Tuesday 04 June 2019 1:01 pm

Shares in Woodford investment trust plunge after fund suspension

Shares in Neil Woodford’s investment trust plunged this morning after the former star trader was forced to suspend trading in his flagship fund as investors flocked to the exit.

Woodford Patient Capital Trust shares fell more than 19 per cent to a low of 61.3p before recovering slightly to 71.54p this afternoon.

Woodford Income Equity Fund was suspended yesterday in an embarrassing moment for the City veteran who has seen his reputation as a star fund manager crumble in the last few years.

A spike in investor redemption requests on Monday sparked the decision to freeze the fund.

Attempted withdrawals included a £250m redemption request by Kent County Council pension funds.

The flagship investment vehicle has seen assets under management dwindle from £10.2bn two years ago to £3.77bn last week.

The City watchdog said it was in touch with Woodford over the suspension.

A Financial Conduct Authority (FCA) spokesperson said it was “in contact with the firms involved to ensure that actions undertaken are in the best interests of all the fund’s investors.”

Moira O’Neill, head of personal finance at Interactive Investor, told City A.M. that investors should not be “too swayed by the reputation” of fund managers and should ensure they have a balanced portfolio.

“When these things happen it is always a lesson for people,” O Neill said.

She added: “[The suspension] has come as a surprise but I can understand why investors would want to stick with him if they have been loyal to him throughout his career,”

Shares in investment supermarket Hargreaves Lansdown, which is a “related party” due to its large stake in the fund, also dipped today.

Hargreaves only removed the fund and the Woodford Income Focus Fund from its recommended Wealth 50 list following yesterday’s announcement despite the recent underperformance and investor withdrawals.

“The suspension is understandably frustrating, but it’s important to remember that the value of your investment will be dependent on the share prices of the portfolio’s underlying holdings, which are not directly impacted by the suspension,” Hargreaves head of investment analysis Emma Wall said.

Yesterday’s suspension topped off a bad day for Woodford after shares in construction firm Kier, in which he is a major shareholder, crashed 40 per cent following a profit warning.

Woodford is the second largest investor in Burford Capital and New River Real Estate Investment Trust, which also saw shares fall six per cent and 5.3 per cent respectively.