Woodford flagship fund to stay locked until December
Neil Woodford's flagship investment fund is likely to be suspended until December, trapping hundreds of thousands of investors, in order to give the besieged fund manager more time.
In an investor letter Link Asset Services said keeping the fund gated until December provides "a realistic amount of time for Woodford to complete a measured and orderly re-positioning of the fund's portfolio".
"We have considered various alternatives and have decided that the best option in the interests of all investors is for the suspension of dealings to continue," the letter said. Link has to review the suspension every 28 days.
I understand the frustration, inconvenience and anxiety the continued suspension of the fund will be causing you and I am extremely sorry for putting you in this situation"
Investors in the Equity Income Fund have not been able to access their money since 3 June. The company said sales continue to be made to improve the liquidity of the fund, with the aim of raising sufficient cash to enable dealing in the fund to resume.
Addressing investors Woodford said: "I understand the frustration, inconvenience and anxiety the continued suspension of the fund will be causing you and I am extremely sorry for putting you in this situation".
The manager promised that he is making progress in reducing the fund's exposure to unquoted companies and illiquid assets, adding that when the fund does re-open the portfolio will have more FTSE companies in it. Some 80% of the proceeds of assets which have been sold since the fund's suspension have been put into FTSE 100 firms, he confirmed.
"We commenced the process of reducing the fund's exposure to unquoted and less liquid assets in February. I'm afraid we cannot share details of exactly what has changed with you just yet," he added.
Ryan Hughes, head of active portfolios at investment platform AJ Bell, said: "This gives much-needed clarity for investors but they are likely to remain concerned.
"The fact that Link and Woodford have given a timeframe suggests they have some confidence in the fund re-opening in December, but this will still mark six months of fund suspension that investors have had to navigate."
Woodford warned the suspension appeared to have dented the performance of the fund in the short-term, but he thought "the worst is now past".
"The suspension and the circumstances that led to it, may have had an impact on the price of some of the fund's assets, but they have not had an impact on the value of those assets," he added.
Since the fund was suspended, hundreds of millions of pounds has been raised by selling stocks.
The board of the £850m Woodford Patient Capital trust is already speaking with rival fund managers, putting Neil Woodford's role as manager of the trust in doubt.
In a regulatory filing this MOnday morning, Woodford revealed that he has sold 60% of his personal investment in the trust, a sum of about £1m.
Woodford said his reason for selling the shares was to meet personal expenses and pay a tax bill. He said he does not receive a salary while the Woodford Equity Income fund is suspended.
The Woodford Equity Income fund was forced to suspend trading on June 4 after a flood of redemption requests from investors saw its assets reduce from a peak of £10.2 billion to £3.7 billion. Investors were concerned about the fund's poor performance and the high proportion of its assets invested in early-stage and start-up businesses.
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