LONDON (Reuters) – British money manager Neil Woodford has barred investors from taking cash out of his flagship fund, sparking client anger and spurring the Financial Conduct Authority (FCA) to examine what is a highly unusual move for a UK retail-focused equity fund.
Since Woodford’s 3.7 billion pound ($4.7 billion) LF Woodford Equity Income Fund suspended withdrawals on June 3, the share price of his listed fund has dropped, along with the value of shares of many of his biggest fund holdings.
CAN - INVESTORS - DO
WHAT CAN INVESTORS DO?
The short answer is nothing for now. Their money remains invested in the LF Woodford Equity Income Fund and can only be accessed when the suspension is lifted.
Fund - Suspension - Days - Theory - Observers
The fund’s suspension must be reassessed at least every 28 days. While in theory it could re-open overnight, observers expect the closure to last a number of weeks.
WHY DO SO MANY RETAIL INVESTORS FOLLOW WOODFORD?
Woodford - Britain - Fund - Managers - Name
Woodford is among Britain’s most famous fund managers. The 59-year-old made his name over more than two decades at Invesco Perpetual, before leaving to set up Woodford Investment Management in 2014, based in the university city of Oxford.
He rose to prominence with his investment decision to avoid high-priced technology stocks, a move vindicated when the so-called ‘tech bubble’ burst and valuations fell sharply.
Feat - Crisis - Banks - Stocks - Tobacco
He repeated the feat during the 2008-2009 financial crisis by avoiding banks, instead preferring stocks such as tobacco companies, which made strong gains.
WHY DID WOODFORD SUSPEND THE FUND?
Trading - Fund - Woodford - Cash - Clients
Trading in the fund was suspended because Woodford could not raise cash quickly enough to give back to clients who were trying to leave, including one of its larger investors, the pension scheme of Kent County Council in southern England.
Another contributing factor was a series of disappointing stock performances, culminating last week in a sharp fall in the share price of construction and services group Kier, in...
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