You may have seen in recent press coverage, Woodford Investment Management have confirmed that the Woodford Equity Income fund will be suspended from issuing, cancelling, selling, redeeming or transferring shares within the fund, with immediate effect for at least 28 days.
The fund is featured in the following LEBC Governed Investment Portfolios at the indicated percentage:
• Balanced Growth – 7.5%
• Balanced Growth Plus – 3%
• Growth – 5%
• Higher Income – 5%
• Higher Income Plus – 5%
• Income & Growth – 5%
• Income & Growth Plus – 5%
• Income Plus – 7.5%
The LEBC Investment Committee is currently investigating the impact of this action by Woodford.
Given the relatively low percentage levels of holdings in these funds, regular income payments should be unaffected during the period of closure and we are working with Aegon (Cofunds) to ensure this is the case.
The Investment Committee had been reviewing this fund given previous notifications concerning some of the underlying investments. However, this suspension has come as a surprise and we understand it has been driven following a request for a total withdrawal of £263 million from one investor, named as Kent County Council on the BBC News website. This has caused liquidity issues within the fund leading to the suspension.
Funds are suspended when a large investor seeks to liquidate their holding. This is done to protect other existing investors in the fund from sudden price fluctuations. Usually normal trading can be reopened once the manager has been able to realise sufficient investments to maintain adequate liquidity. Investors should therefore see this action as having been taken by the fund manager to protect the interests of the long term investors.
The fund must make a further announcement or start trading again in 28 days.
Whilst this is not a desired position, it does highlight the need for a diversified investment portfolio to minimise the impact of any one fund.
A further update will be issued in the next few days as we gather further detail. In the meantime, if you have any questions please contact your adviser.
On behalf of The LEBC Investment Committee
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