(qlmbusinessnews.com via theguardian.com – – Tue, 4th June 2019) London, Uk – –
Savers denied access to equity income fund after investment manager halted withdrawals
Famed City stock-picker Neil Woodford suffered another blow on Tuesday, as a decision to block investors from pulling cash from his flagship fund sparked a share price fall in his listed vehicle.
Woodford’s patient capital trust fund, which is listed on London’s FTSE 250 index, tumbled as much as 20% in early trading before recovering slightly to trade 10% lower at 68p per share.
Investors were spooked by news on Monday that Britain’s best-known fund manager had suspended trading in his equity income fund, barring thousands of investors from pulling their cash for at least 28 days. Investors are still reportedly on the hook for fees of up to 1.7% despite the suspension.
Woodford was forced to temporarily shutter the equity income fund after investors started to jump, pulling at least £187m out in May alone. Those redemptions contributed to a total £600m decline in the value of the flagship fund last month; it shrank in size to £3.7bn after hitting a peak of £10.2bn in May 2017.
A request by investor Kent county council to pull £250m from the fund on Friday is believed to have tipped the scales.
Experts say Woodford has been stung by his optimism about smaller domestic stocks, which have underperformed in the wake of the Brexit vote, prompting investors to pull their cash. Almost £40m was slashed from the value of his 20% stake in Kier Group on Monday, after a profits warning sent shares in the construction and services group tumbling.
The investor exodus is an embarrassment for Woodford as he marks the five-year anniversary of the launch of his eponymous fund. He built his reputation during a 26-year stint at Invesco Perpetual where he controlled assets worth £33bn.
Shares in stockbroker Hargreaves Lansdown, one of Woodford’s biggest supporters, fell by 6% to £20.98 on Tuesday.
The stockbroker took the step of removing both the suspended Woodford equity income fund and the income focus fund from its Wealth 50 list of favourite funds. That is despite the income focus fund continuing to trade alongside Woodford’s patient capital trust.
Emma Wall, the head of investment analysis at Hargreaves Lansdown, said Woodford’s patient capital trust had clearly been impacted by the “negative sentiment around the suspension” of the Woodford flagship fund, but noted that the underlying value of patient capital had not changed.
She added: “There are other factors at play which make UK companies not that attractive at present – political uncertainty.”
Woodford could not be reached for comment.
Reporting by Kate Holton