Neil Woodford’s billion pound equity income fund has blocked their savers from accessing their cash after an apparent exodus of investors.
Woodford’s company said they made the move to protect investors and reposition the portfolio in an attempt to preserve liquidity.
The Financial Conduct Authority (FCA) said they are in contact with Woodford’s “to ensure that actions undertaken are in the best interests of all the fund’s investors.”
It is thought the suspension of dealing will be in place for at least four weeks, the firm has fallen from the Hargreaves Lansdown’s hallmark wealth 50 list.
The retail investment leaders said, “a significant reduction in fund size jeopardises manager Neil Woodford’s ability to run the fund effectively.
Adding, the investor’s “multi-decade track record remains compelling.”
The fund launched four years again and in May 2017 the firm was valued at £10.2bn, according to the Financial Times. The equity fund is the company’s largest with an estimated value of £3.7bn.
A county council is said to have asked for the return of around £250m, while redemptions from the fund have hit an average of £10m per day.
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.
“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, into more liquid investments.”
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.”
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.”
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