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The Liquidity Lessons of Neil Woodford Part 2
What lessons in liquidity management can the Neil Woodford saga teach investors and financial regulators?
In the second of a two-part blog, MATTHEW FEARGRIEVE explains the regulatory response to the liquidity management issues thrown up by the catastrophic mismanagement of The Woodford Equity Income Fund, and asks what lessons can be learned by investors and regulators alike.
Previously, we considered Neil Woodford’s breaches of the UCITS liquidity rules and how the illegally-illiquid portfolio of The Woodford Equity Income Fund (“WEIF”) could not be realized in time to meet the wave of redemption requests being made by spooked investors. A fire-sale of the fund’s liquid (and better quality) assets ensued, and in desperation Woodford suspended redemptions in WEIF; in so doing, he locked his investors into a tanking and ultimately doomed fund. At time of writing (March 2020), about a fifth of WEIF’s peak net asset value of GBP10 billion has been realized by the fund’s liquidator. You can catch up on this and more in the first part of our blog, here:
