Woodford listed fund seeks to reassure as shares fall further
LONDON (Reuters) – Neil Woodford’s listed fund sought to reassure investors on Monday that the suspension of the British money manager’s main equity fund was not having any impact on the operational performance of the Woodford Patient Capital Trust.
Woodford Patient Capital Trust’s shares fell by about 20% last week after the unlisted LF Woodford Equity Income Fund was suspended after a run of redemption requests.
Despite its attempt to calm jittery investors, shares in the fund fell again when markets opened and were down 5.1% by 0703 GMT, the biggest faller on Britain’s FTSE mid-cap index.
Woodford Patient Capital Trust said in a statement it was pleased with the progress of its portfolio companies, which it said have the potential to deliver attractive returns.
“The operational performance of these businesses is not impacted by recent events,” it said, adding that its board was “closely monitoring” the situation.
Woodford, one of Britain’s best known fund managers among retail investors, has been cutting his stakes in at least 21 companies as he frees up cash to meet a rush of redemption requests that forced him to suspend his main fund.
This raises “important questions” about how illiquid investments should be regulated, Andrew Bailey, chief executive of the Britain’s Financial Conduct Authority, said on Sunday.
Limits on the share of illiquid investments held in collective investment schemes already exist under British and European Union rules, Bailey said.
“The Woodford fund’s inability to meet investor withdrawals raises a challenge as to whether the rules requiring assets to be liquid are working as they should be,” Bailey said in an opinion column published in the Financial Times.
After property funds were suspended in the aftermath of Britain’s vote in 2016 to leave the EU, the FCA consulted last year on tougher rules for funds that invest in property and other illiquid assets.
It is due to announce final changes later this year.
“We will take into account the lessons of the Woodford fund when finalising these rules,” Bailey said.
Some of companies invested in by Woodford are listed on an exchange in Guernsey and thinly traded.
Bailey said that listing an unquoted company overseas does not in itself make the stock more liquid, and investors have a right to choose the jurisdiction in which they invest and for it to be maintained.
Bailey said that investment platforms also have responsibilities when it comes to recommending “best buys”.
Hargreaves Lansdown, Britain’s biggest fund supermarket, picks out a number of funds it considers to be among the best-value for its ‘Wealth 50’ list, and has been a major backer of Woodford’s suspended fund up until last week.
Many retail investors would likely have chosen to invest in Woodford’s fund in part because of the support of Hargreaves, which charges fees to use its platform.
At 0703 GMT, shares in Hargreaves were down 2.4%, the second-biggest faller on the FTSE 100.
(Reporting by Huw Jones and Simon Jessop; Editing by Rachel Armstrong and Alexander Smith)