Link Fund Solutions Criticised for Role in Woodford Saga

Link Fund Solutions has been accused of not challenging decisions made at Woodford Investment Management 

Holly Black 17 June, 2019 | 4:07PM
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Link Fund Solutions is the latest outfit to come under fire in the furore surrounding the Woodford Equity Income fund.

The firm has been accused of not holding Woodford Investment Management to account in the lead-up to the fund's suspension earlier this month.

Link is the authorised corporate director of the Woodford Equity Income fund, effectively a board of directors tasked with the day-to-day management, buying and selling shares the fund invests in, and ensuring that the fund’s investments are accurately priced.

Link has been accused of not effectively fulfilling its role after Woodford undertook a number of unusual measures in the months leading up to the fund’s suspension.

Peter Sleep, senior fund manager at Seven Investment Manager, said: "No rules were broken but I am not sure best practice was followed by the fund manager and I am not clear the ACD pushed back sufficiently on the liquidity of the fund."

In March, the fund swapped a number of its stakes in unquoted companies with the Woodford Patient Capital trust in exchange for shares in the trust, a measure to reduce the proportion of the fund held in illiquid and unquoted assets. It also listed stakes in three unquoted companies on the Guernsey stock exchange.

Stuart Alexander, chief executive at Gemini Investment Management, said: “The ACD is the first port of call when there is an issue at the fund, but no-one was challenging the decisions made by Woodford. These Guernsey listings should not have been allowed in the fund; they may be listed now but they are not liquid.”

A Link Fund Solutions spokesman said: “We have been constantly monitoring the liquidity profile of the fund and its redemption rate. Prior to the suspension, the fund was able to meet all redemption requests by selling assets in the fund. However, on Monday 3 June 2019, redemptions reached a level whereby the fund would not be able to meet requests without harming the interests of investors.”

This is not the first time that Link has been criticised for its involvement in high-profile fund closures. Capita Fund Management, which Link bought in 2017, was the ACD for Arch Cru in 2009. Some 20,000 investors were caught out when it transpired the funds they had thought were low-risk had been invested in a mix of hedge funds, private equity, forestry and wine.  

Capita was also fined in 2012 when Connaught Income, for which it was also ACD, went into liquidation, losing investors £118 million.

Alexander added: “Woodford has not broken any rules but risk management is paramount. If the administrators see an issue in a fund they should report it and the regulator should pick those concerns up. Every time something like this happens, all of us get hit because it ruins the reputation of the industry.”

Link added: “Woodford, as the investment manager of the fund, determines the investment strategy. The decision to reduce exposure to unquoted assets while indirectly maintaining exposure through a listed vehicle was in line with the investment objectives and strategy of the fund.”



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Holly Black  is Senior Editor,


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