provided Mr Woodford with some breathing room to fix his fund; he should afford his investors the same space and waive the fund's fees while the fund is suspended". Articles appear on euronews.com for a limited time.

According to reports, a GBP250 million withdrawal request by Kent County Council - one of several United Kingdom local authorities to have pension scheme investments in the fund - led to Woodford Investment Management's decision to suspend trading.

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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".

Kent County Council had wanted to withdraw its £263m investment, but was unable to do so before trading halted.

Investment funds of the sort run by Neil Woodford need closer scrutiny to lessen the risk that fire sales of assets trigger a market-disrupting feedback loop, the governor of the Bank of England has said.

Neil Woodford's eponymous fund, which launched in 2014, reached its peak back in May 2017 when it was valued at £10.2bn.

Bosses at the firm also called on Mr Woodford to follow suit and no longer charge fees on the money investors can not access.

The investment manager has published a video in which he apologises for any distress caused by the suspension and reassuring investors in the fund.

Also hit were the shares of some of Woodford's other big holdings amid concern that he could be forced to sell out of some of his more liquid assets to create cash for when the fund is reopened.

Wall said the suspended fund accounted for only a small part - around 6.4% - of the total assets in its 10-strong "multi-manager" range of funds.

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