In a fresh indignity for one-time star fund manager Neil Woodford, dealing in his LF Woodford Equity Income ?(BLRZQ62) has been suspended.
Having amassed more than £10bn in assets as recently as two years ago, a string of redemptions from the fund has seen this total slip to less than £4bn.
This has forced the sale of more liquid assets in the portfolio and in order to protect current holders of the fund, trading has been suspended.
We recently reported on Morningstar cutting its rating on the fund.
Since inception in 2014, performance has been weak. Its three-year annualised performance stands at -6%. Woodford has also come under some fire for his handling of the unquoted investments in his portfolio.
Ryan Hughes, head of active portfolios at AJ Bell says: ‘With an element of the fund in illiquid investments, it is clear that the fund was having to sell the more liquid holdings to fund the redemptions, which in turn can exacerbate the problem. This is not a decision that will have been taken lightly and it is done to protect the interests of remaining investors.
‘Woodford has indicated that they will be looking to reposition the portfolio away from illiquid holdings during the suspension and therefore investors may have to be patient for the fund to reopen.
‘Events such as this are rare but it is a reminder to all of the risks that come with investing in illiquid assets while offering daily liquidity to investors. This never appears to be a problem when money is flooding in but when sentiment turns it can come back to bite investors badly as has happened here.’
