Woodford fund: Thousands of investors frustrated as cash remains locked up for at least another month

Star fund manager extends suspension indefinitely as part of plan to sell off unlisted shares

Related video: Andrew Bailey grilled by MPs about the Woodford Equity Income fund (Jonathan Atkins)

Investment manager Neil Woodford will keep his flagship £3.7bn fund frozen for at least another 28 days, leaving hundreds of thousands of savers without access to their money.

Mr Woodford, one of Britain’s best-known stock-pickers, suspended withdrawals from the Equity Income Fund on 3 June, after a long run of poor performance prompted investors to ask for their money back, leaving the fund unable to sell off assets fast enough to meet further requests for redemptions.

After an initial 28-day period elapsed, Mr Woodford announced on Monday that the suspension would continue, with the situation monitored daily and a formal review conducted every four weeks.

“Of course, we understand that people want access to their money,” Mr Woodford said in a video posted on the firm’s website. “They’re very frustrated by not being able to deal in the fund. But we are using the time ... to ensure we get the right outcomes for our investors.”

Mr Woodford pointed out there is no “prescribed limit” to the length of time that a fund can remain suspended for, a statement that will add to speculation that investors could be barred from withdrawing their money for an extended period.

Link Asset Services, the regulated manager of the fund, also commented. “It remains in the best interests of all investors in the fund to continue the suspension,” it said in a letter posted on its website.

The suspension was intended to give Mr Woodford’s firm time to offload illiquid investments in smaller and, in some cases unlisted, companies. These assets are harder to sell than the shares of larger listed companies, meaning they could be subject to heavy discounts if a sale is required quickly.

Mr Woodford said he had used the time resulting from the suspension to sell down those stakes.

“Because the fund is suspended, there are no redemptions and the Woodford team is not forced to sell assets at distressed prices,” he said.

Asked in the video why he had taken large positions in small, unquoted companies, Mr Woodford said he was “motivated to invest in undervalued assets and size those positions with a view to the investment opportunity, the extent of the undervaluation”.

One unlisted company that the fund had invested in, Raven Property Group, announced on Monday that it had bought back Woodford’s 12 per cent stake.

Raven invests in commercial property in Russia and has offices in Guernsey, Moscow and Cyprus. According to the Financial Times, it was closely linked to Belasko Corporate Finance, which acted as sponsor on controversial stock market listings that Mr Woodford’s fund made in Guernsey.

Last week, Financial Conduct Authority boss Andrew Bailey told MPs that a loophole in regulation enabled the fund to exceed a threshold for investment into illiquid company shares – by disclosing the proportion of previously private companies that were now listed but failing to mention they were listed on the Guernsey stock exchange and rarely, if ever, traded.

“It’s a flaw in the UCITS [Undertakings for Collective Investment in Transferable Securities] rules,” Mr Bailey said.

He later added: “Listing something on an exchange where trading doesn’t actually happen doesn’t count as liquidity ... I’m still waiting to hear that a trade actually occurred [in the companies that Mr Woodford’s fund recently listed in Guernsey].”