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Woodford Investment Management have issued the following statement regarding the Woodford Equity Income fund suspension:

Suspension extension
Link Fund Solutions Limited (Link), the Authorised Corporate Director of the LF Woodford Equity Income Fund has formally reviewed the suspension of the fund. Link previously indicated that it was anticipated that the suspension of dealing is likely to last until early December 2019 while the portfolio of assets held by the fund is re-positioned. Link have decided that it remains in the interests of all investors for the suspension of dealings to continue.

We are very sorry for the continued suspension and understand the concern it will be causing investors. We remain fully committed to getting the fund into a position that delivers the best possible outcomes for our investors - for those who wish to withdraw their money from the fund when it reopens and for those who wish to stay.

Progress is being made to reposition the fund into a much more liquid portfolio. To date, 84% of the proceeds from share sales made to reposition the portfolio since the suspension have been reinvested in FTSE 100 companies. As the fund's interim report to 30 June 2019 highlights, these include new investments into FTSE 100 companies, Imperial Tobacco, BT and IAG.

During the latest 28-day period, which covers much of September, the fund has underperformed in relative and absolute terms. A primary reason for the underperformance was the downward revaluation of Benevolent AI, a UK-based healthcare company that uses artificial intelligence for drug development.

On 17 September, the company announced that it had raised $90 million from Temasek, a Singapore-based investment company. The funding round valued the company at a lower level and this has subsequently impacted the overall net asset value (NAV) of the fund. Nevertheless, the deal brings on board a new, high quality, long-term institutional investor whose funding will be used to grow Benevolent's pipeline of internal drug development programmes and collaborations with strategic partners across its key therapeutic areas. Earlier this year, Benevolent announced revenue enhancing tie-ups with AstraZeneca and Novartis. The change in valuation was reflected in the fund's closing NAV as at 12 September 2019.

Neil continues to reposition the portfolio founded on a belief that the global economic environment is not as robust as equity markets are implying. Identifying situations where price and value diverge has been at the centre of Neil's investment approach over his entire career - and is underpinning the strategy that he believes is appropriate for the economic and market environment that confronts us.

Questions & answers

Will you continue to charge a management fee?
The company will continue to charge a management fee as we focus on repositioning the portfolio, to cover the infrastructure and resource costs associated with running an actively managed fund.

Will you still be able to run the fund?
We intentionally set up with a scalable cost structure when we started Woodford five years ago. This means that our cost base is predominantly variable and can flex with changes in revenue. As you'd expect, given recent challenges, we've also looked at the remaining fixed costs and taken steps to reduce these too.

There are many funds available in the market place that are viable with a fraction of the size of Woodford's AUM.

Are transfers between platforms allowed?
Transfers between platforms across all share classes, but not share class conversions, are now allowed (as of 10 July 2019). This includes where the receiving platform does not currently have access to the share class being transferred (they will be able to open a new account in that class to support the transfer). This is intended to facilitate cross-platform transfers where there is no change to the beneficial owner. This supports investors by providing them with the freedom to move their investments between platforms.

Important note: the total cost of owning the fund can vary between platforms, even where two platforms offer the same share class. You may wish to consider the different platform fees and any potential discounts on offer before deciding to transfer. Please contact your platform or your IFA for further details.

Is the fund still pricing daily?
We will be publishing price data for information purposes, during the period in which investor trading in the fund is suspended. The last price at which the fund traded was as at midday Friday, 31 May 2019. Any orders placed after that dealing cut-off point have been rejected. All affected investors have been informed accordingly. When the suspension is lifted, investors will be required to submit their new dealing instructions.

Is Neil a forced seller?
No. While investor trading in the fund is suspended, Neil has the time and space to deliver on his strategy to place the unquoted parts of the portfolio with interested buyers.

We at Elson are in contact with Woodford and will be keeping up with the latest news available on this subject. We would advise our clients that there is no cause for alarm, as stated this has been done to protect existing investors. Please revisit our website for the latest updates on Woodford.

If investors have any questions regarding the suspension of dealing and wish to speak to someone at Woodford, please call 0333 300038 or alternatively email them at If you wish to speak to us please contact us here.

- uploaded - 25 September 2019

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Elson Associates does not offer advice as to the suitability of investments. If you are unsure whether an investment is suitable for you, you should obtain expert advice. Past performance of an investment is not necessarily a guide to its performance in the future. The value of investments or income from them may go down as well as up. You may not necessarily get back the amount you invested.

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