As Losses Pile Up, Woodford Fund Suspension Extended By 28 Days
The Woodford Equity Income Fund is bleeding but remains suspended.
Fund administrator Link Fund Solutions confirmed the Woodford fund suspension would continue for another 28 days regardless of losses.
After completing the fourth 28-day review, Link said it had decided that it “remains in the interests of all investors for the suspension of dealings to continue.”
Link said it continued to monitor the repositioning of the Woodford fund’s portfolio vis-à-vis the December target date.
Rebalancing the portfolio
Last month, Neil Woodford invested £145 million on shares in British American Tobacco (BATS), BT (BT) and International Airlines Group (ICAG). On the other hand, he divested stakes in illiquid private stocks and smaller companies.
However, these unquoted investments are costing the fund dearly. In a letter to investors, Woodford revealed its NAV was adversely affected due to a downward revaluation at Benevolent AI.
Benevolent AI uses artificial intelligence in drug development. On September 17, it raised $ 90 million from Temasek the Singapore wealth fund. Unfortunately, this latest funding round valued Benevolent AI at a lower level.
“Neil continues to reposition the portfolio founded on a belief that the global economic environment is not as robust as equity markets are implying,” the fund said.
To date, the fund has reinvested 84% of the proceeds from share sales made to reposition the portfolio since the suspension in FTSE 100 companies.
Fund underperforming the index
The Woodford Equity Income fund is down 12.83% from the date of suspension through to 20 September 2019. However, the benchmark FTSE All-Share Total Return is up 4.29%.
Link will write to investors on the date of their next review which is 21 October 2019.
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