Multi Billion Fund Blocks Redemptions

In a moment of financial serendipity, earlier today we tweeted that as a result of the sudden collapse in the market's most crowded positions (which as we noted over the weekend, now face the biggest risk of a wipe out), "hedge fund redemption requests re-emerge."

It turns out we were very much spot on, because just a few hours later, the Financial Times reported that Neil Woodford, the UK's equivalent of David Tepper, has blocked redemptions from his £3.7bn equity income fund after serial underperformance led to an investor exodus, "inflicting a serious blow to the reputation of the UK’s highest-profile fund manager."

The freeze on redemptions, exactly five years after Woodford opened his eponymous fund management group, underlines his increasingly precarious position. It follows a steady stream of investor outflows, which have occurred each month for two years, with the fund shrinking by two-thirds to £3.7bn since a peak of £10.2bn in May 2017.

The severity of this latest hit to the hedge fund industry can not be underscored enough. The FT quoted a veteran fund manager who has known Woodford for more than 20 years, who said that "this is one of the bigger events for the UK asset management industry of the last decade. A bonfire of reputation and a terrible moment for investor confidence."

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