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Woodford fund goes into second month of suspension

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Fund manager Neil Woodford will keep his flagship £3.7bn fund frozen for at least another month, leaving thousands of investors without access to their money. Mr Woodford, one of Britain's best known money managers, released a video - the second since the Woodford Equity Income Fund was suspended on 3 June - in which he said there was "no prescribed time limit" on how long it could cease trading for.

However, the fund's authorised corporate director Link Fund Solutions said in a letter to investors posted on its website that it remained in the "best interests of all investors" to continue the suspension. Link is required to give an update on the suspension at least every 28 days. It said it expected to provide another update before 29 July. The decision to suspend the fund for at least 28 days was taken after a surge in withdrawals from the fund - which had a value of over £10bn at its height before shrinking to £3.7bn. A request by Kent County Council for over £260m of its investment cash was understood to have force the freeze. Mr Woodford will now continue to face the anger of retail investors left in financial limbo by the fund suspension.

In the video posted on the firm's website, Mr Woodford, seated at a trading desk said: "Of course, we understand that people want access to their money. "They're very frustrated by not being able to deal in the fund." On the question of whether the suspended fund's assets will be subject to a fire sale to release cash, Mr Woodford said: "My view is that we won't have to sell at big discounts. "These assets are fundamentally attractive and I'm confident we'll be able to execute the strategy and get good value for our unquoted and illiquid portfolio." However, illiquid assets are harder to sell quickly to meet redemption requests in a fund like Woodford Equity Income that allowed investors to withdraw their cash every day. The fund has sold more than £300m pounds in UK-listed stocks since the suspension, but analysts say it may need to raise at least £1bn pounds to meet further redemption requests.

They expect the fund to be closed for months. "Many investors accept that the portfolio is populated with very undervalued companies....Over the long course of financial market history, valuation wins out," Woodford said. Woodford has come under fire from the Financial Conduct Authority for ignoring the "spirit" of rules forbidding funds aimed at retail investors from investing more than 10% in unlisted assets.

Posted by MMB Finance Swindon on 4 July 2019