Tuesday 20 August 2019

Woodford's junior fund sees assets plunge 40pc after flagship is frozen

Neil Woodford. Photo: PA
Neil Woodford. Photo: PA

Suzy Waite and Nishant Kumar

Fund manager Neil Woodford locked up his flagship vehicle earlier this month, and now his smaller fund is paying the price.

Assets under management in the smaller LF Woodford Income Focus Fund have plunged by 40pc since May 31 to £298m (€332m), according to data compiled by Bloomberg.

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Woodford, long considered one of the UK's top stock pickers, announced the freeze on assets in his flagship LF Woodford Equity Income Fund on June 3.

Woodford shocked the financial world when he barred investors from withdrawing their money from the Equity Income Fund, leading some of his biggest clients to walk away.

He had ploughed his clients' money into small companies, some of them unlisted, functioning more like a venture capitalist than a traditional mutual fund manager.

The freeze buys Woodford time to offload these stocks and shift into more readily traded investments to meet potential redemptions.

A Woodford spokesman said the Income Focus Fund has different types of assets than its big brother. It holds no illiquid or unquoted securities, and therefore isn't exposed to the same issues as the Equity Income Fund, and mainly invests in companies of varying size that pay a dividend, he said.

Woodford continues to face intense scrutiny from investors, regulators and politicians since he suspended withdrawals.

Bank of England Governor Mark Carney blasted the fund management industry this week, saying that funds that hold illiquid assets while allowing unlimited withdrawals are "built on a lie."

Natixis SA-backed H20 Asset Management has also seen clients pull money from some of its funds over concerns about illiquid holdings. In H2O's case, these are unrated private bonds.



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