Yahoo Finance Shares in top UK financial adviser fall after Woodford suspension
Shares in the UK’s biggest financial advisory firm, Hargreaves Lansdown (HL.L), fell by more than 5% on Tuesday in the wake of the suspension of Neil Woodford’s flagship investment fund.
Clients of Hargreaves Lansdown were reported to have held 28% of the fund’s assets as recently as March, and the firm has continually advised its clients to invest in the fund.
In a highly unusual move, Woodford, one of the UK’s most admired money managers, suspended trading in his high-profile equity income fund on Monday after Kent County Council asked to withdraw £250m of its investment.
Though Woodford has not released any information on how long the suspension will last, investors will not be able to buy or sell units in the fund for at least 28 days.
In the past month, investors have withdrawn some £560m from the fund, which has underperformed its peers in the equity income fund sector for more than a year.
As a result, the fund has shrunk in size. It’s now worth £3.7bn, down from £6.8bn a year ago.
Around £700m worth of Hargreaves Lansdown’s own funds are invested in the fund.
The slump in Hargreaves Lansdown’s shares made it by far the biggest loser on the FTSE 100 on Tuesday.
On Monday, the advisory firm removed two of Woodford’s funds, including his equity income fund, from its highly influential best-buy “Wealth 50” list.
Its head of investment analysis, Emma Wall, said that, while it felt Woodford’s “multi-decade track record” remained “compelling,” it did not not “underestimate the disappointment investors must feel with Woodford’s recent performance.”
“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 before we conduct a review,” she said.
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