Woodford’s Smaller Fund Gets Asset Makeover Before Reopening

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(Bloomberg) --

Standard Life Aberdeen Plc’s investment arm has overhauled a fund once run by Neil Woodford, shifting most of its assets into easy-to-sell stocks to prepare for possible withdrawals when the fund reopens on Thursday.

“There will be some investors who understandably want their money back, and that’s absolutely fair enough,” Andrew Millington, head of U.K. equities at Aberdeen Standard Investments, said in an interview. “We want to offer them what they thought they were buying, which was a liquid portfolio of U.K. equities that can generate attractive dividend yield with sustainable growth.”

Aberdeen Standard Investments was appointed in December to take over as manager of the renamed LF ASI Income Focus Fund. Withdrawals had been suspended in mid-October under redemption pressure. Assets in the fund have fallen to about 251 million pounds ($325 million) from a peak of 747 million pounds in November 2017, according to data compiled by Bloomberg. It’s down 17.7% in the past year.

Millington said about 90% of the fund’s old positions were sold and reinvested to improve liquidity and returns. He declined to give specifics about its current holdings.

The suspension of withdrawals from the income-focus fund was largely drowned out by the collapse of Woodford’s investment business, including the decision to liquidate his former flagship. The larger fund had gradually shifted out of large-cap companies into smaller and harder-to-sell stocks. That, coupled with poor performance, left Woodford unable to pay back investors who wanted their money. While the income focus fund didn’t load up on illiquid stocks to the same degree, stakes in smaller companies made up more than a quarter of its holdings, according to Millington.

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