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Second Woodford fund frozen as implosion continues

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Embattled money manager Neil Woodford. Photo: Woodford Funds/YouTube

Withdrawals from a second fund set up by Neil Woodford have been suspended, as the former star stock picker’s investment empire continues to crumble.

Fund administrators Link Fund Solutions (LFS) said on Wednesday that investors have been blocked from withdrawing money from the Woodford Income Focus Fund with immediate affect. The fund had just over £257m in assets at the end of August.

The suspension comes less than 12 hours after Neil Woodford resigned as money manager for the fund. Link said it feared investors would rush to withdraw money and has decided to block withdrawals to prevent a fire sale of assets that left all investors out of pocket.

“During the Fund’s suspension, LFS will consider the options available to it including the appointment of an alternate investment manager, a scheme of arrangement into another fund or a winding-up of the Fund, and decide on the course of action that is in the best interests of all investors,” Link director Karl Midl said in a letter sent to investors.

“Whilst LFS considers these options, Woodford has committed to continue to work collaboratively with LFS in its capacity as the appointed investment manager of the Fund.”

Woodford Income Focus is the second Neil Woodford vehicle to be suspended this year and its gating marks the latest turn in the spectacular implosion of Woodford’s investment empire.

Woodford ran into trouble earlier this year after investing in a high level of private stock that was difficult to offload. Underperformance led to high levels of withdrawals and Woodford was ultimately forced to suspend his flagship Equity Income Fund in June after a liquidity crunch.

Link, which also manages the Equity Income Fund, took the decision to shut down the Equity Income Fund altogether on Tuesday, which triggered the collapse of Woodford’s entire business. Woodford announced late on Tuesday that he would be shutting down his firm and walking away from the two other funds that bare his name. He has committed to work with the funds to manage the transition to new asset managers.

The implosion marks the culmination of a specular fall from grace for Woodford. He built a reputation as a star stockpicker during a career spanning over 25 years at Invesco Perpetual, before leaving in 2013 to set up a firm bearing his name. Assets in his flagship Equity Income Fund peaked at £10bn in 2017, but underperformance led to significant outflows over the last three years.

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Oscar Williams-Grut is Yahoo Finance UK’s City correspondent. He covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.

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