Fund suspension prompts questions over illiquid assets



Questions are being raised about funds holding illiquid assets after the suspension of a £3.7 billion fund run by UK fund manager Neil Woodford.
Woodford, who was known as a star manager in the UK after 26 years at Invesco Perpetual, was forced to suspend his Woodford Equity Income fund on 3 June after rising outflows.
Performance had been poor for several quarters and outflows mounted which caused the fund to fall from £10.2 billion to £3.7 billion in just two years. The matter worsened in May 2019 when the fund lost £560m in one month and was forced to freeze redemptions.
UK regulator the Financial Conduct Authority announced a formal investigation into the suspension after it was revealed Woodford breached the limit for unlisted stocks twice during 2018.
UK rules state funds must not hold more than 10 per cent in unlisted equities but Woodford, who chose to invest a large part of his fund in small and early-stage companies, avoided this by holding shares listed on the International Stock Exchange in Guernsey rather than the London Stock Exchange.
Financial planning technology company PlanPlus Global said the high volume of unlisted assets held by Woodford highlighted the need for investors to be aware of what was in their funds.
“This example highlights the importance of knowing what assets are within an actively traded fund, versus an index fund. The proportion of assets in the Woodford fund estimated to take over 180 days to liquidate had increased from 25 per cent in June 2018 to 33 per cent by April 2019.”
Recommended for you
Betashares chief executive, Alex Vynokur, has said that the firm is focused on financial advisers “more than ever” as it grows the business, having announced a merger with managed account provider InvestSense.
L1 Capital has confirmed it intends to vote against the conversion of the Platinum Capital LIC into a listed ETF, meaning the deal “has a high probability of failing” due to L1’s substantial shareholding.
Pinnacle Investment Management has continued its focus on international expansion with the appointment of a managing director from T. Rowe Price.
Financial research firm Wealth Data, which publishes the weekly financial adviser numbers, has been sold to fintech firm Padua Solutions.