Woodford Investment Management to close

Manager has committed to work collaboratively in a transition period for Woodford Income Focus and Patient Capital Trust.

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  1. Rob Morgan

Following yesterday’s announcement that the suspended LF Woodford Equity Income Fund is to be wound down, it has emerged that Neil Woodford’s firm, Woodford Investment Management (WIM), is to close. WIM will step down from managing the other two Woodford investments, Patient Capital Trust and Woodford Income Focus Fund.

Patient Capital Trust

The Board of Patient Capital Trust, the vehicle Mr Woodford launched in 2015 to invest exclusively in unlisted and other early-stage companies, issued an announcement yesterday evening stating WIM had served notice as portfolio manager. It also commented that it is, “In advanced discussions in relation to the ongoing management of the Company's portfolio and expects to be in a position to announce details of the new management arrangements shortly.”

During a three-month notice period, WIM has committed to work collaboratively with the Board and its advisers. The Board’s duty is to protect the interests of shareholders, and it remains to be seen whether a new manager will take over management of the Trust on a permanent basis. An alternative would be for the Trust to enter a period of ‘run-off’ whereby assets are gradually sold and proceeds returned to investors – as is the intention with LF Woodford Equity Income.

LF Woodford Income Focus

The closure of WIM also means Mr Woodford’s resignation from the management of Woodford Income Focus pending a notice period of up to six months. This fund is orientated towards larger, income-generating businesses and has avoided most of the issues associated with earlier-stage businesses in the other Woodford portfolios since launch in 2017, albeit performance has also been poor. 

As a result of the resignation of WIM, dealing in the fund has been suspended with effect from 15 October 2019 further to this announcement from  Link Fund Solutions Limited, Authorised Corporate Director ("ACD") of the fund. Link state, "As a result of this we expect that the redemptions in the 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." The suspension will last until further notice.

Most of this fund's assets are invested in larger, more easily-traded shares compared with the previously suspended Equity Income Fund. Nonetheless, Link are concerned that a large scale of redemption requests would mean the fund is a “forced seller” of assets to meet redemptions, thereby adversely impacting values received and artificially depressing the unit price for redeeming and remaining investors. During suspension Link will decide on a course of action that is in the best interests of all investors in the fund. Options include the appointment of an alternate investment manager, a merger into another fund or an orderly winding-up. Whilst Link consider these options, WIM will continue to manage the fund. 

We do not know how long the suspension will last, but we expect an update from Link within the next 14 days. We will keep investors informed of further developments. During the period of suspension, the fund's unit price will continue to be valued and published in the usual way and shown in online valuations.

Past performance is not a reliable guide to future returns. This website is not personal advice based on your circumstances. No news or research item is a personal recommendation to deal. Investment decisions in fund and other collective investments should only be made after reading the Key Investor Information Document or Key Information Document, Supplementary Information Document and Prospectus. If you are unsure of the suitability of your investment please seek professional advice.

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