Fund Suspension Update From Neil WoodfordGuest Post
Neil Woodford’s message to investors following Link’s decision, after discussions with Woodford, to suspend all investor dealing in the LF Woodford Equity Income Fund.
Please also see our Q&A below the video for more information. We will do more to answer further questions over the coming days and weeks.
Questions and answers
What is a fund suspension?
When a fund is suspended, requests from investors to buy, sell or transfer shares will not be accepted. However the fund manager can continue to actively manage the portfolio on behalf of investors as normal.
Why have you decided to suspend the fund?
Link Fund Solutions (Link), as ACD for the fund, has made the decision following an increased level of redemptions. The move is designed to protect the investors in the fund by allowing Neil time to reposition the element of the fund’s portfolio invested in unquoted and less liquid stocks, into more liquid investments.
How long will the fund be suspended for?
Link will monitor the situation on a daily basis to consider whether the exceptional circumstances that gave rise to the suspension of dealing have changed. The suspension will be lifted as soon as is practicable after these exceptional circumstances have ceased.
In accordance with the Fund’s Prospectus, Link and the Depository will formally review the suspension at least every 28 days and will inform the FCA of the review and any change to the information given to Shareholders.
We will keep investors updated in relation to the suspension, including its likely duration.
Will I get my money back?
The fund has been suspended temporarily. Investors will be able to access their investments once the suspension is lifted. When this happens your investment value will be dependent on the share prices of the portfolio’s underlying holdings at that time.
Important note: In the event the share price of those stocks has risen, your investment will be worth more than it is today. If the value of those underlying assets has fallen, your investment will do too.
Will I still be able to purchase/sell shares if I have a regular payment/redemption set up?
No, investors who have a direct debit set up to automatically invest in the fund every month will not have their investment processed this month. Investors will be able to purchase or sell shares again once the temporary fund suspension is lifted.
Investors should check with their platform or IFA on their individual circumstances, but we understand that most investors will have their money collected as usual and held in cash.
Is the fund still going to price daily?
We will be publishing price data for information purposes, during the period in which investor trading in the fund is suspended.
The last price at which the fund traded was as at midday Friday, 31 May 2019. Any orders placed after that dealing cut-off point have been rejected. All affected investors have been informed accordingly. When the suspension is lifted, investors will be required to resubmit their dealing instructions.
Will deals received prior to the dealing cut off point on Friday 31 May be settled as normal?
Will any exceptions be considered? For example, following death or for a transfer between platforms?
No exceptions are envisaged at this stage, but if the situation changes, we will let you know. Transfers in or out of the fund are suspended, including instructions to transfer between share classes. Transfers that do not change the beneficial ownership of a holding are possible – for example, within a platform nominee account or a switch between platforms where the same investor remains invested in the fund in the same share class.
Is Neil a forced seller?
No. While investor trading in the fund is suspended, Neil has the time and space to deliver on his strategy to place the unquoted parts of the portfolio with interested buyers.
Will you be building a cash position in the fund ready to meet redemptions when the suspension is lifted?
We cannot comment on specific future trading intentions on the portfolio for regulatory reasons, other than to reiterate that the suspension is intended to protect the investors in the fund by allowing Neil, as previously communicated to investors, time to reposition the element of the fund’s portfolio invested in unquoted and less liquid stocks, in to more liquid investments.
As such, this represents management of the portfolio, rather than a liquidation of the portfolio.
What future communications can investors expect to receive regarding the suspension and how frequently will these be issued?
We will update you as regularly as possible and as soon as additional information is available. An investor letter was issued by Link on Tuesday 4 June, a copy of which can also be found on their website. Future updates will be provided on our website and on Link’s.
What are the risks?
- The value of the fund and any income from it may go down as well as up, so you may get back less than you invested
- Past performance cannot be relied upon as a guide to future performance
- The ongoing charges figure is charged to capital, so the income of the fund may be higher but capital growth may be restricted or capital may be eroded
- The fund may invest in other transferable securities, money market instruments, warrants, collective investment schemes and deposits – some of these security types could increase the fund′s volatility and increase the level of indirect charges to which the fund is exposed
- The fund may invest in overseas securities and be exposed to currencies other than pound sterling – as a result, exchange rate movements may cause the sterling value of investments to decrease or increase
- The fund may invest in unquoted securities, which may be less liquid and more difficult to value, because they are generally not publicly traded – the lack of an open market may also make it more difficult to establish fair value
Article by Woodford Funds