One of the UK’s largest financial advisers, Hargreaves Lansdown, has removed Woodford Investment Management’s (Woodford IM) flagship fund from its top 50 list of favourite funds.
The Woodford Income Focus Fund has been removed from Hargreaves Lansdown’s influential Wealth 50 list.
The decision comes after the Oxford-based asset manager’s announcement that trading on the equity fund has been suspended for up to 28 days.
Ongoing underperformance has seen investors pulling out an average of £10 million (€11.3 million) per day for the last four weeks, the Financial Times reported.
A request from Kent County Council to withdraw £250 million reportedly led to the suspension. The council was not available for comment.
The Woodford Equity Income fund’s size currently stands at £3.7 billion, down from £6.8 billion a year ago. At its peak, the fund managed £10.2 billion in assets.
Further outflows could have a negative effect on clients still invested in the fund. A significant reduction in the fund’s worth would also jeopardise stock picker Neil Woodford’s (pictured) ability to manage it effectively, Hargreaves Lansdown said.
“Following an increased level of redemptions, this period of suspension is intended to protect the investors in the fund,” the firm said in a statement.
Although the freeze prevents further redemptions, it also prevents investors putting money in the fund.
The gating of the Woodford fund is a “wake-up call for investors”, according to Hector McNeill, co-founder of London-based investment platform HANetf.
“Having paid significant fees for underperformance, Woodford’s investors are now having salt rubbed in their open wounds as they cannot get their money back to redeploy,” he said.
The fund’s value will continue to be based on the portfolio’s underlying holdings, but investors are unable to leave or enter it.
The decision to suspend trading was made by Link Fund Solutions (Link), the fund’s authorised corporate director, in conjunction with Woodford IM, “after consideration of all relevant circumstances”.
Both Woodford IM and Hargreaves Lansdown have stated that they will keep investors in the fund advised as the situation unfolds. The suspension will be reviewed by Link every 28 days.
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