Neil Woodford ban extension

Neil Woodford, pictured above, speaking about the ban extension. Screenshot courtesy of YouTube.

Investors in Neil Woodford’s Woodford Equity Income Fund have been told that they will have to wait at least another 28 days before they can withdraw their money from the fund.

We reported on the shock news last month that Woodford had blocked any fund withdrawals on the basis of an inability to liquidate investments; a move which angered many investors and highlighted the misjudged level of risk involved in these funds.

Link Asset Services, who are the corporate director of the £3.7 billion Equity Income Fund, say the move is to give Woodford and his team more time to make the necessary changes from illiquid to liquid assets. Neil Woodford took to YouTube again last night to explain the decision though, as many investors and financial journalists have pointed out, there was no mention of fees being waived for investors currently being blocked from withdrawal – effectively meaning that the people who want to sell are paying for the privilege of being denied.

In their official statement, Link Asset Services said:

“As set out in our previous letter, dealings in the Fund were suspended after we concluded that redemptions had reached a level whereby the Fund would no longer be able to continue to meet redemption requests without prejudicing the interests of any investor. We believe that, as a “forced seller” of its assets to meet redemptions, the values received by the Fund for such assets may have been adversely impacted and the Fund might not have received full value from such sales.

After consideration of all current circumstances relating to the Fund, we have, in conjunction with Northern Trust Global Services SE, UK Branch, the Fund’s Depositary, concluded that it remains in the best interests of all investors in the Fund to continue the suspension of the issue, cancellation, sale and redemption of shares in the Fund.”

Condemnation has come from the likes of Bank of England chairman Mark Carney, as well as Stuart Alexander; a former colleague of Neil Woodford who now runs Gemini Investment Management. Last month, Alexander slammed Link Asset Services in the Financial Times, suggesting it had been asleep at the wheel while the equity income fund struggled.

The withdrawal ban will be re-evaluated on July 29 though The Guardian newspaper reported that the suspension will be reviewed every 28 days; a wording that suggests the latest extension might not be the last if Woodford struggles to acquire more liquidity in the next few weeks.