A second investment fund set up by the failed stock picker Neil Woodford has been frozen, locking up more than £250m of savers’ money.
The administrator, Link Fund Solutions, said it had closed the Income Focus fund to withdrawals to prevent a run on its assets. The fund’s value has halved to £252m since June, when Woodford’s flagship Equity Income fund was suspended.
“We expect that the redemptions in the [Income Focus] fund will reach a level whereby it may no longer be able to continue to meet redemption requests without prejudicing the interests of both remaining and redeeming investors,” Link said in a letter to investors.
Link closed Woodford’s main fund to withdrawals in June and sacked him as its manager on Tuesday after deciding to wind up the £3.1bn fund. Woodford then quit the Income Focus fund and the publicly traded Woodford Patient Capital investment trust.
Woodford announced he was closing down his investment business on Tuesday, his reputation in shreds. He earned many millions in fees during the business’s four years of trading and had continued to draw fees from the Equity Income fund while savers’ money was trapped.
Shares in the Patient Capital trust fell 5.5% to a new low of 32.50p, compared with 84p at the start of this year.
The Income Focus fund will be suspended until further notice and reviewed every 28 days. The investment vehicle, worth about £750m two years ago, could be closed permanently like the Equity Income fund, Link said.
“During the fund’s suspension, we will consider the options available to us including the appointment of an alternate investment manager, a scheme of arrangement into another fund or a winding up of the fund,” the administrator said.
Woodford was Britain’s best-known fund manager when he left Invesco in 2015 to launch his own business. But failed bets on small and difficult-to-trade firms and some large public companies sent investors dashing for the exits.
Woodford’s failure, and the impact on savers, threatens to undermine confidence in the fund management industry. The Financial Conduct Authority is investigating the Woodford debacle but the regulator has been criticised for its own lack of action as Woodford got into deeper trouble.
Parliament’s Treasury committee will elect a new chair next week. The successful candidate, who will be a Conservative MP, may decide the committee should launch an inquiry into all aspects of Woodford’s failure.
