More pain for Link as Woodford suspension grows

UK fund manager Neil Woodford

The downfall of the “British Warren Buffett” continues to haunt investors of share registry group Link Administration Holdings.

Link’s Fund Solutions business in Britain is the authorised corporate director — which really means trustee — of the LF Woodford Equity Income Fund, run by one of Britain’s most famous fund managers, Neil Woodford.

The Woodford fund has been embroiled in a scandal amid allegations its manager ignored the fund’s legal investment limits and took excess risks by buying illiquid securities in overseas exchanges such as Guernsey.

The fund was deluged with redemption requests during June as investors panicked after the scandal erupted. As a result the manager was forced to suspend redemptions.

Now Link Asset Services has confirmed to unitholders the Woodford fund is likely to remain suspended another four months, at least until early December.

LFS director Karl Midl said in a letter to investors: “We anticipate that the suspension of dealing is likely to last until early December while we implement the strategy to reposition the portfolio in order for the fund to be reopened at that time, and which is conditional upon achieving the target fund profile.”

Mr Midl assured investors the portfolio was being repositioned to ensure there were liquid assets available for redemptions, but the extension of the suspension is another concern for Link investors who are still smarting from a shock profit downgrade at the end of May.

While LFS is only a small part of Link’s business, the company’s shares have fallen below $5 in the past month. They were trading around $7.80 in late May ahead of the profit warning, that Link also blamed on the lack of finality on Brexit, which it said was expected to hurt full-year earnings.

The biggest concern from the Woodford situation is that Britain’s Financial Conduct Authority could pursue Link for not properly scrutinising Woodford’s investments, even if Link said in June that LFS had “acted at all times in accordance with applicable rules and in the best interests of investors”.