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Top stockpicker Neil Woodford apologises for suspending fund | Top stockpicker Neil Woodford apologises for suspending fund |
(32 minutes later) | |
One of the UK's top stockpickers has said he is "extremely sorry" after suspending trading in his largest fund. | One of the UK's top stockpickers has said he is "extremely sorry" after suspending trading in his largest fund. |
Neil Woodford stopped money going in or out of his Woodford Equity Income Fund on Tuesday after increasing numbers of investors asked for their money back. | Neil Woodford stopped money going in or out of his Woodford Equity Income Fund on Tuesday after increasing numbers of investors asked for their money back. |
The move was "necessary to protect investors' interests", he said. | The move was "necessary to protect investors' interests", he said. |
A stockpicker - or fund manager - analyses the potential of different stocks to try to decide whether or not they will make a good investment. | A stockpicker - or fund manager - analyses the potential of different stocks to try to decide whether or not they will make a good investment. |
Investors had withdrawn about £560m from the fund over the past four weeks. | Investors had withdrawn about £560m from the fund over the past four weeks. |
"As difficult a decision as this is, and clearly frustrating for you, our investors, we felt this was necessary to protect your interests," he said. | "As difficult a decision as this is, and clearly frustrating for you, our investors, we felt this was necessary to protect your interests," he said. |
He said that due to the rising number of investors withdrawing funds, the stock market was "in a way anticipating the fact that we would have to be sellers of stocks to meet those redemptions." | He said that due to the rising number of investors withdrawing funds, the stock market was "in a way anticipating the fact that we would have to be sellers of stocks to meet those redemptions." |
Therefore, the prices the firm could get for those stocks "would be disadvantageous for our investors". | |
"I'm extremely sorry that we've had to take this decision, we will keep our investors informed. We will use this time to reposition the fund." | "I'm extremely sorry that we've had to take this decision, we will keep our investors informed. We will use this time to reposition the fund." |
He said the fund needed time to reduce its exposure to illiquid and unquoted shares "to zero". | He said the fund needed time to reduce its exposure to illiquid and unquoted shares "to zero". |
Illiquid stocks can't be easily sold quickly, and investors may make a loss on them, while unquoted shares are those in private, non-listed, companies. | Illiquid stocks can't be easily sold quickly, and investors may make a loss on them, while unquoted shares are those in private, non-listed, companies. |
Why has Mr Woodford taken this action? | |
Stephen Clapham of analysts Behind the Balance Sheet said Mr Woodford had "had a very poor performance in the fund" and so people had been asking for their money back. | |
"This has been an accelerating thing, it's like a snowball going downhill, and I guess he's just got to the point where his fund has shrunk in size, and the illiquid - and particularly the unquoted part of the fund - has increased as a percentage of the total asset, so he's just had to do something." | |
Mr Clapham added he would be "very surprised" if most people who had invested in the fund knew there was a risk that at some point they would not have been able to take their money out. | |
"It's actually not that uncommon," he said, adding that after the Brexit referendum some property funds had taken similar action. | |
Mr Woodford made the apology in a video published on Youtube. | Mr Woodford made the apology in a video published on Youtube. |
He added he would be "doing more to answer any further questions over the coming days and weeks." | He added he would be "doing more to answer any further questions over the coming days and weeks." |
Who is Neil Woodford? | |
Mr Woodford started his own fund five years ago, with its 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 services to the economy in 2013. |