Star fund manager Neil Woodford has suspended trading in his largest fund to block investors accessing their cash after a slew of withdrawals.
Woodford said investors would not be able to redeem, purchase or transfer shares in his Woodford Equity Income Fund after an “increased level of redemptions”.
Investors have taken out about £560mln from the fund over the past four weeks but it was a request from Kent County Council to withdraw £250mln that prompted Woodford to suspend trading.
The Woodford Equity Income Fund managed £10.2bn worth of assets at its peak in 2017 but it now manages £3.7bn, according to financial services and research firm Morningstar.
Kier share price slump hits Woodford's investment
The share price slump saw the value of Woodford’s stake in the business fall to £53.1mln from more than £90.2mln just weeks after he raised its holding to 20% from 19.4%.
"Woodford has clearly made a series of poor investment decisions," said Neil Wilson, chief market analyst at Markets.com
"Out of love UK stocks with entirely domestic may have been ultra-cheap, but they’re still unloved and still cheap.
"Provident has been a disaster. Kier, whose shares tumbled 40% yesterday, also disaster. It’s been a tough few years for Woodford and things look like they will get worse still."
However, it is understood that the decline in Kier’s share price is not connected to the decision to suspend trading in Woodford Equity Income Fund.
Suspension in 'best interest of investors'
The fund said: "After consideration of all relevant circumstances relating to the fund's assets, we have... come to the conclusion it is in the best interests of all investors in the fund to suspend the issue, cancellation, sale, redemption and transfer of shares in the fund.
"Following an increased level of redemptions, this period of suspension is intended to protect the investors in the fund by allowing Woodford, as previously communicated to investors, time to reposition the element of the fund's portfolio invested in unquoted and less liquid stocks, into more liquid investments."
The Financial Conduct Authority said it was aware of the situation and is in contact with the firms involved to “ensure that actions undertaken are in the best interests of all the fund's investors”.
The fund delivered an 18% return to investors in its first year, compared to an average rise of 2% on the London Stock Exchange.
Woodford was appointed a CBE for his services to the economy in 2013.