Suspended Woodford fund outperforms FTSE benchmark
Former star fund manager Neil Woodford’s suspended Income Focus Fund has outperformed the FTSE all-share benchmark in the two weeks since it was frozen.
In a letter to investors this morning, Link Fund Solutions – which is managing the suspension – revealed that the fund’s returns had grown 1.39 per cent, while its benchmark return index increased 1.10 per cent.
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Link said several investment managers had expressed interest in taking over the running of the £253m Income Focus Fund, the smallest of Woodford’s funds.
The fund was suspended the day after Woodford’s investment empire imploded following Link’s decision to wind up his flagship Equity Income Fund, which had been frozen since June.
Income Focus was frozen over concerns investors would rush to withdraw their money following the collapse of Woodford Investment Management.
In today’s letter, Link told investors it was continuing to assess the viability of options including replacing Woodford as manager or transferring its assets to another fund, but that if neither option proved viable Income Focus would be wound up.
Link said it was considering “indications of interest from several investment managers” to replace Woodford, and was working with an investment research firm “to help us to identify any other investment managers that may be suitable to assume the role”.
As its administrator, Link is required to review the fund’s suspension at least every 28 days. It said Income Focus would be unfrozen as soon as possible.
Woodford declined to comment on the update.
The stockpicker’s Equity Income Fund was frozen in June after it was unable to meet a flurry of redemption requests due to the large proportion of illiquid holdings in its portfolio.
Kent County Council’s attempt to withdraw £263m of pension investments from the £3.7bn proved the final straw, and it was suspended soon after.
Read more: Keep retail investors in separate funds, says FCA head
The head of the financial regulator raised the possibility of keeping retail investors’ money separate from institutional investors to better protect individuals in the wake of the Woodford scandal.
Financial Conduct chief executive Andrew Bailey said he did not think the mixing of institutional and retail investors in funds “is necessarily a good idea” and the matter will have to be examined “when the dust settles” after the saga.