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Shares in Neil Woodford’s listed trust plunge after suspension of sister fund

Woodford Patient Capital Trust saw shares tumble 12%, having fallen as much as 21% at one stage, amid concerns of knock-on effects.

Neil Woodford is one of Britain’s highest-profile fund managers (Martin Keene/PA)
Neil Woodford is one of Britain’s highest-profile fund managers (Martin Keene/PA)

Shares in Neil Woodford’s listed investment trust have plunged after investors were blocked from pulling out money from its multibillion-pound sister fund.

Woodford Patient Capital Trust (WPCT) saw shares tumble 12%, having fallen as much as 21% at one stage, amid concerns of knock-on effects from the suspension on Monday of the flagship Woodford Equity Income Fund after an exodus of investors.

This came despite assurances from Woodford Investment Management that its other funds would be unaffected by the suspension.

Shares of other stocks that count Mr Woodford’s fund among their biggest investors also fell heavily after the move, with construction giant Kier Group down 6% in the FTSE 250.

And fund supermarket Hargreaves Lansdown saw shares drop 5% in the FTSE 100 after it said it could no longer include the Woodford Equity Income Fund or Woodford Income Focus Fund on its “Wealth 50” list, which is used by thousands of customers to decide where to invest.

It’s been a tough few years for Woodford and things look like they will get worse still Neil Wilson, Markets.com

An analyst at Winterflood Securities reportedly warned in a note to clients that the fall-out from the suspension could potentially impact the listed investment trust, with the equity income fund being restructured and amid negative sentiment following the move.

Mr Woodford – one of Britain’s highest-profile fund managers – said on Monday the suspension had been taken to “protect” investors and reposition the portfolio in a bid to preserve liquidity.

In a statement, the company said its appointed authorised corporate director Link Fund Solutions would decide when dealing of shares may resume.

The suspension will remain in place for at least four weeks.

Neil Wilson, chief market analyst for Markets.com, said: “It’s been a tough few years for Woodford and things look like they will get worse still.

“Woodford has clearly made a series of poor investment decisions. Out-of-love UK stocks… may have been ultra-cheap, but they’re still unloved and still cheap.

“Provident has been a disaster. Kier, whose shares tumbled 40% yesterday, also a disaster.”

The City watchdog said it was in contact with Woodford Investment Management “to ensure that actions undertaken are in the best interests of all the fund’s investors”.

The Woodford Equity Income Fund is the company’s largest, with a reported value of £3.7 billion, but this is down heavily on the £6.8 billion recorded a year ago.

According to the Financial Times, the fund, launched four years ago, was valued at £10.2 billion in May 2017.

Hargreaves Lansdown said on Monday that a “significant reduction in fund size jeopardises manager Neil Woodford’s ability to run the fund effectively”, although it stressed the investor’s “multi-decade track record remains compelling”.

Redemptions from the fund were reported to have hit an average of £10 million a day, while a county council is said to have requested the return of around £250 million.

On Monday, Woodford Investment Management said: “After consideration of all relevant circumstances relating to the fund’s assets, we have… come to the conclusion it is in the best interests of all investors in the fund to suspend the issue, cancellation, sale, redemption and transfer of shares in the fund.

“Following an increased level of redemptions, this period of suspension is intended to protect the investors in the fund by allowing Woodford, as previously communicated to investors, time to reposition the element of the fund’s portfolio invested in unquoted and less liquid stocks, into more liquid investments.”

PA

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