Sunday , January 17 2021

£ 250m in limbo as second Neil Woodford fund frozen – The Guardian,

Administrator closes Income Focus fund to withdrawals to prevent run on its assets


Neil Woodford

Neil Woodford announced this week he was closing down his investment business. Photograph: Troika / Alamy

A second investment fund set up by the failed stock pickerNeil Woodfordhas been frozen, locking up more than £ 250 m of savers’ money.

The administrator, Link Fund Solutions, said it had closed the Income Focus fund to withdrawals to prevent a run on its assets. The fund’s value has halved to £ 252 m since June, when Woodford’s flagship Equity Income fundwas suspended.

“We expect that the redemptions in the [Income Focus] fund will reach a level whereby it may no longer be able to continue to meet redemption requests without prejudicing the interests of both remaining and redeeming investors,” Link said in a letter to investors.

Link closed Woodford’s main fund to withdrawals in June andsacked him as its manageron Tuesday after deciding to wind up the £ 3.1bn fund. Woodford then quit the Income Focus fund and the publicly traded Woodford Patient Capital investment trust.

Woodford announced he was closing down his investment business on Tuesday, his reputation in shreds. He earned many millions in fees during the business’s four years of trading and had continued to draw fees from the Equity Income fund while savers ’money was trapped.

Shares in the Patient Capital trust fell 5.5% to a new low of 32. 50 p, compared with 84 p at the start of this year.

The Income Focus fund will be suspended until further notice and reviewed every 28 days. The investment vehicle, worth about £ 750 m two years ago, could be closed permanently like the Equity Income fund, Link said .

“During the fund’s suspension, we will consider the options available to us including the appointment of an alternate investment manager, a scheme of arrangement into another fund or a winding up of the fund,” the administrator said .

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Woodford was Britain’s best-known fund manager when he left Invesco in 2015 to launch his own business. But failed bets on small and difficult-to-trade firms and some large public companies sent investors dashing for the exits.

Woodford’s failure, and the impact on savers, threatens to undermine confidence in the fund management industry. The Financial Conduct Authority is investigating the Woodford debacle but the regulator has beencriticized for its own lack of actionas Woodford got into deeper trouble.Parliament’s Treasury committee will elect a new chair next week. The successful candidate, who will be a Conservative MP, may decide the committee should launch an inquiry into all aspects of Woodford’s failure.

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