Investors trapped for another 28 days as suspension of Woodford flagship fund drags on
So when will Neil Woodford’s main fund be reopened? Not in the coming 28 days, investors learned after the markets closed in the UK Monday.
Link Fund Solutions, the official holder of the Woodford Equity Income Fund, has decided to continue blocking redemptions, sales or other transactions of the fund. It’s hardly a surprising outcome, but one that is likely to further frustrate investors, many of whom said they were blindsided by the ban.
The rationale, Link insists, has always been to protect investors’ interests by allowing Woodford’s team the time to shift away from private companies toward more liquid stocks. In the first 28 days of suspension, they have reportedly sold at least £300 million ($379 million) worth of assets, converted into cash or other stock holdings.
“When the fund reopens, you will see a much more liquid portfolio, but one that reflects the same investment strategy. The portfolio will continue to be focused on undervalued companies, but the majority of them will be FTSE 100 and FTSE 250 index constituents,” Link wrote in a statement, adding that it will appoint a partner to assist with the process.
Woodford added in a video that he sees many companies in this group that are “profoundly undervalued” and look like attractive candidates to replenish the portfolio after selling off some favorites. Over the long course of financial market history, he said, valuation wins out, aligning share prices with reality sooner or later.
As long as investors still trust his assessment of reality.
Finally, the beleaguered stockpicker pledged to return to full transparency once the saga is over, even though the policy has been withdrawn for the time being:
When we set Woodford up 5 years ago we felt our investors would value the information that we were able to provide. I think what we underestimated is how our full portfolio transparency would become more damaging in a period of underperformance. In essence, the transparency became more damaging than the value it created for our investors.
Suspending the Equity Income Fund, of course, still doesn’t stop Woodford’s other funds from becoming collateral damage. And it would likely add fuel to the political fire that’s prompted financial regulators to look into the halt in the first place.
The controversy will have another 28 days to brew before Link reviews the situation again.