Troubled Neil Woodford fund to be frozen till December

Woodford

Embattled stock picker and fund manager, Neil Woodford could freeze investments of his investors for another four months.

Neil Woodford’s Equity Income Fund which was once the toast of many equity investors was frozen back in June after it was hit by a record withdrawal request totaling to about $3.7 billion.

To arrest the crash of the fund, Woodford’s Equity Income Fund was blocked from further withdrawals while investors were still charged monthly management fees.

According to a letter released by Link Fund Solutions, the custodian of the fund, the continued freeze is to “complete a measured and orderly repositioning of the fund’s portfolio.”

While Neil Woodford’s said it would continue to charge management fees, the fund said Woodford will not earn any income or dividends during the suspension period.

In his statement, Woodford apologised to his investors that:

“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. Since our last update a month ago, we have made progress with our strategy to reduce our exposure to unquoted and less liquid stocks with our primary focus being on delivering the best possible outcomes for investors in the fund.”

To manage the expectations of his investors, Neil said:

“What you will see when the fund re-opens, is a portfolio with more FTSE 100 and FTSE 250 companies (80% of the proceeds from share sales since suspension have been reinvested in FTSE 100 companies), but still reflecting the same investment strategy. To reiterate, that strategy is founded on a belief that the global economic environment is not as robust as equity markets are implying,”

“Macroeconomic data is increasingly supportive of this thesis, with growth starting to falter in the US, parts of Europe barely growing at all, and further evidence of problems in emerging market economies. Profit warnings have been a regular feature of the second quarter earnings season that recently commenced, and we would expect to see more of these, particularly from global-facing and industrial companies,” he said

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