Woodford Equity Income fund suspension - AJ Bell comment

Ryan Hughes
3 June 2019

The LF Woodford Equity Income Fund has been suspended.  You can read the announcement here - https://woodfordfunds.com/statement-on-lf-woodford-equity-income-fund/

Ryan Hughes, head of active portfolios at AJ Bell comments:

“The news that the Woodford Equity Income fund has suspended dealing will come as a shock to many people but it shows the sheer scale of redemptions the fund has been suffering in recent months with the fund falling to under £4bn from a high of over £10bn two years ago. With an element of the fund in illiquid investments, it is clear that the fund was having to sell the more liquid holdings to fund the redemptions, which in turn can exacerbate the problem. This is not a decision that will have been taken lightly and it is done to protect the interests of remaining investors.

“Woodford has indicated that they will be looking to reposition the portfolio away from illiquid holdings during the suspension and therefore investors may have to be patient for the fund to reopen. Events such as this are rare but it is a reminder to all of the risks that come with investing in illiquid assets while offering daily liquidity to investors. This never appears to be a problem when money is flooding in but when sentiment turns it can come back to bite investors badly as has happened here.”

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