Questions & answers
Delistings from The International Stock Exchange: what does it mean for the fund?
The ‘unquoted limit’ is a UCITS restriction on the maximum (10%) the fund is allowed to invest in securities not listed on or to be admitted to an eligible exchange. Benevolent AI and Industrial Heat announced their delisting from The lnternational Stock Exchange (TISE), meaning an inadvertent passive breach of the fund’s 10% limit will occur. The FCA’s guidance, as for all UCITS limits, is that funds should be brought back into compliance following an inadvertent passive breach in a manner that is in the clients’ best interests and within six months of the date of discovering the relevant breach.
The companies held in the LF Woodford Equity Income Fund that are, or have been, listed on TISE have always been classified as illiquid and valued by Link in line with its Fair Value Pricing policy (which is also adopted for valuing the fund’s unquoted stocks). This continues to be the case.
Following the inadvertent passive breach, action to bring the fund back into compliance is already underway. On 3 May, we informed investors that the fund’s exposure to unquoted securities would be significantly reduced – including those listed on exchanges where there is currently little or no trading activity. The decision by Benevolent AI and Industrial Heat to delist from TISE will have no impact in how the assets are managed within the fund
Will you continue to charge a management fee?
The company will continue to charge a management fee as we focus on repositioning the portfolio, to cover the infrastructure and resource costs associated with running an actively managed fund.
Have you skin in the game?
Neil is often asked if he has skin in the game and as he said recently in a video on the equity income fund suspension, all of his financial investments are held in Woodford funds. During the period of suspension, Neil will not be paid any income or dividends. Neil has recently sold some of his shares in WPCT to meet personal financial obligations, including a tax liability. Neil remains invested in WPCT and completely committed to the early-stage asset class and its long-term investment potential.
Are transfers between platforms allowed?
Transfers between platforms across all share classes, but not share class conversions, are now allowed (as of 10 July 2019). This includes where the receiving platform does not currently have access to the share class being transferred (they will be able to open a new account in that class to support the transfer).This is intended to facilitate cross-platform transfers where there is no change to the beneficial owner. This supports investors by providing them with the freedom to move their investments between platforms.
Important note: the total cost of owning the fund can vary between platforms, even where two platforms offer the same share class. You may wish to consider the different platform fees and any potential discounts on offer before deciding to transfer. Please contact your platform or your IFA for further details.
Is the fund still pricing daily?
We will be publishing price data for information purposes, during the period in which investor trading in the fund is suspended. The last price at which the fund traded was as at midday Friday, 31 May 2019. Any orders placed after that dealing cut-off point have been rejected. All affected investors have been informed accordingly. When the suspension is lifted, investors will be required to submit their new dealing instructions.
Is Neil a forced seller?
No. While investor trading in the fund is suspended, Neil has the time and space to deliver on his strategy to place the unquoted parts of the portfolio with interested buyers.