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Woodford Equity Income: all dealing suspended following redemption concerns

Woodford Equity Income: all dealing suspended following redemption concerns

3 June 2019

No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

  • Dealing in Woodford Equity Income has been suspended by the fund’s Authorised Corporate Director
  • The fund has been removed from our Wealth 50 list
  • The value of the fund will continue to be based on the price of the underlying holdings, but you won’t be able to access your investment until the suspension is lifted
  • Dealing in the Woodford Equity Income Fund has been suspended for up to 28 days, effective immediately. Investors in the fund won’t be able to buy or sell units until the suspension has been lifted. We’ll keep investors updated as soon as we know more.

    As the fund can’t be traded, we have made the decision to remove it from our Wealth 50 list of favourite funds. We have also removed the Woodford Income Focus Fund.

    What has happened?

    Dealing in the Equity Income fund was suspended by Link Fund Solutions, the fund’s Authorised Corporate Director, to protect existing investors, following concerns about redemptions.

    The fund has fallen in size over the last year, due to poor performance and investor outflows. The fund size is currently £3.7 billion, down from £6.8 billion a year ago.

    A significant reduction in fund size jeopardises manager Neil Woodford’s ability to run the fund effectively. Link has taken action in order to protect investors who wish to remain in the fund, who could otherwise be negatively affected by fund redemptions.

    Because the fund has been suspended we’ve removed it from our Wealth 50 list of favourite funds. We have also removed the Woodford Income Focus Fund, as we would prefer to see a resolution to the dealing suspension in the Woodford Equity Income fund before we decide if the Woodford Income Focus Fund should continue to be on the Wealth 50.

    What does this mean for existing investors?

    Existing investors will continue to own units in the fund. The last available fund price (as of noon on Friday 31 May) was 86p for investors who have opted to have income paid out and 100.89p for those in the accumulation class.

    Link will review the fund after 28 days and report to the regulator, after which the suspension will be lifted or renewed. Once the suspension is lifted investors will be free to buy or sell their units. The price of the fund will be dependent on the value of the underlying assets at the time.

    Will I get my money back?

    The fund has been suspended temporarily. When it returns to market, your investment value will be dependent on the share prices of the portfolio’s underlying holdings. 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.

    Who has suspended the funds?

    Link Fund Solutions is the Authorised Corporate Director for Woodford Equity Income. They have chosen to suspend trading on the fund to protect existing investors. They are an independent company who act in the best interests of fund unitholders in accordance with the Financial Conduct Authority’s regulations.

    What will this mean for monthly investors?

    Investors who have a Direct Debit set up to automatically invest in Woodford Equity Income every month will not have their investment actioned this month. Instead, their money will be collected as usual and held in cash.

    What will this mean for investors in Hargreaves Lansdown Multi-Manager funds?

    The Multi-Manager funds are by their nature diversified investments. Woodford Equity Income is held in six of the HL Multi-Manager funds, while Woodford Income Focus is in one of the HL Multi-Manager funds. Our funds remain open to buy and sell as normal.

    The managers of the HL Multi-Manager funds will continue to monitor the situation and communicate any decisions made on behalf of their investors. The managers remain committed to getting the best long-term outcomes for their investors.

    What will this mean for Woodford Patient Capital?

    The Woodford Patient Capital Trust is unaffected by this dealing suspension. The trust will continue to trade on the stock exchange.

    What happens next?

    The Woodford Equity Income Fund will be reviewed in 28 days by Link who will report to the regulator and determine whether the trading suspension should be lifted or renewed.

    We will continue to talk with Woodford, Link Fund Solutions and the regulator in order to ensure you are kept up to date with developments.

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Investment notes
No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.
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