Woodford Investment Managers has announced plans to switch exposure to unquoted stocks in its £4.6bn Equity Income fund in favour of buying shares in the £691m Woodford Patient Capital Trust, also run by Neil Woodford.
The firm said it has sold some of the unquoted stocks to Patient Capital.
In a statement, Woodford IM said the move has been made ahead of any potential regulatory changes following the Financial Conduct Authority's discussion paper Patient Capital and Authorised Funds published in December.
This highlighted patient capital assets are currently constrained by liquidity and exposure limits in open-ended funds. The regulator is, as a result, exploring whether these restrictions are appropriate, or whether they should be relaxed.
Additionally, Woodford IM said the Patient Capital trust did not exist when the Equity Income fund was launched in 2014, so it was unable to gain unquoted exposure in this way at the time.
The Equity Income fund purchased new shares in Patient Capital shares primarily for a "non-cash consideration" by transferring five unquoted holdings (Atom Bank, Carrick Therapeutics, Cell Medica, RateSetter and Spin Memory were sold) to the value of £72.9m to Patient Capital and subscribing for the remaining £6m in cash.
Woodford IM added exposure to individual unquoted holdings within the Equity Income portfolio will be further reduced as companies reach a "more mature stage of their growth cycle".
This allows the trust to increase its position in companies the board views as the "next wave of disruptors" and also brings on board a new institutional shareholder in the form of the Equity Income fund.
Craig Newman, chief executive, Woodford Investment Management, said: "The Woodford Equity Income Fund has always aimed to deliver a growing income stream and a total return by investing predominantly in listed stocks, with some exposure to unquoted holdings to generate excess returns from disruptive technologies. These objectives remain firmly intact.
"Neil is as passionate on the unquoted asset class as ever but having listened to feedback from clients we believe that moving the exposure to the asset class via a collective fund rather than individual unquoted stocks makes sense - both operationally and from an investor view."
Additionally, the firm announced its £572m Equity Income Focus fund, launched in 2017 to generate a higher income for investors, has moved from the Investment Association's Specialist sector to the UK Equity Income peer group. The Equity Income fund was previously moved from this sector to the IA UK All Companies sector.
This leaves a more "clearly defined" product suite, helping investors to make an easier choice for their needs, the group said:
• Woodford Patient Capital trust: For investors looking to benefit from a higher exposure to early-stage companies
• LF Woodford Equity Income fund: For investors looking for long-term, total returns bolstered by investing in companies with sustainable dividend growth
• LF Woodford Income Focus fund: For investors looking for a high income, predominantly from UK companies