LF Woodford Equity Income fund extends suspension period

Posted by Liz Rees in Fund and industry updates category on 02 Jul 19

On Monday 1st July Link Fund Solutions Limited (the Authorised Corporate Director of the fund) announced that, following a formal review, the LF Woodford Equity Income Fund will remain suspended.

Link considers this is the best course of action to ensure investors’ interests are protected. It gives Mr Woodford and his team the time required to continue to reposition the fund into more liquid investments.

During the suspension no requests to sell, buy or transfer units in the fund will be accepted. Link is monitoring the situation on a daily basis, then another review will be conducted in 28 days and an update issued.

Willis Owen comment

We appreciate that not having immediate access to your money can be concerning but we do believe it is necessary to prevent forced sales of less liquid companies at unattractive prices in order to meet redemptions.

We understand that around £300m has been realised to date and a further £125m is due to be received following a bid for BCA Marketplace. Some of Woodford’s stakes have been bought back by the companies themselves while others have been placed with institutional investors. The firm said it is close to appointing a specialist advisor to help with the sale of the unlisted stocks.

On completion of the repositioning, we understand that the fund will be focused on a portfolio of FTSE 100 and FTSE 250 companies which Woodford considers to be significantly undervalued. Mr Woodford does acknowledge in his latest update that a catalyst will be needed for these companies to return to favour.

We concur with this; while the gap between growth and value is extensive, in the current low growth environment it is natural for investors to favour growth strategies. However, an end to trade conflicts and Brexit uncertainty could bring about a change in market leadership.

We will, of course, let you know if we hear any more news about when the fund may re-open though we do expect it could take some time to complete the exercise.

Please note that trading in the LF Woodford Income Focus fund and Woodford Patient Capital Trust remains unaffected by this suspension.

Important InformationPast performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Nothing in this article is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment.