'Once your reputation is damaged like that there is no way back': Platforms react to Fidelity blocking Income Focus purchases
'Highly unusual'
Platform providers have dubbed Fidelity International's decision to block investors from buying into the Woodford Income Focus fund as "highly unusual" and "unprecedented", despite claiming that star fund manager Neil Woodford "is finished".
Fidelity said today (18 June) personal investors will no longer be able to buy new units in Woodford Income Focus, but will still be able to withdraw money.
Earlier this month the Woodford Equity Income suspended trading due to a vast swathe of redemptions. The Income Focus fund remains open, but has consequently seen outflows in the fallout from the gating, with assets falling from £500m to £325m.
Jason Hollands, managing director at Tilney, said it should be up to the investor to decide whether to invest or not and for the ACD to determine whether dealing in a fund should be suspended.
"While this isn't a fund we rate and the performance has certainly been poor, the ACD has not suspended it from trading, so this seems a highly unusual move for a platform to prevent execution-only investors who wish to purchase shares in it from doing so," Hollands said.
"It is inconceivable that potential investors in the fund will be unaware of the wall of difficult news that Woodford Investment Management has faced in recent weeks but ultimately it should be up to the investor to make their own choice."
FCA opens investigation into Woodford suspension as February 2018 breaches revealed
Moira O'Neill, head of personal finance at interactive investor, agreed that clients already "have a clear view on the Woodford Income Focus fund".
She added over the past 12 months, for every £1 invested in the Woodford Income Focus fund almost £4 has been withdrawn, on average.
She added: "This has increased dramatically since 4 June, with interactive investor customer activity in the fund generating 98% sells versus 2% buys.
"As things stand, we see no reason to restrict customers' freedom of choice. Policing regulated investments is a precedent that we would be reluctant to set."
Bill Vasilieff, chief executive officer at Novia Financial, said he "can understand what Fidelity has done" as "fund performance has been truly dire" and "everyone is heading for the exit".
"Even with quoted stocks, large redemptions in a fire sale can depress prices and investors are probably thinking to get out while they can," he said.
"We are not getting any money from advisers into the funds," he added. "Advisers know if they put money into Woodford their clients won't thank them. Woodford is finished; once your reputation is damaged like that there is no way back."
"Woodford hasn't helped active management - it will drive more investors to passives. The star fund manager is also finished. We all knew star fund managers couldn't keep it up forever, and Woodford became over confident."
A spokesperson for Old Mutual Wealth confirmed it is keeping all its funds under review and "closely monitoring the Woodford Income Focus fund", while an AJ Bell spokesperson said the platform does not have any plans to block purchases of the fund.
