- More by Caleb Simmons
Neil Woodford fund suspended as UK economy all but dead in the water
In the years since the Brexit farce made the UK a global laughing stock the economy has gone from bad to worse at every turn. Based on lies, corruption and propped up by uncertainty Brexit has had huge impacts on UK businesses and those who rely on UK businesses.
An enklas parade of huge bluechip companies have either gone into administration, left the UK or stopped trading with the UK.
Only last month Jamie Oliver announced his restaurant empire was bankrupt leaving around 5 thousand people out of work. An announcement dwarfed by the collapse of British Steel only days later which left another 20 thousand unemployed.
European and Japanese technology giants and car manufactures were also quick to jump ship relocating mainly to Paris and Dublin.
Now the latest nail in the coffin is the suspension of the UK’s flagship private equity fund.
The UK‘s most high-profile stockpicker, Neil Woodford has suspended trading in his largest fund as rising numbers of investors ask for their money back.
Neil Woodford’s funs is used as a stable investment by government bodies and corporate giants alike.
Neil Woodford said after “an increased level of redemptions”, investors would not be allowed to “redeem, purchase or transfer shares” in the fund.
Investors have withdrawn about £560m from the fund over the past four weeks alone.
Kent County Council also wanted to withdraw its £263m investment, but was unable to do so before trading halted.
In a statement, the council said: “The announcement on Monday that trading in the investment fund was suspended was not anticipated. [SIC] KCC is disappointed that, as a major investor in the fund, we did not receive this prior notification. We do not know whether the decision to suspend trading was linked to the council’s decision to redeem.”
A stockpicker – or fund manager – analyses the potential of different stocks to try to decide whether or not they will make a good investment.
At its peak, the Woodford Equity Income fund managed £10.2bn worth of assets, such as local authority pension funds. The UK government was heavily invested into the fund.
However, it now manages just £3.7bn, according to the financial services and research firm Morningstar.
Mr Woodford’s firm, Woodford Investment Management, is also the biggest investor in Kier Group, the construction and services group which on Monday warned on profits, sending its shares crashing 41%.
It is understood that the fall in Kier’s share price is not connected to the decision to suspend trading in the Woodford Equity Income fund.
The firm said the suspension would give it “time to reposition the element of the fund’s portfolio invested in unquoted and less liquid stocks, in to more liquid investments”.
The Financial Conduct Authority, the city watchdog, said: “The FCA is aware of this situation and in contact with the firms involved to ensure that actions undertaken are in the best interests of all the fund’s investors.”
Daniel Godfrey, an adviser to fund management groups, told BBC Radio 4’s Today programme that Neil Woodford was “one of the finest fund managers that Britain’s ever produced, although clearly he is having a dark and terrible moment.”
He believes Mr Woodford could bounce back from this blow.
“There could be a new dawn and it’s not necessarily the end,” he said.
“It’s clearly a very dark and difficult moment for Neil Woodford and his business and there may well have to be a hit to valuations to get rid of some of the unlisted holdings. But from there it’ll still be probably a reasonably big fund.
“It could well be the case that in five years’ time, we’re looking at it and anyone who bought when it reopens will have had a great performance.”
The suspension of Mr Woodford’s Equity Income fund has hit shares in fund platform Hargreaves Lansdown, which included the fund in its flagship list of share recommendations, Wealth 50.
Hargreaves removed the fund from its recommendation list on Monday, but investors have not responded positively.
Shares in the company have slumped more than 4%, leaving it the biggest loser in the FTSE 100.
The shock to the UK’s public companies send ripples through the nation’s privately owned companies (not listed on the open stock market for the public to buy shares in, but owned by invited individuals only). On Tuesday morning the UK’s mass exodus saw a jump in private companies leaving for mainland Europe. Paris, Dublin and Berlin have absorbed much of the UK’s lost business, wealth, reputation, power, influence and capital.
Mr Woodford launched his own fund five years ago this month, with its corporate headquarters in Oxford.
In its first year, it gave investors a return of 18% on their money, compared with an average rise of only 2% on the London Stock Exchange at the time.
However, after the figures were released he warned: “It’s far too early to conclude that the fund’s strategy has worked.”
Before that, the 59-year-old had worked as part of the UK equities team at investment managers Invesco Perpetual for more than 26 years.
He was appointed a CBE for his services to the economy in 2013.
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